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Bill Number: 3052 Ratification Number: 287 Act Number 188 Introducing Body: House Subject: Regulation of bingo
(A188, R287, H3052)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 23 TO CHAPTER 21, TITLE 12, SO AS TO PROVIDE FOR THE REGULATION OF THE GAME OF BINGO BY THE TAX COMMISSION, THE TERMS AND MANNER OF PLAYING THE GAME, EXCEPTIONS, CLASSES OF LICENSES FOR PLAYING THE GAME, A TAX ACCORDING TO THE CLASS OF LICENSE, WHO MAY CONDUCT THE GAME, THE HANDLING OF PROCEEDS, REPORTING OF RECEIPTS, BONDING REQUIREMENTS, A PROCEDURE FOR APPEAL OF REVOCATION OF THE LICENSE, INSPECTION AUTHORITY BY THE COMMISSION, DISPOSITION OF REVENUES FROM THE GAME, REGULATION OF PRIZES AWARDED TO WINNERS OF BINGO, AND PENALTIES FOR VIOLATIONS; TO AMEND SECTION 12-54-90, RELATING TO REVOCATION OF A LICENSE BY THE COMMISSION, SO AS TO AUTHORIZE THE COMMISSION TO NOTIFY, BY CERTIFIED MAIL OR PERSONAL SERVICE, A PERSON WHOSE LICENSE IS REVOKED; AND TO REPEAL SECTIONS 12-21-2580 THROUGH 12-21-2630 AND CHAPTER 17 OF TITLE 52 RELATING TO THE REQUIREMENTS FOR SPONSORING BINGO GAMES, REQUIRING AN ANNUAL LICENSE AND AN ADMISSION TAX FOR THESE GAMES, PROVIDING FOR BONDING OF THE OPERATION OF THESE GAMES, AND FOR THE DISPOSITION OF THE REVENUE DERIVED FROM THE PROVISIONS OF SECTIONS 12-21-2590 AND 12-21-2600, AND THE DEFINITION OF THE TERMS AND MANNER OF PLAYING THE GAME OF BINGO AND THE DEFINITION OF WHICH ORGANIZATIONS MAY CONDUCT THE GAME.
Be it enacted by the General Assembly of the State of South Carolina:
Regulation of bingo
SECTION 1. Chapter 21, Title 12 of the 1976 Code is amended by adding:
Regulation of Bingo Games
Section 12-21-3310. This chapter may be cited as the Bingo Act.
Section 12-21-3320. As used in this chapter:
(1) 'Bingo' or 'game' means a specific game of chance, commonly known as bingo, in which prizes are awarded on the basis of designated numbers or symbols on a card conforming to numbers and symbols selected at random.
(2) 'Commission' means the South Carolina Tax Commission.
(3) 'Card' means a printed design on which there are arranged five horizontal rows and five vertical columns forming twenty-five squares. Numbers are printed in twenty-four of the squares, and the term 'free', 'free square', or 'free space' is printed in the square or space located in the center of the card. The five columns are denominated from left to right by the respective letters of the word 'B-I-N-G-O'. Each square in the 'B' column contains a number from one through fifteen inclusive; each square in the 'I' column contains a number from sixteen through thirty inclusive; except for the center space which is marked as free, each square in the 'N' column contains a number from thirty-one through forty-five inclusive; each square in the 'G' column contains a number from forty-six through sixty inclusive; and each square in the 'O' column contains a number from sixty-one through seventy-five inclusive. No number may appear twice on the same card.
(4) 'Promoter' means an individual, corporation, partnership, or organization compensated either by salary or percentage of the games proceeds or both to manage, operate, or conduct the licensee's bingo game. The person hired under written contract is considered the promoter.
(5) 'Nonprofit organization' means an organization exempt from federal income taxes pursuant to Internal Revenue Code Section 501(c)(3), 501(c)(8), or 501(c)(10).
(6) 'Session' means a consecutive series of games which must occur only between twelve o'clock noon and twelve a.m. of the following day. No more than one session may occur during the permitted period.
(7) 'Fair' means a recognized annual state or county fair. The fair must be recognized by the governing body of the county in which it is held, or in the case of the State, by the South Carolina Agricultural and Mechanical Society.
(8) 'Gross proceeds' means the total amount received from the sale of bingo cards and entrance fees charged at locations in which the bingo is conducted.
(9) 'Ball' means a ball, disk, square, or other object upon which is printed a letter and number which corresponds to the letter and number of a square on a bingo card.
(10) 'Cage' means a device, whether operated manually or by air blower, in which bingo balls are placed before the bingo game begins.
(11) 'Caller' means the house representative who is responsible for drawing bingo balls and announcing to the players the result of each drawing.
(12) 'Drawing' means the indiscriminate selection of a single ball from the cage.
(13) 'House' means the nonprofit organization licensed with the commission.
(14) 'Marker' means a device which indicates the number called.
(15) 'Master-board' means the receptacle used by the house to display balls which are drawn during the bingo game.
(16) 'Player' means one who participates in a game of bingo other than as an agent, promoter, or representative of the house.
(17) 'Fund' means the Parks and Recreation Development Fund.
(18) 'Building' means a structure surrounded by exterior walls or permanent firewalls.
Section 12-21-3330. The game of bingo is not a lottery when:
(1) the nonprofit organization conducting the game has completed the application as described in Section 12-21-3340 and the application has been approved by the commission;
(2) the promoter under contract with the nonprofit organization is licensed properly with the commission;
(3) the nonprofit organization presents to the commission upon application a certified copy of the statement issued by the Internal Revenue Service exempting the nonprofit organization from federal income taxation due to its status as a Section 501(c)(3), 501(c)(8), or 501(c)(10) organization;
(4) the game is conducted in accordance with the provisions of Sections 12-21-3410 and 12-21-3420.
Section 12-21-3340. (A) To conduct bingo, an applicant nonprofit organization shall file with the commission a written application in a form prescribed by the commission, executed and notarized which must include:
( 1) the name and address of the applicant and sufficient facts relating to its incorporation and organization to enable the commission to determine whether it is an authorized organization;
( 2) a copy of the organization's corporate charter and the Internal Revenue Service's statement exempting the applicant from federal income taxes as either a 501(c)(3), 501(c)(8), or 501(c)(10) organization;
( 3) the names and addresses of the organization's officers;
( 4) the place where and the times when the applicant intends to conduct bingo under the license applied for;
( 5) the specific purpose to which the bingo net proceeds are to be devoted;
( 6) the designation of a 'promoter' as defined by this chapter;
( 7) a copy of any contract or lease between a promoter and the applicant;
( 8) the name, address, and social security number of each person who will work at the proposed bingo games and receive compensation for the work, the nature of the work to be performed, and a statement as to whether or not the person has been convicted of a felony, gambling offense, criminal fraud, or a crime that has a sentence of two or more years;
( 9) submit a sample ticket, Class AA or B, for approval and the name and address of the printer;
(10) submit the name and address of the financial institution where the special accounts are established. The account numbers also must be submitted;
(11) other information considered necessary by the commission.
(B) Upon application for a license, the commission has thirty days to approve or reject the application based on the requirements of this chapter.
(C) Each applicant or licensee is required to file a renewal application each year submitting all the information and documentation required by this section.
(D) The nonprofit organization is required within thirty days to notify the commission, in writing, of any changes in the information supplied on the application.
Section 12-21-3350. (A) A promoter under contract with a licensee to manage, operate, or conduct a game shall file a written application for a promoter's license in a form prescribed by the commission, properly executed and notarized which must include:
(1) the name, address, and social security number of the promoter or of each officer if the promoter is a corporation;
(2) a copy of the promoter's contract or lease with the nonprofit organization;
(3) the name and address and social security number of any person working for the promoter at the bingo game and receiving compensation for the work;
(4) a notarized statement as to whether or not the applicant for a promoter's license or any of his employees has been convicted of a felony, gambling offense, criminal fraud, or a crime that has a sentence of two or more years.
(B) Upon application for a license, the commission has thirty days to approve or reject the application based on the requirements of this chapter.
(C) Each promoter is required to file a renewal application each year submitting all the information and documentation required by this section.
(D) The license authorized by this section is for the privilege of engaging in business as a bingo promoter and must be purchased from the commission at a cost of one thousand dollars a year.
A promoter shall obtain a promoter's license for each organization for which he operates bingo games.
(E) The promoter is required within thirty days to notify the commission, in writing, of any changes in the information supplied on the application.
Section 12-21-3360. If a nonprofit organization
intending to operate a Class AA or B license does not contract with an outside promoter, the organization shall designate a member as the promoter.
Section 12-21-3370. (A) All contracts with a promoter, whether or not the promoter is a member of the nonprofit organization, must be in writing and must state the promoter's compensation, percentage of net proceeds or both, if any, for operating the game.
(B) Whenever a promoter leases equipment, furniture, fixtures, or a building to the bingo licensee the lease must be in writing and must state the rental amounts to be paid to the promoter.
Section 12-21-3380. The promoter and the nonprofit organization are jointly and severally liable for all taxes, penalties, interest, and fines imposed by this chapter and Chapter 54 of Title 12. However, the promoter at all times is liable primarily.
Section 12-21-3390. For each licensee that the promoter manages, operates, or conducts bingo, the promoter must purchase a promoter's license as provided for in Section 12-21-3350. No promoter is permitted more than ten licenses. This license must be prominently displayed at the location where bingo is conducted.
Section 12-21-3400. (A) The promoter's license authorized by this chapter must not be transferred to any other person, organization, entity, or corporation.
(B) The bingo license authorized by this chapter must not be transferred to any other nonprofit organization and is valid and continues in force so long as the nonprofit organization to whom it is issued continues to conduct the bingo games at the same location in accordance with the provisions of this chapter.
(C) No promoter or nonprofit organization may lease, sell, rent, lend, or exchange to any other person, organization, corporation, or other entity a promoter's or bingo license issued pursuant to this chapter.
Section 12-21-3410. (A) The game of bingo must be played in the following manner:
(1) Bingo is played by more than one player and a caller who is associated with the house. Each player pays an amount certain for each card to be played during the course of a game and may purchase the card for a specified number of games. After the player has purchased a card or cards for a specified number of games, the house cannot require or accept an additional payment or consideration by the player in order to complete the specified number of games.
(2) Before each game begins, the caller shall announce to the players the configurations that will win the game. A configuration consists of covering a number of grids in some geometrical design such as, but not limited to, a line, square, or the four corners of the card.
(3) At the beginning of each game, the caller also shall announce the prize, specifically stating the dollar amount or merchandise that will be awarded to the winner. After the prize has been announced and the game has begun, the prize must not be diminished or altered. The prize must be awarded to the winner of that game without delay. For multiple winners, the prize must be divided equally among the winners.
(4) The caller shall draw numbers from the cage one at a time. As each number is selected, it is announced to the players. If a player has a card with the called number on it, he may use a marker to cover the square which contains the number. After the number is announced, it must be indicated on the master-board by the caller.
(5) When a player covers sufficient squares on a card to achieve the winning configuration, he may indicate to the caller. The caller shall require that the player's card be checked against the master-board in the presence of the other players to determine if the squares were covered accurately. If it is determined by the caller that the player accurately has covered the squares and achieved the preannounced configuration, the player is declared the winner. If it is determined that the player has not covered the squares accurately and achieved the preannounced configuration, play continues in that game.
(6) All devices, including the master-board, used to show what numbers have been called during a game must not be changed or turned off until the winners are verified.
Section 12-21-3420. In addition to the manner of play prescribed in Section 12-21-3410, the following procedures apply to the conduct of the game:
(1) Before the beginning of the first game, all seventy-five balls must be displayed openly on the master-board for the inspection of the players.
(2) Only one set of seventy-five balls and only one master-board is allowed in the room or area during the play of the game.
(3) Only one bet or payment is to be paid for each card.
(4) No bets or payments may be made while a game is in progress, except the sale of cards for subsequent games.
(5) Before the start of play, the caller shall announce to all players the prize to be awarded for that game.
(6) The house is required to identify the games for which a card may be used before the card is purchased.
(7) Before the start of play, the caller shall announce to all players the winning configuration of covered squares for that particular game.
(8) The prize must be awarded to the first person who successfully achieves the winning configuration of covered squares.
(9) Balls must be selected randomly by an indiscriminate process.
(10) Only one number may be called at a time.
(11) All balls drawn remain on the master-board until the conclusion of the game.
(12) A minimum of sixty percent of the gross proceeds taken in by the house during a single session must be returned to the players in the form of prizes.
(13) All cards used in a game sell for an equal value.
(14) The playing of bingo is restricted to the premises designated with the commission by the sponsor organization.
(15) Bingo only may be played at the place designated by the bingo licensee on its annual application.
Section 12-21-3430. The provisions of Sections 12-21-3330 through 12-21-3390 do not apply to the holder of a Class D bingo license. However, the commission shall prescribe a separate application form for fairs to obtain a license.
Section 12-21-3440. (A) The following are the classes of bingo licenses:
(1) CLASS AA: An organization operating a bingo game offering prizes with a minimum payout of fifty thousand dollars a session shall obtain an annual Class AA bingo license at a cost of four thousand dollars a year. The prizes offered at any one session may not exceed two hundred fifty thousand dollars. The holder of a Class AA license may not conduct more than one bingo session a month.
(2) CLASS B: An organization operating a bingo game offering prizes, which do not exceed eight thousand dollars a session, shall obtain an annual Class B bingo license at a cost of one thousand dollars a year. The holder of a Class B license may not conduct more than three bingo sessions a week.
(3) CLASS C: An organization operating a bingo game and offering prizes of twenty dollars or less a game during a single session shall obtain an annual Class C bingo license at no cost. However, the organization may offer a prize in cash or merchandise of no more than one hundred fifty dollars for one jackpot game a session.
(4) CLASS D: A person, organization, or corporation desiring to conduct a bingo game at a fair as defined in Section 12-21-3320 and who offers prizes for each game of no more than fifty dollars in merchandise only shall obtain a temporary Class D bingo license at a cost of one hundred dollars for not more than ten days or two hundred dollars for more than ten days.
(5) CLASS E: An organization which has a game of bingo and operates exclusively by bona fide members who are residents of this State and who do so on a strictly volunteer basis and whose gross bingo proceeds do not exceed six thousand dollars a month, and where prizes do not exceed four thousand dollars a session shall obtain an annual Class E license from the commission at a cost of five hundred dollars a year. If the gross bingo proceeds for any month exceed six thousand dollars, the person or organization within ten days is required to obtain a Class B license from the commission and comply with all requirements of a Class B license. The holder of a Class E license may not conduct more than one bingo session a week.
(B) The following are bingo taxes required according to the class of license:
(1) CLASS AA: The holder of a Class AA bingo license shall remit a bingo tax of eight dollars for each bingo player a session.
(2) CLASS B: The holder of a Class B bingo license shall remit a bingo tax of two dollars for each bingo player a session.
(3) CLASS C: No bingo tax may be assessed or collected from a Class C licensee.
(4) CLASS D: The holder of a Class D bingo license shall remit a bingo tax of four percent of gross proceeds.
(5) CLASS E: The holder of a Class E bingo license shall remit a bingo tax of four percent of gross proceeds.
Section 12-21-3450. The holder of Class AA, and Class B licenses shall issue a special ticket, approved by the commission, which states clearly the amount of bingo tax paid.
Section 12-21-3460. No person or organization may hold more than one class of bingo license and shall operate under that license for one year.
Section 12-21-3465. Only one nonprofit organization may operate or cause the operation of bingo per building. This section applies to all buildings regardless of ownership, of primary use, or of original use.
Section 12-21-3470. A person who has been convicted of violating a state or federal statute relating to gaming or gambling, a crime that has a sentence of two or more years, or, where applicable, whose promoter's license has been revoked by the commission is not permitted to manage or conduct a game or assist in any manner with the bingo operation.
Section 12-21-3475. No license, as provided by this chapter, may be issued to any organization or individual that has not been domiciled in South Carolina for at least three years immediately preceding the license application.
Section 12-21-3480. (A) A member of the nonprofit organization, other than the promoter, is required to be present at the bingo game.
(B) Upon completion of the session, the promoter shall turn over to the representative member of the nonprofit organization the gross proceeds from the session less the amount paid out as prizes.
(C) The representative member of the nonprofit organization shall deposit the funds into the bingo checking or savings account as described in Section 12-21-3490.
Section 12-21-3490. (A) The provisions of this section apply to the nonprofit organization which is responsible for the special checking and savings accounts established by this section.
(B) The organization shall control all deposits, transfers, and disbursements from these accounts, including the payment of compensation to the promoter and employees of the promoter or organization working the bingo games.
(C) An organization receiving an annual license to conduct bingo shall establish and maintain one regular checking account designated the 'bingo account' and also may maintain an interest-bearing savings account designated the 'bingo savings account'. All funds derived from the conduct of bingo, less the amount awarded as cash prizes, must be deposited in the bingo account. No other funds may be deposited in the bingo account. Deposits must be made no later than the next business day following the day of the bingo occasion on which the receipts were obtained. All accounts must be maintained in a financial institution in this State.
(D) Funds from the bingo account must be withdrawn by preprinted, consecutively-numbered checks or withdrawal slips, signed by a properly authorized representative of the licensee and made payable to a person or organization. Checks must be imprinted with the words 'Bingo Account' and must contain the organization's bingo license number on the face of the check. There also must be noted on the face of the check or withdrawal slip the nature of the payment made. No check or slip may be made payable to 'cash', 'bearer', or a fictitious payee. All checks, including voided checks and slips, must be kept and accounted for.
(E) Checks drawn on the bingo account must be for one or more of the following purposes:
(1) the payment of necessary and reasonable bona fide expenses incurred and paid in connection with the conduct of bingo;
(2) the payment of necessary and reasonable compensation incurred and paid in connection with the conduct of bingo for personnel and promoters managing and conducting the game;
(3) the disbursement of net proceeds derived from the conduct of bingo to charitable purposes or the purpose for which the organization was established;
(4) the transfer of net proceeds derived from the conduct of bingo to the bingo savings account pending a disbursement to a charitable purpose.
(F) The disbursement of net proceeds on deposit in the bingo savings account to a charitable purpose must be made by transferring the intended disbursement back into the bingo account and then withdrawing the amount by a check drawn on that account as prescribed in this section.
(G) Proceeds given to a person or an organization for a charitable purpose must not be used by the donee:
(1) to pay for services rendered or materials purchased in connection with the conducting of bingo by the donor organization; or
(2) for a cause, a deed, or an activity that does not constitute a charitable purpose or other purpose for which the organization was established if the activity is conducted by the donor organization.
(H) Gross proceeds derived from the conduct of bingo must not be commingled with other funds of the licensed organization.
(I) A licensed organization that has stopped conducting bingo and has unexpended bingo funds shall disburse those funds to a charitable purpose or other purposes for which the organization was established within one year after the date of cessation of the conduct of bingo. However, unexpended funds to be used for a Building Fund may be retained for this purpose. The organization shall file a report with the commission showing the establishment of a Building Fund, the amount of money from the special account to be retained for that purpose, and other information the commission may consider necessary.
(J) Net proceeds must not be used directly or indirectly by a licensed authorized organization to support or oppose a candidate or slate of candidates for public office, to support or oppose a measure submitted to a vote of the people, or to influence or attempt to influence legislation. The records of these accounts are available for inspection, upon demand, by the commission.
Section 12-21-3500. (A) Each licensee conducting bingo games shall submit quarterly to the commission a report under oath containing the following information:
(1) the amount of the gross proceeds derived from the games;
(2) each item of expense incurred or paid;
(3) each item of expenditure made or to be made, with a detailed description of the merchandise purchased or the services rendered;
(4) the net proceeds derived from the games;
(5) the use to which the proceeds have been or are to be applied;
(6) a list of prizes offered and given, with their respective values.
(B) Each licensee shall maintain records to substantiate the contents of each report.
(C) A person is not eligible for a license or a license renewal unless all required reports, fees, and requested information have been filed with the commission.
Section 12-21-3510. The commission shall perform all functions incident to the administration, collection, enforcement, and operation of a tax imposed under this chapter.
Section 12-21-3520. A person found violating the provisions of this chapter and assessed additional taxes or penalties, fines, or interest, upon request, is entitled to a conference before the commission.
Section 12-21-3530. Except as otherwise provided in this section, every organization and promoter licensed to conduct bingo, as a condition precedent to conducting a game or to continue in the business of conducting a game, shall file a bond executed by a surety company authorized to do business in this State, or post a cash bond with the commission in an amount as may be approved by the commission. The organization and promoter shall have separate bonds. No organization or promoter may engage in this business before submitting the bond required by this section. This bond is security for all taxes for which the promoter or organization is liable. The minimum bond for a promoter is twenty thousand dollars. The minimum bond for an organization licensee is as follows:
(1) Class AA twenty thousand dollars;
(2) Class B ten thousand dollars;
(3) Class C no bond required;
(4) Class D no bond required;
(5) Class E five thousand dollars.
Section 12-21-3540. The commission has the authority to seize bingo equipment or cards found in the possession of a promoter, bingo licensee, or player which have been manufactured, altered, or changed in a manner so as to no longer make bingo a game of chance as defined in this chapter.
Section 12-21-3550. A violation of the provisions of this chapter is subject to a penalty of twenty dollars to one thousand dollars at the discretion of the commission. Each violation and each day in violation of a provision of this chapter constitutes a separate offense.
Section 12-21-3560. The commission may enter upon the premises where bingo is played or the business premises of any other person and examine or cause to be examined by an agent or representative designated by it for that purpose books, papers, records, memoranda, commodities, or other things bearing upon the amount of taxes or fees payable or the proper conduct of a game and secure from the taxpayer or other person any other information directly or indirectly concerned in the enforcement of this chapter.
Section 12-21-3570. The commission, in its discretion, may compromise any criminal or civil action arising under the provisions of this chapter either before or after prosecution has begun.
Section 12-21-3580. The collection of the taxes and fees imposed by this chapter must not be stayed or prevented by an injunction, writ, or order issued by a court or its judge.
Section 12-21-3590. (A) Fifty percent of the annual revenue derived from the provisions of this chapter which is collected from bingo within the State must be deposited with the State Treasurer and credited to the general fund.
(B) Thirty-seven and one-half percent of the annual revenue derived from the provisions of this chapter which are collected from bingo within the State must be deposited by the State Treasurer in a separate fund for the Department of Parks, Recreation and Tourism entitled the Parks and Recreation Development Fund. Interest earned by this fund must be added to it and credited to its various accounts in the same proportion that the annual allocation to each account bears to the total annual distribution to the fund. Unexpended amounts in the various fund accounts must be carried forward to succeeding fiscal years except as provided in Section 51-23-30. Fund proceeds must be distributed as provided in Chapter 23 of Title 51.
(C) Twelve and one-half percent of the annual revenue derived from the provisions of this chapter which are collected from bingo within the State must be deposited with the State Treasurer to be credited to the account of the South Carolina Commission on Aging. This amount must be allocated to each county for distribution in home community services for the elderly as follows:
(1) One-half of the funds must be divided equally among the forty-six counties.
(2) The remaining one-half must be divided based on the percentage of the county's population age sixty and above in relation to the total state population using the latest report of the United States Bureau of the Census.
(3) The aging service providers receiving these funds must be agencies recognized by the South Carolina Commission on Aging and the Area Agencies on Aging.
Section 12-21-3600. A promoter of a bingo game who pays a winner a prize valued at one thousand dollars or more shall record the name, address, and social security number of the winner and the value of the prize he received and shall report the information to the Tax Commission quarterly."
Revocation of licenses
SECTION 2. Section 12-54-90 of the 1976 Code is amended to read:
"Section 12-54-90. (A) When a person fails, neglects, violates, or refuses to comply with a provision of law or regulation administered by the commission, the commission, in its discretion, may revoke one or more licenses held by the taxpayer within ten days of notification in writing of the taxpayer's failure to comply. The notification may be served by certified mail or personally.
(B) A person whose license has been revoked must not be issued a new license until all outstanding liabilities are satisfied.
(C) The commission may review and determine whether a new license may be issued according to guidelines established by it."
SECTION 3. (A) Sections 12-21-2580 through 12-21-2630 and Chapter 17 of Title 52 of the 1976 Code are repealed.
(B) All persons or organizations subject to those provisions of law repealed by subsection (A) of this section are liable for all taxes and fees for periods remaining within the applicable statute of limitations.
Validity of licenses
SECTION 4. Licenses in effect on October 1, 1989, remain valid until their expiration and no holder of such a license may apply for renewal between the effective date of this section and October 1, 1989.
SECTION 5. This act takes effect October 1, 1989, except for Section 4, which takes effect upon approval by the Governor.