I previously posted regarding use of Proceeds under proposed 11VAC20-30-30 which imposes the use of proceeds formula applicable to bingo.

• The math simply doesn’t work to use the bingo formula for poker. Instead, the electronic gaming formula properly applies.

Apparently the error applying the bingo formula based on gross proceeds is in the statute itself. VDACS is responsible to establish the percentage of gross proceeds to be used for use of proceeds. Since it needs to be based on gross proceeds as opposed to adjusted gross proceeds, the percentage needs to be in the 1-1.5% range for the math to work out. (This is the effective UOP using the formula recently adopted by VDACS for electronic pull tabs).

For example, if 90% of gross receipts are returned as prizes, after paying the operator*, rent, utilities, security, insurance, etc., there may be some left over for charitable expenditures, in any, in the neighborhood of 1-1.5% of gross receipts.

* The proposed regulations require that the payment to the operator be a flat fee. As can be seen from looking at the math, this could cause harm to the charity for events that have relatively less gross revenue because the charity will be contractually obligated for the full flat fee, regardless of how successful any given tournament is. Permitting the operator fee to be tied to the success of the event by percentage would work better.