Charities losing out on tip-jar proceeds?

Oversight: The popular games are supposed to help charities, but lax regulations spark questions on whether all revenue is being reported

June 13, 2000|By David L. Greene | David L. Greene,SUN STAFF

HANSONVILLE - At Mel's Airport Inn, only one thing is flowing faster than the Budweiser: "tip-jar" money.

Patrons are forking over $20 bills to pay for bottles of brew - then taking their change in $1 tip-jar tickets, numbered cards that offer instant cash and fuel a lucrative gambling industry in Frederick and Washington counties.

The tip jar is a glorified raffle game, popular in mostly rural sections of the country and legal in 22 states. Players buy tickets from a jar and peel back cardboard windows to win money based on numbers or gamy cartoon characters - like the baby sitting Buddha-style smoking a stogie on the tickets at this Frederick County bar.

The pastime has long flourished in private clubs and organizations, and is legal in Maryland. But it is particularly big business in Frederick and Washington counties, where it is also allowed in bars and restaurants.

Frederick County residents wagered $27.4 million on tip jars last year - more than the $22.6 million they spent during the same time on Maryland State Lottery games. In Washington County, one fraternal group - the Improved Order of Redmen in Hagerstown - raked in more than $640,000 from tip jars last year.

In both counties, proceeds from the tickets are supposed to help local charities. But there are questions about whether that happens, and whether the different ways of regulating this industry work.

Washington County has stricter regulations, giving county officials more control over which charities benefit from proceeds. But neither jurisdiction holds fraternal organizations or private clubs accountable for how they spend the money they take in, and critics say this leads to problems.

Few involved in the tip-jar industry seem eager to talk about the gaming, including bar-owners, local charities and officials of fraternal organizations, who make the biggest bundle off the game. But now some public officials are pushing the issue into the spotlight, especially in Frederick, where the county commissioners are expected to vote today on whether to establish a task force to study tightening regulations.

"This is government-sanctioned gambling, and we should make sure it's done properly," says state Del. Sue Hecht, a Democrat who proposed the task force.

Hecht, who represents parts of both counties, says tip-jar proceeds could easily be landing in the wrong hands under Frederick's current method of oversight. Two employees in the county's permits office now regulate the games, in addition to other responsibilities. The delegate estimates less than $650,000 of the $5.1 million in revenue that tip-jar operators took in last year actually made it to charities. "We're talking about millions of dollars that are lost in the system somewhere," says Hecht.

Her opponents dispute those totals, and her calls for change have slammed into a wall of angry resistance - against more regulation of a long-cherished entertainment.

"It's a difference in philosophy," says county commissioner Terre R. Rhoderick, a Republican who opposes Hecht's plan. "Those in the nonprofit sector think government should be doing more, that we need another group to make decisions. I disagree."

In Washington County, a county commission collects half the tip jar money from bars and distributes it to local charities. But fraternal clubs, such as the Redmen, are allowed to hold their own tip jar games and keep 85 percent of the intake. They do not have to report what they do with it. In Frederick County, fraternal clubs, volunteer fire departments and churches can keep all the money they bring in.

Washington County does not calculate how much is wagered on tip jars annually. But Hecht estimates - and the county gaming commission does not dispute - that operators made $10.8 million in revenue last year. County records show $2.4 million of that was donated to local causes.

In some places, the game dominates the social scene. At the Airport Inn, patrons seated around a horseshoe bar during happy hour are often double-fisted - beer in one hand, a tip jar stub in the other - and call for tickets faster than the bartender can snap them out of the jar. But at Uncle Willie's, a tavern on the main drag of Brunswick, the tip jar sits unnoticed. Customers there prefer Keno.

Frederick allows nonprofits - such as the American Red Cross and Big Brothers-Big Sisters - to team up with a local tavern. Bar owners must give 70 percent of their tip jar proceeds to the nonprofit organization, and can keep the rest to pay operating expenses. Some nonprofits do quite well - the Hospice of Frederick last year made about $96,000 from its partnership with the Place, a bar in Frederick.

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