House File 300HOUSE FILE BY QUIRK Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act concerning the licensure, operation, and taxation of card 2 game tournaments by organizations representing veterans and 3 allowable prizes at annual game nights. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1815HH 82 6 ec/es/88 PAG LIN 1 1 Section 1. NEW SECTION. 99B.7B CARD GAME TOURNAMENTS 1 2 CONDUCTED BY QUALIFIED ORGANIZATIONS REPRESENTING VETERANS. 1 3 1. As used in this section, unless the context otherwise 1 4 requires: 1 5 a. "Card game" means only poker, pinochle, pitch, gin 1 6 rummy, bridge, euchre, hearts, or cribbage. 1 7 b. "Qualified organization representing veterans" means 1 8 any licensed organization representing veterans, which is a 1 9 post, branch, or chapter of a national association of veterans 1 10 of the armed forces of the United States which is a federally 1 11 chartered corporation, dedicates the net receipts of a game of 1 12 skill, game of chance, or raffle as provided in section 99B.7, 1 13 is exempt from federal income taxes under section 501(c)(19) 1 14 of the Internal Revenue Code as defined in section 422.3, has 1 15 an active membership of not less than twelve persons, and does 1 16 not have a self=perpetuating governing body and officers. 1 17 2. Notwithstanding any provision of this chapter to the 1 18 contrary, card game tournaments lawfully may be conducted by a 1 19 qualified organization representing veterans if all of the 1 20 following are complied with: 1 21 a. The organization conducting the card game tournament 1 22 has been issued a license pursuant to subsection 4 and 1 23 prominently displays that license in the playing area of the 1 24 card game tournament. 1 25 b. The card games to be conducted during a card game 1 26 tournament, including the rules of each card game and how 1 27 winners are determined, shall be displayed prominently in the 1 28 playing area of the card game tournament. Each card game 1 29 shall be conducted in a fair and honest manner and shall not 1 30 be operated on a build=up or pyramid basis. Every participant 1 31 in a card game tournament must be given the same chances of 1 32 winning the tournament and shall not be allowed any second 1 33 chance entries or multiple entries in the card game 1 34 tournament. 1 35 c. Participation in a card game tournament conducted by a 2 1 qualified organization representing veterans shall only be 2 2 open to members of the qualified organization representing 2 3 veterans and guests of members of the qualified organization 2 4 participating in the tournament. The cost to participate in a 2 5 card game tournament shall be limited to one hundred dollars 2 6 and shall be the same for every participant in the card game 2 7 tournament. Participants in a card game tournament shall be 2 8 at least twenty=one years of age. 2 9 d. Cash or merchandise prizes may be awarded during a card 2 10 game tournament and shall not exceed one thousand dollars and 2 11 no participant shall win more than a total of five hundred 2 12 dollars. A qualified organization representing veterans shall 2 13 distribute amounts awarded as prizes on the day they are won 2 14 and merchandise prizes shall not be repurchased. An 2 15 organization conducting a card game tournament shall only 2 16 display prizes in the playing area of the card game tournament 2 17 that can be won. 2 18 e. The qualified organization representing veterans shall 2 19 conduct each card game tournament and any card game conducted 2 20 during the tournament and shall not contract with or permit 2 21 another person to conduct the card game tournament or any card 2 22 game during the tournament. 2 23 f. No person receives or has any fixed or contingent right 2 24 to receive, directly or indirectly, any profit, remuneration, 2 25 or compensation from or related to a game in a card game 2 26 tournament, except any amount which the person may win as a 2 27 participant on the same basis as the other participants. 2 28 g. A qualified organization representing veterans licensed 2 29 under this section shall not hold more than one card game 2 30 tournament per week. Card game tournaments held under an 2 31 annual game night license shall not count toward the limit of 2 32 one card game tournament per week for a license holder. A 2 33 qualified organization representing veterans shall be allowed 2 34 to hold only one card game tournament during any 2 35 twenty=four=hour period. 3 1 h. At the conclusion of each card game tournament, the 3 2 person conducting the card game tournament shall announce the 3 3 gross receipts received, the total amount of money withheld 3 4 for expenses, and the amount withheld for state taxes. 3 5 i. The person conducting the card game tournament does 3 6 none of the following: 3 7 (1) Hold, currently, another license issued under this 3 8 section. 3 9 (2) Own or control, directly or indirectly, any class of 3 10 stock of another person who has been issued a license to 3 11 conduct games under this section. 3 12 (3) Have, directly or indirectly, an interest in the 3 13 ownership or profits of another person who has been issued a 3 14 license to conduct games under this section. 3 15 3. The qualified organization representing veterans 3 16 licensed to hold card game tournaments under this section 3 17 shall keep a journal of all dates of events, amount of gross 3 18 receipts, amount given out as prizes, expenses, amount 3 19 collected for taxes, and the amount collected as revenue. 3 20 a. The amount collected by the qualified organization 3 21 representing veterans as revenue shall be no less than ten 3 22 percent of the gross receipts collected from each event. 3 23 b. Each qualified organization representing veterans shall 3 24 withhold that portion of the gross receipts subject to 3 25 taxation pursuant to section 423.2, subsection 4, which shall 3 26 be kept in a separate account and sent to the state along with 3 27 the organization's quarterly report. 3 28 c. A qualified organization representing veterans licensed 3 29 to conduct card game tournaments is allowed to withhold no 3 30 more than five percent of the gross receipts from each card 3 31 game tournament for qualified expenses. Qualified expenses 3 32 include but are not limited to the purchase of supplies and 3 33 materials used in conducting card games. Any money collected 3 34 for expenses and not used by the end of the calendar year 3 35 shall be donated for educational, civic, public, charitable, 4 1 patriotic, or religious uses as described in section 99B.7, 4 2 subsection 3, paragraph "b". The qualified organization 4 3 representing veterans shall attach a receipt for any donation 4 4 made to the fourth quarter quarterly report required to be 4 5 submitted pursuant to section 99B.2. 4 6 d. Each qualified organization representing veterans 4 7 licensed under this section shall make recordkeeping and all 4 8 deposit receipts available as provided in section 99B.2, 4 9 subsection 2. 4 10 4. An organization wishing to conduct card game 4 11 tournaments pursuant to this section as a qualified 4 12 organization representing veterans shall submit an application 4 13 and annual license fee of one hundred dollars to the 4 14 department. 4 15 Sec. 2. Section 99B.8, Code 2007, is amended by adding the 4 16 following new subsection: 4 17 NEW SUBSECTION. 6. a. Notwithstanding any provision of 4 18 section 99B.7 to the contrary, if the games are conducted by 4 19 an eligible qualified organization issued a license pursuant 4 20 to subsection 3, the sponsor may award cash or merchandise 4 21 prizes in any game of skill, game of chance, or card game 4 22 lawfully conducted during the annual game night in an amount 4 23 not to exceed ten thousand dollars and no participant shall 4 24 win more than a total of five thousand dollars. 4 25 b. For purposes of this subsection, an "eligible qualified 4 26 organization" means any of the following: 4 27 (1) A qualified organization representing veterans as 4 28 defined in section 99B.7B. 4 29 (2) A qualified organization that primarily represents 4 30 volunteer emergency services providers as defined in section 4 31 100B.31. 4 32 (3) A qualified organization that is exempt from federal 4 33 income tax under section 501(c)(3) of the Internal Revenue 4 34 Code and that has conducted an annual game night during the 4 35 period beginning January 1, 2001, and ending December 31, 5 1 2006. 5 2 Sec. 3. Section 99B.9, subsection 1, unnumbered paragraph 5 3 1, Code 2007, is amended to read as follows: 5 4 Except as otherwise permitted by section 99B.3, 99B.5, 5 5 99B.6, 99B.7, 99B.7B, 99B.8, 99B.11, or 99B.12A, it is 5 6 unlawful to permit gambling on any premises owned, leased, 5 7 rented, or otherwise occupied by a person other than a 5 8 government, governmental agency, or governmental subdivision, 5 9 unless all of the following are complied with: 5 10 Sec. 4. Section 99B.12, subsection 1, unnumbered paragraph 5 11 1, Code 2007, is amended to read as follows: 5 12 Except in instances where because of the location of the 5 13 game or the circumstances of the game section 99B.3, section 5 14 99B.5, section 99B.6, section 99B.7, section 99B.7B, section 5 15 99B.8, or section 99B.9 is applicable, individuals may 5 16 participate in gambling specified in subsection 2, but only if 5 17 all of the following are complied with: 5 18 Sec. 5. Section 423.2, subsection 4, Code 2007, is amended 5 19 to read as follows: 5 20 4. A tax of five percent is imposed upon the sales price 5 21 derived from the operation of all forms of amusement devices 5 22 and games of skill, games of chance, raffles, and bingo games 5 23 as defined in chapter 99B, and card game tournaments conducted 5 24 under section 99B.7B, that are operated or conducted within 5 25 the state, the tax to be collected from the operator in the 5 26 same manner as for the collection of taxes upon the sales 5 27 price of tickets or admission as provided in this section. 5 28 Nothing in this subsection shall legalize any games of skill 5 29 or chance or slot=operated devices which are now prohibited by 5 30 law. 5 31 The tax imposed under this subsection covers the total 5 32 amount from the operation of games of skill, games of chance, 5 33 raffles, and bingo games as defined in chapter 99B, card game 5 34 tournaments conducted under section 99B.7B, and musical 5 35 devices, weighing machines, shooting galleries, billiard and 6 1 pool tables, bowling alleys, pinball machines, slot=operated 6 2 devices selling merchandise not subject to the general sales 6 3 taxes and on the total amount from devices or systems where 6 4 prizes are in any manner awarded to patrons and upon the 6 5 receipts from fees charged for participation in any game or 6 6 other form of amusement, and generally upon the sales price 6 7 from any source of amusement operated for profit, not 6 8 specified in this section, and upon the sales price from which 6 9 tax is not collected for tickets or admission, but tax shall 6 10 not be imposed upon any activity exempt from sales tax under 6 11 section 423.3, subsection 78. Every person receiving any 6 12 sales price from the sources described in this section is 6 13 subject to all provisions of this subchapter relating to 6 14 retail sales tax and other provisions of this chapter as 6 15 applicable. 6 16 EXPLANATION 6 17 This bill provides for the operation of card game 6 18 tournaments by qualified organizations representing veterans 6 19 and allowable prizes at annual game nights conducted by 6 20 certain authorized organizations. 6 21 The bill establishes new Code section 99B.7B, providing for 6 22 card game tournaments conducted by a qualified organization 6 23 representing veterans. The bill defines "card game" to mean 6 24 only poker, pinochle, pitch, gin rummy, bridge, euchre, 6 25 hearts, or cribbage. The bill provides that only qualified 6 26 organizations representing veterans can conduct a card game 6 27 tournament and provides for a $100 annual license fee. The 6 28 bill requires the organization to display the card games to be 6 29 conducted during a tournament, including the rules and manner 6 30 of determining winners for each game. The bill provides that 6 31 participation in a tournament shall be open to members and 6 32 guests of the qualified organization and the cost to 6 33 participate shall not be more than $100. A person under age 6 34 21 cannot participate. 6 35 The bill provides that cash or merchandise of up to $1,000 7 1 can be awarded at a tournament and no participant shall win 7 2 more than a total of $500. The bill also provides that an 7 3 organization holding a license can hold no more than one 7 4 tournament a week and only one tournament can be conducted by 7 5 a qualified organization in any 24=hour period. Card game 7 6 tournaments held under an annual game night license shall not 7 7 count toward the number of tournaments allowed. The bill also 7 8 provides that the qualified organization licensed to conduct 7 9 card game tournaments shall keep records of the dates of 7 10 events, the amount of gross receipts, the amount of prizes 7 11 awarded, expenses, amount collected for taxes, and revenue 7 12 collected for conducting card game tournaments. The bill 7 13 requires qualified organizations to collect at least 10 7 14 percent of gross receipts collected from each event as revenue 7 15 and to withhold no more than 5 percent of gross receipts for 7 16 expenses incurred in holding card game tournaments. Of the 7 17 amount withheld for expenses, any amounts collected but unused 7 18 for expenses by the end of a calendar year shall be donated 7 19 for charitable purposes. Any amounts donated shall be 7 20 indicated on the quarterly reports required to be submitted to 7 21 the department of inspection and appeals pursuant to Code 7 22 section 99B.2. 7 23 Code section 99B.8, concerning annual game nights, is also 7 24 amended to allow certain eligible qualified organizations to 7 25 award cash or merchandise prizes of up to a total of $10,000 7 26 with no more than $5,000 awarded to any participant. The bill 7 27 defines eligible qualified organizations as a qualified 7 28 organization representing veterans, a qualified organization 7 29 representing volunteer emergency services providers, and a 7 30 qualified organization exempt from federal taxes under section 7 31 501(c)(3) of the Internal Revenue Code that has held a game 7 32 night between January 1, 2001, and December 31, 2006. 7 33 The bill further amends Code section 423.2, concerning 7 34 sales taxes, to specifically provide that sales taxes shall be 7 35 imposed on card game tournaments in the same manner as for 8 1 other games as defined in Code chapter 99B. 8 2 LSB 1815HH 82 8 3 ec:nh/es/88