- Associated Press - Friday, February 6, 2015

FRANKFORT, Ky. (AP) - The Knights of Columbus in Bowling Green used to donate nearly $80,000 a year from its gambling revenues to support local charities, including the Boys and Girls Club and a group that advocates for abused and neglected children in the state’s court system.

But faced with a dwindling audience for its bingo and pull tab games, the organization has shut down its charitable gambling operation and is selling its building.

“It got to the point that we weren’t even making enough to pay our utilities,” said Allen Freeland, the group’s former bingo chairman.

Statewide revenue from charitable gambling, which by law must be reported to the state, has declined by nearly 40 percent in the last decade, from a high of $608 million in 2002 to $365 million in 2013. Service organizations across the state have been feeling the pinch.

“Most of the charities are down,” said Willie Byrd, executive director of Options Unlimited, a charity that helps people with disabilities find work and uses gambling as the primary source of its revenue. “We’re down about 10 percent.”

State lawmakers will consider two bills this month aimed at helping the charitable gambling industry. One would try to attract new players by letting people play an electronic version of pull tabs. The other would seek to ban so-called “Internet sweepstakes cafes” that let people purchase Internet access and win cash prizes while playing online casino-style games.

Kentucky allows paper pull tabs. The game emulates slot machines in that players select which tabs to remove from a ticket in the hopes of revealing a pattern that matches a cash prize. The maximum payout for each pull tab is $599. These games are by far the most popular, accounting for about 74 percent of all charitable gambling revenue in the state, according to Charitable Gaming Commissioner Elizabeth Whitehouse.

Electronic pull tabs work the same way, except the games are played on an iPad-like device. Gambling officials hope they will bring in more money by attracting a younger generation that favors iPad games over other forms of charitable gambling, such as bingo. Virginia began allowing electronic pull tabs for charitable gambling in 2012. Last year, those games brought in $213 million.

Charitable gambling has taken a hit for multiple reasons, including the popularity of the state lottery, waning interest among younger players for games like bingo and the recession that left people with less disposable income.

“High fuel prices (and) smoking bans (were) kind of the perfect storm for driving clients out of the bingo halls,” said John Smith, owner of Lancaster Bingo, a company that sells gaming supplies to charities. “(Electronic pull tabs) gives the opportunity to engage a different clientele.”

Sweepstakes Cafes have opened in several cities and towns across Kentucky. While they offer casino-style games on a computer, they are not regulated under the state’s gambling laws. The Kentucky League of Cities says the cafes are illegal, but concede the law is unclear, making it difficult for local officials to do anything about them. A bill in the state Senate would clarify that sweepstakes cafes are illegal.

“When you are draining away that (charity) money to an illegal activity in my opinion that’s just opportunistic,” said Sen. Mike Wilson, R-Bowling Green and the bill’s primary sponsor.

Both bills are in the Republican-controlled state Senate. Democratic House Speaker Greg Stumbo said he has not looked at the bills would be open to discussing them. Stumbo has filed a bill that would allow the Kentucky Lottery to operate a limited number of casinos in the state. Stumbo said he does not think the bill will pass, but said he wanted to file it to make sure lawmakers keep discussing casino gambling options.

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