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CHARITABLE GAMBLING By: Sandra Ashley Heiling, Finance Officer Case Background: The City of Ramsey requires a contribution equal to ten percent of net profits from lawful gambling organizations with sites in Ramsey. The funds received are deposited in a Special Revenue fired which is restricted to lawful purpose expenditures. Contributions by organization received through May 15 are: Cystic Fibrosis $11,632 Ramsey Lions 12,010 Anoka Area Hockey 463 Anoka lee Arena 399 Fund Balance $24,504 I recently reviewed the gambling reports of the organizations, and have contacted the Anoka Area Hockey Association and the Anoka Area Ice Arena Association, Inc. for additional information. A case discussing compliance with the 10% of net profit and 75% of extxmdimres in the City's trade area will be on the next Finance agenda. The purpose of the case this evening is to discuss whether the City will allow past losses to reduce current profits in determimng the 10% contribution. The Anoka Area Ice Arena has reported a net operating loss for five of the eight months they conducted gambling in Ramsey during 1992. The carry forward loss to 1993, if allowed by Council, would be ($8,314.52). Although we are awaiting additional information from the Anoka Area Hockey Association to determine the overall profit/loss for 1992, this organization also has experienced operating losses for many months and may end the year with an overall loss for 1992. Observations: While it appears reasonable to apply past losses to current profits, continuing losses do represent significant financial risk for the licensed organization and no contribution to the City of Ramsey's Special Revenue Fund. For these reasons it also seems reasonable for the City of Ramsey to consider license renewal denial at a site with continuing losses. For purposes of this discussion, continuing losses is fief'meal as a net loss in operations for a permit year or a net monthly loss for more than five months within any permit year. Just for the record, a premises permit is granted for two years, and once the City approves this permit, the City cannot withdraw the approval during the term of the permit - according to the State Gambling Control Board. Staff Recommendation: It is recommended that the City allow monthly net losses to be applied to future profits realiTed within the permit year. It is further recommended that the City consider denial of license renewal to organizations with continuing loss. Finance Committee Action: Motion to direct Staff to prepare a resolution establishing policy for determining how the 10% is calculated within a permit year. Review Checklist: Finance Oftieer FC: 5f2.5/93 q