Indiana Charitable Gaming Rules

Published:

by John Keller, CPA | Amanda Meko, CPA, Partner
Team Members of the Not-for-Profit Services Group

At the Indiana CPA Society Not-For-Profit Conference, representatives from the Charitable Gaming Division of the Indiana Gaming Commission discussed the Commission’s policy for reporting income from charitable gaming activities.

An organization that holds a fundraising event that includes gaming is required to report all revenue and expenses from such events on a Forms CG-8 and CG-21 for an annual charitable gaming license (Form CG-9 and CG-22 for a single event). Everything that the organization takes in as part of the event is considered proceeds from gaming and must be reported on these forms.

The non-gaming parts of the event, such as a meal provided during the event, should not be separated out and should be reported as revenue from a gaming event. The sale of alcohol is permitted at gaming events, but the organization should not take part in selling alcohol or collecting revenues from the sale of alcohol. This should be conducted by the venue itself or an outside contractor brought into the event.

Even when the gaming activity is a small part of the event, it makes the entire event subject to reporting as gaming revenue. For example, if an organization holds an annual dinner and silent auction (which is not gaming because there is not the element of chance to win a prize) and there is a small raffle drawing at the event, the Indiana Gaming Commission considers all of the event’s proceeds as gaming revenue. The Commission’s suggestion for avoiding this is to sell the tickets for the raffle at the silent auction, but hold the drawing on another day. The drawing of the raffle, not the selling of ticket, is what creates a gaming event.

Many organizations use the opportunity of a gaming event to solicit donations from the attendees. The representatives from the Indiana Gaming Commission suggest that to do so the organization should setup a locked box with a sign identifying it as for contributions and have attendees drop their contributions in. The box must remain locked during the event and the money in the box cannot be mixed with the gaming money, nor handled by persons conducting the gaming activity. If this is done, then the contributions from the box do not have to be reported as proceeds from a gaming event.

The Commission also requires that organizations keep a separate bank account for gaming revenue and that the money in that account never be mixed with the operating bank account of the organization. The money in the gaming account can be used to pay for almost any operating expense (except for salaries, taxes and alcohol), but should be paid directly out of the account and not run through the regular operating account.