Liquor Permit Holders
Pursuant to Ohio Administrative Code § 4301:1-1-53, “Regulation 53”, liquor permit holders are prohibited from operating any gambling device or conducting any game of chance (poker, video bingo and poker machines, craps, tip ticket dispensing machines, slot machines, etc.) or scheme of chance (tip tickets, illegal lottery, numbers game, etc.) on the liquor permit premises. A gambling device is defined by the Ohio Revised Code as, any ticket, token, or other device representing a chance or interest in a scheme of chance. Regulation 53 also prohibits liquor permit holders from conducting a bingo operation on the liquor premises (see exception below for the sale of instant bingo tickets). However, Regulation 53 does provide for a very narrow exception to allow charitable organizations to conduct schemes of chance, provided that there is strict compliance with Ohio law (see below). The Investigative Unit of the Ohio Department of Public Safety in conjunction with local law enforcement is responsible for policing such activity in Ohio’s liquor permit establishments.
Instant Bingo Tickets (comparable to the instant winner tickets from the Ohio Lottery), which are considered a game of chance and therefore subject to the general prohibition of Regulation 53, may be conducted by a liquor permit holder, provided that the following criteria can be met:
- The sales are conducted on behalf of an organization that has received a letter from the IRS stating that it is tax exempt under Section 501(c)(3) of the Internal Revenue Code and meeting the definition of a charitable organization as defined in the Section 2915 of the Ohio Revised Code;
- No persons are compensated, directly or indirectly, for selling the tickets (the “volunteer requirement”); and
- All money received from the sales, after deduction of prizes paid out, are used by, given or donated to the charitable organization.
The Ohio Supreme Court decided in Freedom Road Foundation v. Ohio Dept. of Liquor Control, 80 Ohio St.3d 202 (1997), that instant bingo tickets could be sold on behalf of the charitable organization, as defined under Ohio law, by the liquor permit owners and their employees as long as they are not compensated for their assistance. The Supreme Court made two very important determinations as follows:
- In “conducting” the sale of tickets, the charity does not have to be on the premises. Further, charitable organizations may conduct a game of chance despite the fact that the owner and/or employees of the permit premises actually “carry on” that activity; and
- Permit holders and their employees may receive nothing in the nature of compensation for operating the fundraising activity. They must participate voluntarily. The benefit of increased patronage does not fall within the prohibited class of compensation listed in ORC § 2915.02.
The most frequent citations issued by the Investigative Unit concerns the manner in which proceeds from the sale of instant bingo or pull-tabs are disbursed. Ohio law prohibits such proceeds from being “split” in any manner between the liquor permit holder and the charity. Ohio law requires all proceeds from the sales of instant bingo or pull-tabs to be donated to charitable organizations. Permit holders may not charge an administrative fee or receive any other form of compensation for the sale of tip tickets on their premises.
Holders of a temporary “F” liquor permit who meet the definition of a charitable organization as defined in the Section 2915 of the Ohio Revised Code (including the two-year existence requirement, if applicable), may conduct games of chance, provided the temporary permit holder owns the facility being used or has leased the facility. The gambling activity may only be conducted for fundraising purposes for the charitable organization.