Organizations face shrinking budgets as charitable gaming revenue dwindles

FARGO — Charities are taking a financial hit in an avenue that has been a consistent revenue source for some time. As restaurants and bars shuttered, so did the gaming inside.

The proceeds organizations raise through charitable gaming have plummeted during the pandemic.

Moorhead Youth Hockey’s annual budget is dependent on about 30% of it coming from charitable gaming operations. The organization has about 11 locations in Moorhead, including Vic's Lounge, and surrounding communities with pull tabs, electronic tabs, bingo and other raffles.

“What it ultimately ends up going toward is reducing the cost for kids to play,” said Moorhead Youth Hockey Executive Director Rob Gramer.

Minnesota Gov. Tim Walz announced bars and restaurants could reopen June 1 after nearly 11 weeks of closure. But as of Thursday, May 21, there was no guidance included in regards to reopening charitable gaming, according to an Allied Charities of Minnesota update.

Gramer tallied an estimated loss of around $100,000 that the organization would have expected to receive from their gaming operation at the end of this fiscal year June 30.

Those funds would’ve gone toward offsetting programming costs, such as ice rental bills, tournament entry fees, uniforms and paying coaches and officials, so those fees wouldn’t need to be passed down.

“If you have to get into a situation where you’re doubling, tripling or quadrupling fees to offset the income from charitable gaming, you’re going to put people and families in tough situations to even have their kids be able to play, that are already in tough situations,” Gramer said.

“They may not even be able to have their kids return to play under the current fee structure, so if they quadruple, it’s going to be a major impact on kids being able to play,” he added.

Moorhead Youth Hockey, which has over 600 kids playing on about 50 to 60 teams per year, anticipates at least an equal, if not greater, impact on next year’s fiscal budget, Gramer said.

“It’s hard to anticipate what the total impact is going to be. But if restaurants are at half capacity, there’s that factor,” he said. “And then the other piece is the discretionary income impact of those going out. We don’t know how that impacts their spend on charitable gaming.”

On the North Dakota side, restaurants and bars got the green light to reopen May 1 — after six weeks of establishments being closed to dine-in services — under new guidelines, which included restrictions on gaming.

North Dakota State Gaming Director Deb McDaniel won’t know the actual numbers for quite awhile, but since gaming lost around six weeks because of COVID-19, in looking at the net proceeds ($8,887,134) for the (April, May, June) quarter ended June 30, 2019, and taking one-third of that, McDaniel estimates that charitable gaming lost at least $2 million in net proceeds just for the one month in April.

Estimating that at a minimum, one-third of the activity did not get played for the June 30, 2020, quarter, the net proceeds would be around $6,873,000.

Gaming is also a big part of Fargo Moorhead Community Theatre’s budget. After tax revenue, gaming makes up about 60% of gross revenue, as well as expenses.

Before the pandemic, FMCT operated blackjack at all of its locations throughout the area. Under Gov. Doug Burgum’s ND Smart Restart plan, blackjack tables had to remain closed, though electronic gaming machines could operate if spaced 6-feet apart.

It will be tough to replace the blackjack income considering everything that goes along with protecting people from the virus, FMCT Gaming Director Rick Stenseth said.

Stenseth said it’s too early to start talking about the dollars and lasting effect, but with no revenue for about 42 days, “it has a big impact on our budget at the theater,” he said.

On top of a dwindling budget, FMCT had a structural failure in its building over the winter where a roof beam cracked.

Of all the setbacks, Stenseth said the biggest is to the workforce.

“At our Windbreak location, we have three blackjack tables and a paddle wheel,” he said. “So on any given night, we would have to have people to staff those, six people I’d say. Now I need one to be a cashier for the e-tabs.”

Across town, Fraser, Ltd. knows it's going to have a loss.

The longest serving nonprofit organization in North Dakota is new to the charitable gaming world, but has quickly seen the benefits from operating electronic gaming, blackjack and pull tabs.

“Charities especially, we use our gaming funds to fund programs that don’t receive funding from other places,” said Fraser Gaming Manager Rikki Iverson.

Despite the hurdles, Iverson said Fraser assures people’s needs will get met.

“It’s unfortunate that now we’ll have to be more creative, where we would have had these funds,” she said. “Now we won’t and we’ll have to look to other sources. But that's what nonprofits do, they get creative.”

But, gaming is coming back, and those that love electronic pull tabs, which Fraser operates at Golf Addiction in Fargo, will have new games to play made available in the new quarter, Iverson said.