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MEMORANDUM TO: Mayor Fahey and Members of the City Council FROM: Joel Hanson, City Administrator DATE: March 5, 2004 RE: Gambling Compliance Issues Update Below is a brief update on the issues that the gambling subcommittee (Mayor Fahey, Council Member LaValle, Kathy Glanzer, and I) have been working on as it relates to any assistance the City can provide in addressing gambling compliance concerns for the organizations operating at the Little Canada Bingo Hall: • Rent — Discussions have been held with the landlord relative to the rent being charged to the charitable gambling organizations operating at the Little Canada Bingo Hall. State Statutes allow a maximum rent of $300 per session based on the square footage of the bingo hall. The current rent being charge is $238.40 per session. However, when compared to the other large space tenants in the Market Place Shopping Center, it appears reasonable to assume the rent per session could be lowered. • Concession Stand — The landlord currently has a separate lease with the Vitale's covering their operation of the concession stand that serves the bingo hall. (This lease expires in 2007.) The charitable gambling organizations have expressed concern that they receive no revenue from a concession stand whose sole customer base are the bingo players. The charitable gambling organizations point out any revenues that could be derived from the concession stand would be non - gambling revenues, therefore, would go to their general funds. In the event that the organizations have compliance issues, these non - gambling revenues could be utilized to buy back compliance. • Operational Issues for the Charities — The committee has had discussions with the charities relative to the need to increase profits and decrease expenses. The charities are currently looking at ways to revamp their bingo programs so that less prize money is paid out, thus increasing profits. The charities are also looking at staffing issues to determine if adjustments can be made to decrease compensation expenses. • Gambling Ordinance Amendment — As you know, the City is considering an amendment to its Gambling Ordinance to clarify requirements relative to the 10% Fund required contribution. These adjustments take into account months where charities do not make a net profit as well as months where compliance buy -backs were necessary.