CalNonprofits Articles

Confusing, incomplete reports reveal need for investigation

Will your nonprofit sign onto a letter to State legislative leaders urging them not to extend a special carve-out that enables major league sports teams to hold 50/50 raffles?

Nonprofits should be concerned about extending this special carve-out because there has been no audit or review to see if this program is working or where the money is going, and what little information CalNonprofits has been able to gather about these raffles raises more questions than it answers.

We're including more background below, and we hope you will join us calling for an audit of this program prior to any re-authorization of it. Raffles are an important revenue source for many nonprofits and we need to protect raffles as a trusted charitable fundraising mechanism for authentic nonprofits.

Background: Three years ago, the legislature passed a bad bill that allows major/minor league sports teams to hold 50/50 cash raffles, in which 50% of the proceeds goes to the winner. In comparison, when all other nonprofits hold raffles, we are only allowed to hold 90/10 raffles in which the winner gets 10% of the proceeds and the nonprofit retains 90%.

When this legislation was being debated, legislators promised that in addition to including a three-year sunset, the legislature would also receive a report about if and how communities had benefited from it:

 

“The DOJ [CA Dept of Justice] will do a report back to this committee in three years, and you will be able to say, okay, how has this impacted our community, Has this worked?” -former Senator Isadore Hall, answering questions in 2015 from other legislators about reporting and transparency.

 

Broken Promises: This report never happened, and in fact, no government entity has conducted any sort of comprehensive review of how well these raffles are actually working. The only resource we have to see if his experiment has worked are the individual reports that sports teams have submitted to the Bureau of Gambling Control, but there are also big problems with these reports.

Incomplete reports, missing information: The teams’ reports for the first two years reveal that these sports teams raffles are big business, with more than $10 million generated in 2017 alone. Unfortunately, the public has no idea how much of that money is really going to charities because many of the required reports to the Bureau of Gambling Control are incomplete, inaccurate, or missing entirely. Nonetheless, the program has been allowed to continue to operate with virtually no state oversight and scant knowledge of what happens to those dollars. During the initial legislative effort in 2015, the teams’ lobbyists promised veterans organizations they would be beneficiaries of these raffles, but those same groups are opposing AB 888 because that support did not materialize.

Continuing this problematic carve out: The bill that authorized these raffles included a sunset provision, intended to give the legislature an opportunity to review the program’s results before allowing it to continue. The sunset date is the end of this year. Despite the incomplete reporting by the teams thus far, and despite the fact that no review has been conducted of these large-scale raffles to determine whether they are being run in ways that protect the public’s and the nonprofit sector’s interests, Assemblymember Evan Low is authoring a bill (AB 888) to re-authorize these exclusive raffles.

Action step: Please take a moment to sign onto this letter urging a comprehensive audit of these raffles and this program before it is reauthorized. We can’t let this large-scale experiment with pro sports teams raffles continue without a review of what’s happened in the three years since they were authorized.

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