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CR 07-130 Charitable Gambling permit application for Hopkins Youth Hockey Assoc. . : • December 11, 2007 Council Report 2007-130 • CHARITABLE GAMBLING PREMISES PERMIT APPLICATION FOR THE HOPKINS YOUTH HOCKEY ASSOCIATION (HYHA) Staff recommends approval of the following motion: Move that the Hopkins City Council adopt Resolutions 2007-080, approving the charitable gambling premises permit for the Hopkins Youth Hockey Association at Hopkins Tuttle's Recreation Center, 107 Shady Oak Road with the condition that HYHA submit a copy of their audit as soon as it is complete. Adoption of this resolution will allow the HYHA to continue to run the existing charitable gambling activities at Tuttle's Hopkins Recreation Center. Overview • The HYHA has requested a renewal of their gambling license and premises permit. They conduct charitable gambling only at Tuttle's Recreation Center. Primary Issues to Consider � Does this organization meet the criteria of the City's gambling policy? � Yes • Has the organization conducted its past gambling operations in accordance with state and local laws? Yes Supporting Documents • Resolution 2007-080 • Legislative Policy 4-A, Lawful Gambling • Audit for 2007-2006 and 2006-2005 Audit • List of donations made by the HYHA • Gambling License Application available in the City Clerk's office �� �'���i Terry Obermaier, City Clerk • Council Report 2007-130 Page 2 � Alternatives 1. Approve Resolution 2007-080, allowing the Hopkins Youth Hockey Association to continue the present gambling activities at the present location. 2. Do not approve the resolutions with the result that the Hopkins Youth Hockey Association will no longer have gambling in the City of Hopkins. 3. Continue the item for more information. Staff recommends alternative one. � • � CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA RESOLUTION 2008-006 RESOLUTION APPROVING A GAMBLING LICENSE FOR THE HOPKINS YOUTH HOCKEY ASSOCIATION WHEREAS, the Hopkins Youth Hockey Association has been an integral part of the Hopkins Community, and WHEREAS, the Hopkins Youth Hockey Association applied for a gambling license to conduct lawful gambling in 2008 and 2009, and WHEREAS, the Hopkins Youth Hockey Association 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 Youth Hockey Association Premises Permit Renewal application at Tuttle's Family Entertainment, 107 Shady Oak Road, Hopkins. Adopted by the City Council of the City of Hopkins, Minnesota, this 2" day of January, 2008. � Eugene J. Maxwell, Mayor ATTEST: Terry Obermaier, City Clerk � • LAWFUL GAMBLING 1. PURPOSE 1.01 The purpose of this policy is to establish rules and procedures for lawful gambling in the City of Hopkins. 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 has its principal or registered office, street address and zip code within the City of Hopkins. 2.03 The organization defined in Section 2.02 must be engaged in its primary 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 members as � defined in Minnesota Statute.Chapter 349. 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 permit or license to conduct bingo 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 Only one organization, as defined in Section 2.02, may conduct gambling within a single owned, occupied or leased premise. � Legislative Policy Manual -- Chapter 4-A 1 � 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 be an 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 notice sent to the general membership announcing the meeting to authorize gambling activities, and 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 sh�ll 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. 2.15 The City shall receive 10°/o of net profits from organizations conducting gambling in leased premises. Established 11/19/85 by Resolution 85-3218 Revised 10/5/1993 . Revised 4/19/94 Revised 12/16/97 Revised 8/19/2003 City of Hopkins � Legislative Policy Manual -- Chapter 4-A 2 --_... _..... _ _._.._.. _.. . _ _ _....... _ _ _ _-- .._._ __ . _. ._ . . . _. --_.... _ _--. . .._. _-- __. ._ ._.. .. . . ._...._._ __ . _... ... . -- - . � i �� � LAWFUL GAMBLING FUND OF HOPKfNS YOUTH HOCKEY ASSOCIATION (License # 04157) (MN Taxpayer ID # 7345553) (FEDERAL ID # 41-1 31 291 7) REGULATORY BAS1S FINANCIAL. STATEMENTS AND SUPPLEMENTARY INFORMATION YEARS ENDED MAY 31, 2007 AND 2006 � � � I � I i � , I ' � — ---- ---------- ----------- -- -- t LAWFUL GAMBLING FUND OF ' HOPKINS YOU7H HOCKEY ASSOCIATION � (License # 04157) I� S7ATEMENTS OF ASSETS, LlABILITIES AND PROFIT CARRYOVER i REGULATORY BASIS � MAY 31, 2007 AND 2006 I 2007 2006 ASSETS CASH Gambling Bank Accounts: Noninterest Bearing $ 15,777 $ 97,394 Cash - Starting Game Banks 5,000 5,060 Total Gash 20,777 22,454 ' INVENTORIES 677 623 Tota1 Assets $ 21,454 $ 23,077 � LIABILfTIES , ACCOUNTS PAYABLE State Gambling Taxes $ 5,536 $ 3,484 Due to Vendor 1, 049 1,226 Other 4 _ Total Accounts Payable 6,589 4,710 COMMITMENTS AND GONTINGENCIES �� PROFIT CARRYOVER I PROFIT CARRYOVER 14,865 18,367 Total Liabilities and Profit Carryover $ 21,454 $ 23,077 I k � � � See accompanying Notes to Financial Statements � I LAWFUL GAMBL(NG FUND OF HOPKINS YOUTH HOCKEY ASSOCIATION . (License # 04157) STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN PROFIT CARRYOVER REGUL.ATORY BASIS YEARS ENDED MAY 31, 2007 AND 2006 2007 2006 Amount Percent Amount Percent REVENUES Pull-Tab Receipts $ 1,272,543 100.0 % $1,030,423 100.0 % Less: Prizes Awarded 1,054,890 82.9 863,647 83.8 Net Revenues - Pull-tabs 217,653 17.1 166,776 16.2 GROSS PROF(T 217,653 100.0 166,776 100.0 ALLOWABLE EXPENSES 113,660 52.2 96,488 57.9 INCOME BEFORE LAWFUL PURPOSE AND BOARD APPROVED EXPENDITURES . 103,993 47.8 70,288 42.1 LAWFUL PURPOSE EXPENDITURES Gambling Taxes State Combined Receipts Tax 29,200 13.4 16,852 10.1 State Board Fees 1,273 0.6 1,030 0.6 State Ideal Gambling Taxes 25,644 11.8 20,896 12.5 Ideal Tax Refund on Unsold Tickets (3,849) (1.8) (3,861) (2.3) State License Fees 600 0.3 ' 500 0.3 � Total Garnbling Taxes 52,868 24.3 35,497 21.2 Audit Fee 4,000 2.4 Program Expenditures 54,627 25.1 12,600 7.6 Total Lawful Purpose Expenditures 107,495 49.4 52,017 31.2 REVENUES [N EXCESS (DEFICIT) OF EXPENSE� (3,502) (1.6) 18,271 11.0 Profit Carryover - Beginning of Year 18,367 96 PROFIT CARRYOVER - END OF YEAR $ 14,865 $ 18,367 I � I �� See accompanying Notes to Financial Statements �3) ; � , -- -- LAWFUL GAMBLING FUND OF HOPKINS YOUTH HOCKEY ASSOCIATION . (License # 04157) RECONCIL1ATtON OF GAMES USED REGULATORY BASIS YEARS ENDED MAY 31, 2007 AND 2006 + 2007 2006 Number of Number of Amount Games Amount Games PULL-TABS Cost of Games Used: Beginning Inventories $ 623 15 $ 642 13 Purchases 19,755 427 16,791 381 20,378 442 17,433 394 Less: Ending Inventories 678 14 623 15 Total Cost of Games Used $ 19,700 428 $ 16,810 379 Reconciliation of Games Used: Games Used Per Books Above 428 � 379 Games Used and Reported Per Gross ' Revenues (Receipts) by Month 428 379 J Difference _ _ � , ( I I I� i �7� � ; . i _ _ :.. ... LAWFUL GAMBLING FUND OF HOPKINS YOUTH HOCKEY ASSOCIATION � (License #04157) ANALYStS OF MAXiMUM ALLOWABLE EXPENSES REGULATORY BASIS YEARS ENDED MAY 31, 2007 AND 2006 2007 2006 GROSS PROFIT $ 217,653 $ 166,776 ALLOWABLE EXPENSES Gambling Product Sold $ 19,700 $ 16,810 Campensation and Payroll Taxes 59,355 63,169 Advertising 145 - Accounting and Legal Services 10,600 6,793 Bank Charges and Miscellaneous Expenses 2,187 3,555 Purchase and Repair Expenses for Office Equipment and Gambling Devices 115 - � Rent 19,061 12,637 Theft and Liability Insurance 979 1,200 Local Gambling Fees, Gambiing Manager Bond - 375 Cash Short (Cash Long) 1,518 3,251 Reimbursement for Negative Expense Calculation - (11,302) Tot`al Allowable Expenses 113,660 96,488 � MAXIMUM ALLOWABLE EXPENSES BY MINNESOTA STATE STATUTES 129,962 91,727 MAXIMUM ALLOWABLE EXPENSES lN EXCESS (DEFICIT) OF ALLOWABLE EXi'ENSES - CURRENT YEAR 16,302 (4,769 ) BEGINN(NG CUMULATIVE MAXIMUM ALLOWABLE EXPENSES IN EXCESS OF ALLOWABLE EXPENSES 565 5,326 ENDING CUMULATIVE MAXIMUM ALLOWABLE EXPENSES IN EXCESS OF ALLOWABLE EXPENSES $ 16,867 $ 565 i i � - � � LAWFUL GAMBLING FUND OF � HOPKINS YOUTH HOCKEY ASSOCIATiON {License # 04157) S RECONCILIATION OF PROFIT CARRYOVER REGULATORY BASIS YEARS ENDED MAY 39, 2007 AND 2006 2007 2006 ADDITIONS Cash in Gambling Sank Accounts $ 15,777 $ 17,394 Cash in Starting Banks 5,000 5,060 Ending Inventory 677 623 Total Additions 21,454 23,077 SUBTRACTIONS Tax to be Paid to Department of Revenue 5,536 3,484 Unpaid Invoices included in Cost of Goods Sold 1,049 1,226 Other 4 _ Total Subtractions 6,589 4,710 , PROFIT CARRYOVER FROM FINANCIAL STATEMENTS 14,865 18,367 � PROFIT CARRYOVER FROM TAX REPORT 14,865 18,367 VARIANCE FROM BALANCE $ - $ - I� � ; � � � � � i i i � i I 'I ' � � � i I � � � J �i � I . • I � _� LAWFUL GAMBLWG FUND OF HOPKINS YOUTH HOCKEY ASSOCIATION l (License # 04957) � (MN Taxpayer 1D # 7345553) (FEDERAL ID # 41-1312917) , REGULATORY BASIS FINANCIAL STATEMENTS :, AND INDEPENDENT AUDITORS' REPORT YEAR ENDED MAY 31, 2006 AND �� SEVENTEEN MONTHS ENDED MAY 31, 2005 , ' � � ,, � J 1 � .i � L� � '_i _� :� ;! :; J � . :• :a _; :i � ' LAWFUL GAMBLING FUND OF HOPKINS YOUTH HOCKEY ASSOCIATION � I (License # 04157) ��' STATEMENTS OF ASSETS, LIABILITIES AND PROFIT CARRYOVER ;,. REGULATORY BASIS ` i NYAY 31, 2006 AND MAY 31, 2005 ; 1 2006 2005 ASSETS - CASH i } ;� Gambling Bank Accounts: � ' ' Noninterest Bearing $ 17,394 $ 30 j Cash - Starting Game Banks 5,060 5,000 I�:_ ' Total Cash � 22,454 5,030 �:' `I ' INVENTORIES 623 642 �= � Total Assets $ 23,077 $ 5,672 �,,; E' =: I LIABILITIES - ACCOUNTS PAYABLE State Gambling Taxes $ 3,484 $ 4,662 �-� Due to Vendor 1,226 914 4 710 5 576 ,<. _, Total Accounts Payable , , '� : i � = PROFIT CARRYOVER PROFIT CARRYOVER 18,367 96 Total Liabilities and Profit Carryover $ 23,077 $ 5,672 � --, �� � -; i `; � ;; - ; � i i ' ;-. ;; j � __ i I � j ' i ' '' _ See accompanying Notes to Financial Statements I ', j (2) � - � ; ---- � - - - f - - - � - - LAWFUL GAMBLING FUNC OF HOPKIN� YOUTH HOCKEY ASSOCIATION (License # 04157) � STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN PROFIT CARRYOVER REGULATORY BASIS YEAR ENDED MAY 31, 2006 AND SEVENTEEN MONTHS ENDED MAY 31, 2005 2006 2005 Percent Percent Amount of Sales Amount of Sales REVENUES Pull-Tab Receipts $ 1,030,423 100.0 % $1,640,927 100.0 % ; Less: Prizes Awarded 863,647 83.8 1,341,724 81.8 Net Revenues - Puli-tabs 166,776 16.2 299,203 18.2 � GROSS PROFIT 166,776 100.0 299,203 100.0 ALLOWABLE EXPENSES 96,488 57.9 159,236 53.2 ' INCOME BEFORE LAWFUL PURPOSE AND BOARD APPROVED EXPENDITURES 70,288 42.1 139,967 46.8 LAWFUL PURPOSE EXPENDITURES Gambling Taxes: State.Combined Receipts Tax 16,852 10.1 22,878 7.6 State Board Fees 1,030 0.6 1,641 0.5 State Ideal Gambling Taxes 20,896 12.5 32,973 11.0 Ideal Tax Refund on Unsold Tickets (3,861) (2.3) (3,524) (1.2) i� State License Fees 500 0.3 - - Total Gambling Taxes 35,417 21.2 53,968 18.0 Audit Fee 4,000 2.4 - - - Program Expenditures 12,600 7.6 82,379 27.5 `; Ideal Tax Refund Expenditures - - 3,524 1.2 Total Lawful Purpose Expenditures 52,017 31.2 139,871 46.7 5 ' REVENUES IN EXCESS (DEFICIT) OF EXPENSE� 18,271 11.0 96 0.0 Profit Carryover - Beginning of Year 96 - _ PROFIT CARRYOVER - END OF YEAR $ 18,367 $ 96 , ,,� =i See accompanying Notes to Financial Stafements �3) _ ; .:I -- LAWFUL GAMBLING FUND OF HOPKINS Y011TN HOCKEY ASSOC!/�TION ; :; (License # 04157) `' � NOTES TO FINANCIAL STATEMENTS MAY 31, 2006 AND MAY 31, 2005 � ,, . ., - NOTE 2 COMMITMENTS AND CONTINGENCfES �i I I The Organization leases space for the site of its lawfu! gambling activities within the City of � `� � Hopkins. The pull-tab lease agreement requires ten percent of gross profits per month, not � to exceed $1,750, and expires at the end of December 2007 or upon loss of the � j organizations premise permit, whichever is earlier. Rent expense for the year ended May 31, .-�- 2006 and seventeen months ended May 31, 2005 was $12,637 and $29,750, respectively. j i i NOTE 3 INCOME TAXES k:_� The Organization is exempt from state and federal income taxes under Section 501(c)(3) of �:.>- the internal Revenue Code. However, the Organization is required to pay state and federal �>_� income taxes on unrelated business income. Under the regulatory method, income taxes are recognized when paid. There were no income taxes paid, with Lawful Gambling funds, in the , year ended May 31, 2006 and the seventeen months ended May 31, 2005. ;:=: _; � _:,; ` NOTE 4 RESULTS OF GAME TESTING i �._, ;�;;==; Subsequent to year end, the Organization's independent auditor selected 21 pull-tab games ' `==' from the site includin , g games with unsold tickefs, to be tested as part of their audit. = The exce tions of their testin as re orte t ;:� _--_ p g, p d o. the Organ�zation, are as follows: � � Days ;-; Mfr Unsolds as Prizes as Deposited Deposit F�� ID Part # Seria! # Reported Counted Reported Counted Difference Late Diffecence AG VTS161 8085919 755 755 2,018 2,018 - 4 _ �! AG VIP160 7993011 555 555 2,112 2,192 - 27 - -.- TP 21877-MN K432943 180 180 2,318 2,398 - 2g _ TP 21998-MN K425823 379 379 2,300 2,300 - g _ i="� AG VIP160 7993016 664 664 9,899 1,891 - 6 - �� AI PEY08 260148 - - 2,313 2,393 - - (5� On June 1, 2006, the inventory of games was observed by two independent individuals . appointed by the Organization. No exceptions in the Organization's perpetual inventory records were noted. In addition, cash on hand of $5,455 was counted. �> :;=_i � -.i _ � :;- �>-� �_: � . i :_-=:, � �=' ; � , _ : i � I - - - ___� _ LAWFUL GAMBLING FUND OF HOPKINS YOUTH HOCKEY ASSOCIATION (License # 04157) � RECONCILIA�ION OF GAMES USED REGULATORY BASIS YEAR ENDED MAY 31, 2006 AND SEVENTEEN MONTHS ENDED MAY 31, 2005 2006 2005 � Number of Number of Amount Games Amount Games PULL-TABS � � � � Cost of Games Used: Beginning Inventories $ 642 13 $ - - Purchases 16,791 381 26,874 623 � � 17,433 394 26,874 623 Less: Ending Inventories 623 15 642 13 Total Cost of Games Used $ 16,810 379 $ 26,232 610 Reconciliation of Games Used: Games Used Per Books Above 379 610 ' Games Used and Reported Per Gross Revenues (Receipts) by Month 379 610 Difference or Possible Unreported Games - - : � , I ? i I � � � '; �7� i_ ;=:', �.�- LAWFUL GAIVIBLING FUND OF HOPKINS YOUTH HOCKEY ASSOCIATION i�:::: (Li'cense #04157) =- ANALYSIS OF MAXIMUM ALLOWABLE EXPENSES REGULATORY BASIS ;-:_� YEAR ENDED MAY 31, 2006 AND'SEVENTEEN MONTHS ENDED MAY 31, 2005 ��'. � 2006 2005 �-� �;_>::� GROSS PROFIT $ 166,776 $ 299,203 ', �;"� ALLOWABLE EXPENSES r : ' �,;<1 Gambling Product Sold $ 16,810 $ 26,232 �. ;.� Compensation and Payroll Taxes 63,169 99,890 — Accounting and Legal 6,793 11,711 �= =1 - 4 268 !;»i d Miscellaneous Su lies 3,555 - Bank Charges an pp � '� � Purchase and Repair expenses for Office Equipment and Gambling Devices - 6,392 � 12 637 29 750 Rent , , I' ` _ I - � — Theftand Liability Insurance 1,200 License Renewal and Insurance 375 1,175 `'=1 Cash Short (Cash Long) 3,251 4,199 � ! �s;>_ � �:<;' Reimbursement for Excess Cash Short - �74) ; Reimbursement for Negative Expense Calculation (11,302) (24,307) ; - Subtotal 96,488 159,236 ;� � � MAXIMUM ALLOWABLE EXPENSES BY - MINNESOTA STATE STATUTES 91,727 164,562 I . - MAXIMUM ALLOWABLE EXPENSES IN EXCESS (DEFICIT) OF ALLOWABLE EXPENSES - CURRENT YEAR (4,761) 5,326 � =� �::-, __ BEGINNING CUMULATIVE MAXIMUM ALLOWABLE EXPENSES IN EXGESS OF ALLOWABLE EXPENSES 5,326 - �:; � � ENDING CUMULATIVE MAXIMUM ALLOWABLE EXPENSES IN EXCESS OF ALLOWABLE EXPENSES $ 564 $ 5,326 !; <, l _::i >_:;j �-->� �> :'; L_; ` ii I:` �8� i ,_ _ _ -- - - --- LAIlUFUL GAMBLING FUND OF HOPKINS YOUTH HOCKEY ASSOCIATION (License # 04157) • RECONCILIATION OF PROFIT CARRYOVER REGULATORY BASIS YEAR ENDED MAY 31, 2006 AND SEVENTEEN MONTHS ENDED MAY 31, 2005 2006 2005 ADDITIONS Cash in Gambling Bank Accounts $ 17,394 $ 30 Cash in Starting Banks 5,060 5,000 Ending Inventory 623 642 Total Additions 23,077 5,672 SUBTRACTIONS Tax to be Paid to Department of Revenue 3,484 4,662 Unpaid Invoices inciuded in Cost of Goods Sold 1,226 914 � Total Subtractions 4,710 5,576 PROFIT CARRYOVER FROM FINANCIAL STATEMENTS 18,367 96 ; j PROFIT CARRYOVER FROM TAX REPORT 18,367 96 VARIANCE FROM BALANCE $ - $ - :i � ,� ; -� ; .; ; , � �9) s � • 2006-2007 Charitable Gambling Donations/Lawful Purpose Expenditures _ �_� .� Recipient/Proiect Name Pmt. Pmt. Date i ICA Food Shelf $ 500 Jan. 2006 Pavilion Shootin Room - mt $ 5,000 Feb. 2006 9 p New Jerseys - boys $10,000.00 May. 2006 ($10K was paid in last yr. LPEs) ISD 270 Champions Fund $ 1,800 Jun. 2006 HYHA goalies - Staubers $ 4,250 Oct. 2006 SwensonlLee Family $ 500 Nov. 2006 Pavilion Shooting Room -pmt $ 5,000 Feb. 2007 City of Hopkins/Civic recipients $ 1,500.00 Feb. 2007 HYHA Coach in Chief position $ 4,000 Mar. 2007 Family Resource Center $ 500 Mar. 2007 ICA Food Shelf $ 500 Nov. 2007 Total $ 33,550 �