CR 01-199 Charitable Gambling Premises Permit Application For The Hopkins VFW Post
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Council Report 2001-199
December 12, 2001
CHARITABLE GAMBLING PREMISES PERMIT APPLICATION FOR
THE HOPKINS VFW POST 425
Staff recommends approval of the following motion:
ado t Resolutions 2001-93 a rovin the charitable
Hopkins VFW Post 425, 100 Shady Oak Road.
Adoption of this resolution will allow the Hopkins VFW to continue to run the existing
charitable gambling activities at the VFW hall.
Overview
. The VFW has requested a renewal of their gambling license and premises permit.
They conduct charitable gambling at the VFW hall only.
Primary Issues to Consider
. Does this organization meet the criteria of the City's gambling policy?
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Yes
. Has the organization conducted its past gambling operations in accordance with
state and local laws?
Yes
Supporting Documents
. Resolutions 2001-93
. Legislative Policy 4-A, Lawful Gambling
. Financial Statement and Independent Auditor's Report, Years ending June 30,
2000 and 1999
. List of donations made by the VFW
. Gambling License Application available in the City Clerk's office
~I!kn~
. Terry Obermaier, City Clerk
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Council Report 2001-199
Page 2
Alternatives
1. Approve Resolution 2001-93, allowing the Hopkins VFW to continue the present
gambling activities at the present location.
2. Do not approve the resolutions with the result that the Hopkins VFW will no longer
have gambling in the City of Hopkins.
3. Continue the item for more information.
Staff recommends alternative one.
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CITY OF HOPKINS
HENNEPIN COUNTY , MINNESOTA
RESOLUTION 2001-93
RESOLUTION APPROVING A GAMBLING PREMISES
LICENSE FOR THE HOPKINS VFW, POST 425, AT
100 SHADY OAK ROAD, HOPKINS
WHEREAS, the Hopkins VFW has been an integral part of the Hopkins
Community, and
WHEREAS, the Hopkins VFW has applied for a gambling license to
conduct lawful gambling in 2002 and 2003, and
WHEREAS, the Hopkins VFW has conducted gambling activities in
accordance with state law and Hopkins City Policy,
NOW, THEREFORE, be it hereby resolved that the City Council of the
City of Hopkins, Minnesota, approves the Hopkins VFW's Premises Permit
Renewal application for The Hopkins VFW Hall, 100 Shady Oak Road,
Hopkins.
Adopted by the City Council of the City of Hopkins, Minnesota, this 18th day
of December, 2001 .
Charles D. Redepenning, Mayor
ATTEST:
Terry Obermaier, City Clerk
. POLICY 4-A
LAWFUL GAMBLING
1. PURPOSE
1.01 The purpose ofthis policy is to establish rules and procedures for lawful gambling
in the City of Hopkins.
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2. REGULATIONS
2.01 Except as otherwise enumerated herein, the provisions of Minnesota Statute
Chapter 349 relating to the definition of terms, licensing and restrictions of
gambling are adopted and made a part of the statement of policy promulgated by
the City of Hopkins as if set out in full
2.02 An applicant for a license shall be a registered Minnesota nonprofit corporation or
an organization which is designated as exempt from the payment of income taxes
by the Internal Revenue Code and whose principal location or office is within the
City of Hopkins.
2.03 The organization defined in Section 2.02 must be engaged in its activities for the
benefit of the community within the City of Hopkins for at least five years on a
perpetual, continuous, uninterrupted basis and have at least 30 active voting
members.
2.04 Gambling allowed by the city shall be carried on only within premises owned,
occupied or leased by the organization except such activities permissible under
M.S. 349.166.
2.05 No application for a premises permit will be approved for any organization to
conduct gambling on any premises other than the premises of an on-sale liquor
licensee or the premises of a fraternal, veterans or other non-profit organization.
In order for a fraternal, veterans, or other non-profit organization to conduct
gambling on their premises, such premises must have been continuously owned
and occupied for a period of at least five years. No application for premises
permit shall be approved for any organization for a site established for the
primary purpose of conducting gambling. This section shall not apply to any
organization which is exempt from the requirement for a gambling license
according to M.S. 349.166.
2.06 A Class A license will only be approved for an organization that is licensed
pursuant to Minnesota Statute, section 349.16, and that conducts gambling on
premises that it owns and operates.
2.07 More than one organization, as defined in Section 2.02, may conduct gambling
within a single owned, occupied or leased premise. More than one organization
may jointly conduct a lawful gambling game at one location. However, two or
more organizations shall not separately conduct the same game at the same time
at one location.
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2.08 The operation of gambling devices and the conduct of bingo and raffles licensed
or approved pursuant to the authority granted to the City of Hopkins shall be
carried on under the supervision of a gambling manager designated by the
organization. The gambling manager shall be responsible for the operation of the
gambling activity and the receipts and profits generated from the operation.
2.09 The gambling manager shall bean active member of the organization issued the
license and shall qualify under state law.
2.10 Organizations seeking approval for a premises permit, that are not currently
conducting gambling in the City, must provide the City, in addition to the
application forms, a copy of the minutes of a general membership meeting, where
a quorum was present, wherein the organization approved a motion authorizing
the gambling activities.
2.11 participants in raffles, paddlewheels, pull tabs and tip boards shall be restricted to
individuals who have attained the legal drinking age. This restriction only applies
to premises where liquor, wine, beer or 3.2 beer is served. Where intoxicating
beverages are not served the age shall be eighteen.
2.12 Organizations wishing to renew a gambling license must provide the City with a
financial audit of its lawful gambling activities and funds for the previous two
years. The audit(s) must be performed by an independent accountant licensed by
the state of Minnesota.
2.13 In addition, such organizations must provide the City with information on all
expenditures of lawful gambling funds during the previous two years. Such
information must include at a minimum the name of the recipient, the amount of
the expenditure or contribution, and a brief description of how the expenditure or
contribution meets the definition of "lawful purposes" as defined in M.S. 349.12.
The City reserves the right to require additional documentation from licensed
organizations, or organizations seeking licenses, as it deems necessary.
2.14 A fee of $100.00 shall be charged to all organizations submitting a Premises
Permit Application or Applications for approval by the City.
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BOYER & COMPANY
A Professional Association
14500 Bumhaven Drive-Suite 101
Bumsville, MN 5~06
(612) 435-3437
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INDEPENDENT AUDITOR'S REPORT
Board of Directors and Members
GeorgeR Wol:ffVFWPost425
We have audited the accompanying statemen~ of assets, liabilities and profit canyover-regulatory basis of
the LawfulGambling Fund of George R WoIffVFW Post 425 as ofJune 30, 2000 and 1999, and the
related statements of revenues, expenses and changes in profit carry over - regulatory basis for the years
thenended''rhesefinancial statements are the responsibility of the Organization's management. Our
responsibility is to express an opinion on these financial statements based on our audits.
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We conducted our audit in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statemen~ ~e free of material misstatement. An audit includes e,,~mining, on a testbasis, evidence
. supporting the amounts and disclosures in the financial statements. An audit also includes. assessing the
accollnting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
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Asdescribed in Note. 1, . these financial statements were prepared inconformity with the accounting
practices prescribed or permitted by the Department of Revenue of the State of Minnesota "Regulatory
Basis" which is a comprehensive basis of accounting other than generally accepted accounting principles.
InOuro~inionthe financial statements referred to above present fairly, in all material respects, the assets,
liabilitiesl:1ficlprofitcanyover of the Lawful Gambling Fund of George R WolfIVFW Post 425 as ofJune
30,2000 and 1999, and the results of its operations and changes in its profit carryover for the years then
ended, on the basis of accounting described in Note 1..
This report is intended solely for the information and use of the Board of Directors, members and .
management of the I.,awful Gambling Fund of George R WolfIVFW Post 425 and for filing with the
Department of Revenue of the State of Minnesota and should not be used for any other purpose.
BOYER& COMPANY
Burnsville, Minnesota
Principal Auditor: Lawrence J. Rossini CPA
September 28; 2000
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LAWFUL GAMBLING FUND OF
GEORGE R WOLFF VFW POST 425
License # 00185
STATEMENT OF ASSETS, LIABILITIES AND FUND BALANCE
REGULATORY BASIS .
JUNE 30, 2000 and1999
ASSETS
2000 1999
$82,870 $18,882
23,538 23,095 '
10,776 10,225
117,184 52,203
3,494 3,488
28,138 28,138
.1,122 1,151
$149 938 ~
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LIABILITIES
ACCOUNTS PAYABLE
State Combined Receipts Tax
GameVendors
$18,109 $17,474
6,543 7,065
24,652 24,539
950 550
25,602 25,089
1;otal Accounts, Payable
Pllddleticketgllme deposits
Total Current Liabilities
FUND BALANCE
FUND BALANCE
ProfitCany-Over
124,336
59,891
Total Liabilities and Fund Balance
$149.938
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See Accompanying Notes To Financial Statements
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LAWFUL GAMBLING FUND OF
GEORGE R WOLFF VFW POST 425
License'# 00185
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN PROFITCARRY-OVE
REGULATORY BASIS
FORTHE YEARS ENDED JUNE 30, 2000 and 1999
REVENUE
Pull~ TabRt:ceipts
PaddlewheelReceipts
Bingo Receipts
Interest Income
2000 1999
AMOUNT PECENfAGE AMOUNT PECENfAGE
$3,561,735 79.70% $3,520,533 81.04%
6,000 0.13% 4,500 0.10%
900,812 20.15% 818,716 18.84%
467 0.01% 514 0.01%
4,469,014 100.00% 4,344,262 100.00%
2,921,547 65.37% 2,883,511 66.38%
3,000 0.07% 2,250 0.05%
767,410 17.17% 732,.932 16.87%
3.691.957 82.61 % 3.618.693 83.30%
$777,057 17.39% $725,569 16.70%
$323,864 7.25% $319,597 7.36%
. $453,193 10.14% $405,973 9.34%
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Revenues.collected
COST OFREVENUES
. Pul1-TabPrizes
Paddlewheel Prizes
Bingo Prizes
Cost ofRevenu~
GROSS PROFIT
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ALtOWABLEEXPENSES
REVENUES IN EXCESS OF
ALLOWABLE EXPENSES
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LAWFUL PURPOSE EXPENDITURES
Gambli;1gTaxes:
State GOIlll>U1edReceipts Tax
StateldealG111nbling Tax
Qawbli1}.g'fax Refund..Unsold Tickets
Federal QaI,nl>ling Tax
State Ten Percent Tax
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154,559 3.46% 160,800 3.70%
76,363 1.71 % 78,879 1.82%
(11,686) ..0.26% (11,161) ..0.26%
6,706 0.15% 4,402 0.10%
12,276 0.27% 8,412 0.19%
238,218 5.33% 241,332 5.56%
2,100 0.05% 2,000 0.05%
15,687 0.35% 20,000 0.46%
121,058 2.71% 123,020 2.83%
11,686 0.26% 11,161 0.26%
388,749 5.98% 397,513 6.31%
$64,445 1.44% $8,460 0.19%
59,891 51,431
$124.336 ~
TotalG8mbling TaXes
Audit Fee ... . ... ... ...... ........ . .
BoatdAuthorizedEXPenditures
Programs Expenditures
Ideal Tax. RefimdExpenditure
Total Lawful Purpose Expenditures
REVENUES IN EXCESS OF EXPENSES
Profit Carry-Over - Beginning of Year
PROFIT CARRY-OVER
END OF YEAR
See Accompanying Notes To Financial Statements
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LAWFUL GAMBLING FUND OF
GEORGER; WOLFF VFW POST 425
License # 00185
NOTES TO FlNANCIALSTATEMENTS
June 30, 2000 and 1999
NOTEtSUMM.;\RY OF SIGNIFlCANTACCOUNTINGPOLICIES
Nature of Organization ." <<< ... . ..' . .'. . .... .. ..'
TheQeorgeRWolff\1FWPost 425, Jocatedin IioPkins Minnesota was formedasp3rt ofa national
organizati()n forfraternal,patriotic, historical and.educational purposes. The organization
commenced lawful gambling operationat its post location within the City of Hopkins to increase its
program seIVices.. The. organization hasaclass A license. The organization is licensed for the sale of
~es,paddlewheels,tipboards and pulltabs and for the play of bingo in' accorda11ce with guidelines
el)tablished~Y Stat~ law. The formsoflawful. gambling conducted by.the organization dwing 2000 .
a,tld1999 ",ere bingO,Puntabs and paddlewheel. Revenues in excess. of allowable expenses generated
b~the l:-~W@. GatnbliIlgFundcan only be used for lawful purposes and Board approved expenditures
as defined by Minnesota statutes.
.Bll~isof Preselltatiorl '.
ItegtIlat.or}'basis ofacco1.1fiting is the basisofaccoullting prescribed by the State of1llimesota, which
is.licpxppr~h~nsi,,ePa.sis ofaccount.ingotherthaJlgeIlerallyaccepted accounting principles.
Re~ato1Ybasisofaqcountingdiffers fromtheacc~ xpethod of accoUIlt.ing in that .under the
r....egw..............a..to.ry... '. .me.t'.h.. od, all....expe. nses oth. er..thanthe. co..'. st ofg.am. . esan.. d. th..e sta.t.e. g8llllll.... '. g tax.. esare expe. ns. ed
whenpmd.Jnaddition, under the accrual method, state gambling taxes collected ..upon purchase of
.theg3lll~~eprepaidan,dexpensed during the period the game is used. Under the regulatory method,
tl1ese state. gam\)lingtaxes .are.expensedwhenpaid. ..Also., under.the regulatory method, the.cost.of
e<iuipxpentis eXpensed,. whereas under,generallYaccepteci accounting principles, such expenditures
are <;apitalized and depreciated over the asset's estiIilated useful life. .
Use of Estimates -The preparation offinancialstltefilentsin confornlitywith the regulatory basis of
~ccoUl.l~llg requires management to make.estimates and assumptions that affect the reported amounts
ofassetsa,tld 1iabili~es and disclosure of con~gent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period;' Actual
results could differ from those estimates.
. Starting .GarneBanks- Starting game banks consists of imprest amounts which are used to fund
open play of games.
Inventories -.Inventories .consist of the vendor cost of the. games. purchased.. State. gambling taxes
paid upon purchase of the games are not included in inventories.
DeferredFundLoss- Deferred fund losses represent significantfund losses requiring Gambling
Control Board approval prior to deduction.
Unearned Revenue-Uneamedreve~ueresu1ts from bank deposits made for net revenue in excess of
prizes paid out on games in play at the balance sheet date.
BingoReceipts- Gross receipts represent amounts collected from customers net of coupons and
discounts.
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LAWFUL GAMBLING FUND OF
GEORGER.WOLFFVFWPOST 425
License#OQ185
NOTES TOFINANClALSTATEMENTS
June 30, 2000 and 1999
NOTE 2 DEFERRED FUND LOSS
Theamollilt shown as Deferred Fllild Lossof$28,138 atJune 30, 2000 . and 1999 respectively
represents cas~ shortagesrelat~to39 Pull-tapgatllescloSed,in April and May 1996 of $14,156 and a
$6,723fumilossSeptember 1998~da$7,2~9fu1i~ 10ss~Y 1999. In.addition, during 1999 the
GamblingCtnJ.tiol Board approved a Wrlte off of the $7,259 fund loss. As of June 30, 2000 the
amountfuls not been written off. .
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NOTE 3 PROFIT CARRY-:OVER RECONCaIATlON
The profitcany-over balance of $124,335 at Jllile 30, 2000 is greater than the amount shown on the
State of Minnesota Lawful Gambling ActivitY Suriiihary and Tax Return by $3,305. At June 30, 1999
the profit carry-overbalan.ce of $59,891 isgreatertlianthe amount shown on the State of Minnesota
Lawful Gambling Activity sUmmary and TaxRetUrh by $3,555. .
NOTE 4 INCOME TAXES, .' ..' '.' .
The Organization isexemptfronl state and federnlincometaxes llilOOr Section 501(c)(19) of the
Internal Revenue COde. However,theOrgariiiatioil isreqUiied to pay State aild federal income taxes
on unrelated businessincdme. Under the regulatory method of accounting, income taxes are expensed
when paid. The orgariization combines gambling and other1inrelated business income for tax
. purposes,
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". .'... .....- ,-.', - "... . . ..... '" ........
NOTE 5 BOARDi\fPROVEDEXPENDITURES . .' '. . . . .
During20001P1d1999,the OrgilnizatiollDladepaYments on a Gambling Control Board approved
loan origitlal!yobtained in1987 andsubsequellt1yincreased by $70,000. Of the $70.000 loan, the
GambliJig.COiltiol13oardapproved42% t9 be paid with gambling funds. The balances at June 30 and
trailSactiOlisare represented as follows:
BeginningLoan.Balance
Paytnents From Gambling Fllilds
2QOO
$1,676.35
(15,687.21)
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$22,293.23
(22,000.00)
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. AdditionalFunds. Borrowed
Interest charged by bank
Balance atJune 30
70,000.00
4,40153
$60,390.67
1,383.12
$ 1,676.35
NOTE 6 RESULTS OF GAME TESTING
Subsequent to year end, the Organization's independent auditors selected 30 pull-tab games to be
tested as part of his audit. Of the 30 g~es selected, only 27 were found. Of the 27 games tested 24
included unsold tickets. The exceptions of the testing, as reported to the organization,' are as follows:
PULL-TABS
Serial #7997448 Prizes lower than reported
Serial #B40 1224 Prizes higher than reported .
Serial #5768075 Prizes lower than reported
Serial#2269212 Prizes lower than by $50, & unsold tickets lower by $38
Serial #B692186 Prizes lower than reported
Projecting the differences fOllild would result in an additional cash shortage of $12,546.
AmOlmt of Error
$(50)
$13
$(16)
$(88)
$(18)
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LAWFUL GAMBLING FUND OF
GEORGE R. WOLFF VFW POST 425
License #00185
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 and 1999
NOTE .1iST.ATETAX REFUNDS AND TAX SAVINGS .
State ~refundsand.taxsavings are limited as to certain lawful purpose use, As of June 30.2000 all
of the refundswere.spent
NOTE 8 REAL ESTATE TAX
Al1oniinte~estbearingchecking accountis maintained to hold funds for the payment of real estate
taxes of the organization. During the year ended June 30. 2000 payments from the (iambling Fund to
this checkingaccounuotaled $20.169.98. Real estate taxes of $22,642.17 were paid to .theCounty. A
balanceof$1.52LI6 and $3.993.35 remained in this checking account at June 30. 2000 and 1999
respectively.
NOTE 9 RELi\TED PARTY TRANSACTIONS
The organization paid compensation for services in conducting lawful gambling activities to certain
members of the organization.
NOTE 10 FEDERAL EXCISE TAX
Federal excise tax of$2.246 was unpaid at June 30.2000. The excise tax is recorded as a lawful
expenditure when paid.
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HOPKINS RASPBERRY FESTIVJ!:\E I
For All Sites
From11/1/1999 to 10/31/2001
.
Date Check No Payee
Description
Amount
*** For Site B-02297-001 DECOYS GRILL & BAR
For
2/28/2001 UNSOLD Tax Credit/Refund f
12/10/19994488
4/10/2000 4583
5/11/2000 1
7/2/2000 4651
7/10/2000 4661
5/15/2001 4916
6/1/2001 4933
7/3/2001 4941
7/19/2001 4953
8/22/2001 4976
.2001
4880
8/22/2000 4685
10/12/20004710
6/12/2000 4632
Total of
For A-1
Hopkins Raspberry F
Hopkins Raspberry F
Hopkins Raspberry F
Brassworks
Hopkins Raspberry F
Hopkins Raspberry F
U.S.Postal Service
Hopkins Raspberry F
Hopkins Raspberry F
Hopkins Raspberry F
Total of A-1
For A-12
Deanna Anderson
Total of A-12
For A-5
Normandale Communit
University of Minne
Total of A-5
For A-8
I.R.S.
Total of A-8
-8091.60
-8091.60
Donation to Festival
Donation to Festival
Donation to Festival
Donation to Festival
Donation to Festival
Donation to Festival
postage for 2001 Fes
Donation to Festival
Donation to Festival
Donation to Festival
25000.00
9907.16
25000.00
250.00
10000.00
15000.00
340.00
16400.00
5000.00
2500.00
109397.16
Half Audit Expense
1500.00
1500.00
Scholarship for Jaym
Scholarship
2500.00
2000.00
4500.00
990T
2669.00
2669.00
Total of Site B-02297-001 DECOYS GRILL & BAR
109974.56
*** For Site B-02297-002 RASPBERRIES BAR
2/29/2000
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For
Tax Credit/Refund
Total of
For A-1
Neg Expense-Tax Savi
-9907.16
-9907.16
HOPKINS RASPBERKY t-t=~ IIVJ:\C L
For All Sites
From11/1/1999 to 10/31/2001
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Date Check No Payee
Description
Amount
2/16/2000 4539
4/10/2000 4584
7/14/2000 4662
7/28/2000 4664
2/13/2001 4846
3/12/2001 4866
3/23/2001 4878
4/6/2000 4574
8/1/2000 4671
Hopkins Raspberry F
I nsty-prints
Mike Held
Wells Fargo
Hopkins Raspberry F
Hopkins Raspberry F
U.S. Postal Service
Total of A-1
For A-12
Deanna Anderson
Total of A-12
For A-5
North Dakota State
Total of A-5
Donation to festival
Letterhead/envelopes
Donation to Festival
Junior Royalty Savin
Donation to Festival
Donation to Festival
Postage for 2000 Par
2500.00
865.86
100.00
600.00
3000.00
5553.97
147.00
12766.83
Half Audit Expense
1500.00
1500.00
Scholarship for Aime
2000.00
Total of Site B-02297-002 RASPBERRIES BAR
2000.00
6359.67
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*** For Site B-02297-003 HOPKINS BOWL
3/1/2000 4551
11/13/2000 4727
1/11/2001 4817
1/29/2001 4837
11/28/1999 4462
For (1)
U.S. Postal Service
Total of (1)
For A-1
Hopkins Raspberry F
Hopkins Raspberry F
Hopkins Raspberry F
Total of A-1
For A-2
Lutheran Brotherhoo
Total of A-2
Postage for 2000 Par
66.00
66.00
Donation to Festival
Donation to Festival
Donation to Festival
5000.00
1000.00
1000.00
7000.00
Donation to Dee Luml
1000.00
1000.00
8066.00
Total of Site B-02297-003 HOPKINS BOWL
Total of Organization
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124400.23