Sponsors, gaming board at odds over rules for veterans’ club gaming expenses; committee punts bill

House Bill 241, a proposal to amend definitions in the Gaming Control Act to restore or clarify a list of allowable gaming expenses for licensed nonprofit clubs, drew sharply different accounts from veterans’ organization representatives and officials from the Gaming Control Board during a Commerce & Economic Development committee hearing.

Veterans and fraternal nonprofit leaders told the committee the change is needed to make small, post-run gaming operations viable. "These are not the Taj Mahals of the world... these are shoestring budget operations," Richard Gay, who said he represents veteran organizations, told the panel. Bill Jennings, who identified himself as president of the Veterans and Fraternal Nonprofit Organization in New Mexico and commander of the American Legion department, said his post had eight slot machines but ceased operations after the board changed its enforcement of allowable-game expense rules; Jennings said his post previously took in roughly $95,000 to $100,000 a year on eight machines and that removing the expense list made operations unviable.

The Gaming Control Board opposed the bill in testimony, saying the statutory change would alter how revenue distribution is calculated and could reduce required charitable distributions. Michelle Pado, staff counsel for the Gambling Control Board, told the committee the board had changed a prior practice at the clubs’ request so that the gaming manager does not deduct allowable expenses before transferring funds; instead, the parent organization should pay expenses to maintain oversight and avoid gaming managers holding funds. The board’s audit division also warned that adding the itemized allowable-expense list affects percentage calculations used to determine contributions to charity and could reduce funds going to charitable purposes.

Committee members asked detailed questions about lease agreements for gaming machines, who is responsible for repairs and maintenance, and why the board had altered its prior practice. Veterans’ witnesses said many clubs lease machines under revenue-share leases and need clear statutory authority to pay expenses out of gaming proceeds. The Gaming Control Board said the earlier practice was stopped largely because clubs reported managers were holding funds at the manager’s desk and clubs asked to stop that process.

After extended Q&A, the committee elected to roll the bill rather than hold a vote, asking the Gaming Control Board and the sponsor to meet and clarify the operational and regulatory disconnects, and to report back to the committee if a negotiated solution emerges.