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The bingo business

Really interesting story about how bingo, which is legal in Texas as a charitable fundraiser, operates without a whole lot of scrutiny.

In June 2006, police responded to a call from Daytime Bingo Hall in Midland reporting that $100,000 in cash was missing from a floor safe. As investigators began digging into the apparent theft, they had questions: Since bingo operations are not allowed to have so much money on hand overnight, what was the cash doing there in the first place? And how had it escaped notations on the hall’s books?

According to police reports and descriptions of the case in Texas Lottery Commission transcripts, workers at the hall revealed several possible sources for the money. Bingo prizes were often overstated, they claimed; the hall would report a $100 prize as $200 and keep the difference. They said the operator also was selling tickets without reporting the sales to the state and placing proceeds in the safe — another violation of Texas bingo rules.

The police contacted the agency that regulates bingo, the Lottery Commission, and requested an audit of the hall and the three nonprofit organizations that sponsored bingo games there — the B’nai B’rith Youth Club, B’nai B’rith Men’s Club and Lou Rosenberg Scholarship Fund.

The commission’s Bingo Operations Division had recently audited two of the charities, finding only minor bookkeeping errors. This time, auditors found that about $250,000 could not be accounted for.

The incident highlights the serious regulatory challenges facing the agency reponsible for keeping an eye on a business that generates about $700 million every year in Texas, the vast majority in cash. A small — and shrinking — state enforcement staff, laws ripe for manipulation and the fragmented nature of the game have resulted in a legal gambling enterprise that critics contend in some ways is free of meaningful scrutiny from government regulators.

Experts and participants say the vast majority of games are conducted fairly, with proceeds accounted for and ending up in their proper places; most nonprofits use the $35 million they earn annually from bingo for charitable purposes. Yet without adequate oversight, they add, money can simply disappear, with few repercussions.

“In this business, that’s more the case than not,” said Kenneth Messer, who runs an American Legion bingo hall in Longview.

How well the state keeps track of bingo money could have costly implications. As legislators grapple with a projected $27 billion budget shortfall, several have said they would consider expanding legalized gambling to bring in more revenue. If that happens, the bingo industry wants a share of the action.

As this and a companion story show, the lack of strong oversight and uniform standards means that an awful lot of bingo-generated cash can wind up in the hands of the operators and not the charities for which it is supposedly intended. A lot more often winds up getting stolen as well. And thanks to a court case won by bingo interests (currently under appeal), they’re in there lobbying the Lege to keep them in mind for any expansion of gambling they may see fit to allow. Worth keeping an eye on.

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