Senate File 2314 - Reprinted SENATE FILE BY COMMITTEE ON STATE GOVERNMENT (SUCCESSOR TO SF 2166) Passed Senate, Date Passed House, 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 SF 2314 6 ec/cc/26 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 a member if a bona fide social 2 4 relationship exists between the member and the guest. The 2 5 cost to participate in a card game tournament shall be limited 2 6 to one hundred dollars and shall be the same for every 2 7 participant in the card game tournament. Participants in a 2 8 card game tournament shall be at least twenty=one years of 2 9 age. 2 10 d. Cash or merchandise prizes may be awarded during a card 2 11 game tournament and shall not exceed one thousand dollars and 2 12 no participant shall win more than a total of two hundred 2 13 fifty dollars. A qualified organization representing veterans 2 14 shall distribute amounts awarded as prizes on the day they are 2 15 won and merchandise prizes shall not be repurchased. An 2 16 organization conducting a card game tournament shall only 2 17 display prizes in the playing area of the card game tournament 2 18 that can be won. 2 19 e. The qualified organization representing veterans shall 2 20 conduct each card game tournament and any card game conducted 2 21 during the tournament and shall not contract with or permit 2 22 another person to conduct the card game tournament or any card 2 23 game during the tournament. 2 24 f. No person receives or has any fixed or contingent right 2 25 to receive, directly or indirectly, any profit, remuneration, 2 26 or compensation from or related to a game in a card game 2 27 tournament, except any amount which the person may win as a 2 28 participant on the same basis as the other participants. 2 29 g. A qualified organization representing veterans shall 2 30 not hold more than one card game tournament per week. Card 2 31 game tournaments held under an annual game night license shall 2 32 not count toward the limit of one card game tournament per 2 33 week. With the exception of an annual game night license, no 2 34 more than one card game tournament per week shall be held 2 35 within a structure or building and only one qualified 3 1 organization representing veterans licensed to conduct card 3 2 game tournaments under this section may hold card game 3 3 tournaments within a structure or building. A qualified 3 4 organization representing veterans shall be allowed to hold 3 5 only one card game tournament during a calendar day. 3 6 h. At the conclusion of each card game tournament, the 3 7 person conducting the card game tournament shall announce the 3 8 gross receipts received, the total amount of money withheld 3 9 for expenses, and the amount withheld for state taxes. 3 10 i. The person conducting the card game tournament does 3 11 none of the following: 3 12 (1) Hold, currently, another license issued under this 3 13 section. 3 14 (2) Own or control, directly or indirectly, any class of 3 15 stock of another person who has been issued a license to 3 16 conduct games under this section. 3 17 (3) Have, directly or indirectly, an interest in the 3 18 ownership or profits of another person who has been issued a 3 19 license to conduct games under this section. 3 20 3. The qualified organization representing veterans 3 21 licensed to hold card game tournaments under this section 3 22 shall keep a journal of all dates of events, amount of gross 3 23 receipts, amount given out as prizes, expenses, amount 3 24 collected for taxes, and the amount collected as revenue. 3 25 a. The amount collected by the qualified organization 3 26 representing veterans as revenue is limited to ten percent of 3 27 the gross receipts collected from each event. 3 28 b. Each qualified organization representing veterans shall 3 29 withhold that portion of the gross receipts subject to 3 30 taxation pursuant to section 423.2, subsection 4, which shall 3 31 be kept in a separate account and sent to the state along with 3 32 the organization's quarterly report. 3 33 c. A qualified organization representing veterans licensed 3 34 to conduct card game tournaments is allowed to withhold no 3 35 more than five percent of the gross receipts from each card 4 1 game tournament for qualified expenses. Qualified expenses 4 2 include but are not limited to the purchase of supplies and 4 3 materials used in conducting card games. Any money collected 4 4 for expenses and not used by the end of the calendar year 4 5 shall be donated for educational, civic, public, charitable, 4 6 patriotic, or religious uses as described in section 99B.7, 4 7 subsection 3, paragraph "b". The qualified organization 4 8 representing veterans shall attach a receipt for any donation 4 9 made to the fourth quarter quarterly report required to be 4 10 submitted pursuant to section 99B.2. 4 11 d. Each qualified organization representing veterans 4 12 licensed under this section shall make recordkeeping and all 4 13 deposit receipts available as provided in section 99B.2, 4 14 subsection 2. 4 15 4. An organization wishing to conduct card game 4 16 tournaments pursuant to this section as a qualified 4 17 organization representing veterans shall submit an application 4 18 and annual license fee of two hundred dollars to the 4 19 department. 4 20 Sec. 2. Section 99B.8, Code Supplement 2005, is amended by 4 21 adding the following new subsection: 4 22 NEW SUBSECTION. 6. Notwithstanding any provision of 4 23 section 99B.7 to the contrary, if the games are conducted by a 4 24 qualified organization representing veterans as defined in 4 25 section 99B.7B, or a qualified organization that primarily 4 26 represents volunteer emergency services providers as defined 4 27 in section 100B.11, or a qualified organization that is exempt 4 28 from federal income tax under section 501(c)(3) of the 4 29 Internal Revenue Code and that has conducted an annual game 4 30 night during the period beginning January 1, 2001, and ending 4 31 December 31, 2005, issued a license pursuant to subsection 3, 4 32 the sponsor may award cash or merchandise prizes in any game 4 33 of skill, game of chance, or card game lawfully conducted 4 34 during the annual game night in an amount not to exceed ten 4 35 thousand dollars and no participant shall win more than a 5 1 total of five thousand dollars. 5 2 Sec. 3. Section 99B.9, subsection 1, unnumbered paragraph 5 3 1, Code 2005, 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 2005, 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 Supplement 2005, 5 19 is amended 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 SF 2314 6 17 ec/cc/26