FRANKFORT — Mike Mulroney is worried about Charlize Way.
The Valley Station resident founded the nonprofit just over a decade ago in memory of his mother, Shirley, who died of cancer.
Since then, he has successfully grown the nonprofit organization into a prominent Louisville charity, donating more than $2.7 million to people in need, primarily with cancer-related expenses.
Shirley’s Way relies on revenue from so-called “charity gaming,” which is revenue from electronic pull-tab machines, bingo nights and other games.
Now, Mulroney, 53, worries that his charity’s main source of income is threatened by a bill that Kentucky lawmakers rushed to pass at the end of this year.
Although it appears to have little connection to the world of Kentucky horse racing, the charitable gaming division could soon be governed by a new horse racing corporation created under Senate Bill 299.
Lawmakers passed the bill in the frenetic final days before the Legislature went into veto period in late March, and it now awaits a decision from Gov. Andy Beshear.
Mulroney and other nonprofit leaders who rely on charitable gaming argue that bringing charitable gaming under the aegis of horse racing’s governing body is in the interest of the entire racing sector and the community. We believe that this may pose a threat to our activities.
What changes would SB 299 make?
The 282-page bill includes two prominent Republican leaders with ties to Kentucky’s horse-racing industry: Senate Majority Leader Damon Thayer of Georgetown and House Speaker David Osborne (D-Georgetown). Prospect selection).
SB 299 would turn the Horse Racing Commission into an independent corporation similar to state lottery companies. Currently, the Horse Racing Commission is an independent agency that is part of the state’s Public Protection Cabinet. It oversees live horse racing, historical horse racing, and sports betting.
Under SB 299, beginning July 1, 2025, charitable gaming regulations will be added to the new corporation’s purview. Charity gaming now has its own department within the Civil Protection Cabinet.
“A pretty fundamental change in the balance of power.”
SB 299 includes language stating that “charitable gaming…is an important method of raising funds for legitimate charitable purposes and is in the public interest,” and Osborne said the measure would have a negative impact on the charitable gaming sector. He refused to give it.
The goal of the bill is to “ensure that Kentucky gaming, in all its forms, is operated with the highest level of integrity and operated in the most responsible manner,” Osborn said. said this in a floor debate in March.
“The reality is, with one small exception, this doesn’t affect the charity game,” Osborne said.
But by placing charity gaming under the same agency that regulates horse racing, nonprofit leaders worry that their voices and concerns will be diminished.
Once SB 299 goes into effect, the new horse racing corporation will be governed by a 15-member board of directors. Only two seats will be reserved for representatives of the charity gaming sector, but eight members must be from horse racing and three from the gaming industry.
The Charitable Gaming Department currently has nine staff, including its own commissioner. There will also be an advisory board of up to nine members, with seats reserved for representatives of organizations that rely on charity games, such as Catholic groups and veterans groups.
“This is a pretty fundamental shift in the balance of power in terms of how charity gaming is regulated and licensed,” said Jason Hall, executive director of the Kentucky Catholic Conference.
He worries that the charitable gaming sector loses out every time a regulatory dispute arises.
“Under the new system, if a racetrack or racing official wants to limit charity poker tournaments or whatever it is, and if there is a reduction in the number of licenses in the future or something like that, we will “We’re going to lose the vote,” Hall said.
He also worries that the new structure will impose regulations on charity games that are difficult for volunteers and small nonprofits to navigate.
“If the administrative burden is too high, it becomes impractical for schools and parishes to hold raffles to raise money for something,” Hall said.
“Of course it would be in the interest of the commercial gaming industry to do that, because it would be in their interest if fewer games were played outside of their direct control and profit structure,” Hall added.
One year suspension of new electronic pull tab installations
Another change that concerns Mulrooney, founder of Shirley’s Way, is the one-year moratorium on licensing new electronic pull tab locations starting July 1, 2024.
With the decline of in-person games like bingo, Shirley’s Way turned to electronic pull tabs, a game of chance, as a way to raise money for the community, Mulroney said.
Shirley’s Way currently operates electronic pull-tab machines at 32 locations in the Louisville area and plans to install machines at five new locations in the near future, Mulroney said.
Mulrooney said electronic pull tab machines are a win-win for the community, and Shirley’s Way regularly receives requests from bars and restaurants to install new machines.
Electronic pull-tab machines bring customers into restaurants and bars, giving people something fun to do while raising money for charities, he said.
“If they stop us, a lot of people are going to get hurt,” Mulroney told the Courier-Journal.
Brian Stinnett is the executive director of Options Unlimited, which uses electronic pull-tab machines and bingo to help fund services for people with disabilities.
Like Mulroney, Stinnett worries this bill could be the beginning of the end for electronic pull-tab machines for charity fundraising.
“If we lose these machines, we basically have to look at other ways to continue providing service,” Stinnett said. “It would be tough without these machines.”
Are charity games a threat to other forms of gaming?
Osborne, the bill’s House sponsor, said one of the motivations for moving charity gaming to a new horse racing corporation was to create a specialized system that would require criminal background checks and strict ethics rules for charity gaming, just like other areas of gaming. The key is to ensure that an appropriate oversight committee is established.
He points out that charity gaming income has increased dramatically over the past few years, which is backed up by Charity Gaming Authority figures.
According to the Charity Gaming Sector’s annual report analyzed by The Courier Journal, total (gross) revenue from charity gaming was approximately $434 million in 2018, but by 2023 that amount could rise to as much as $794 million. It is said to reach a million dollars.
Still, as of 2023, it will represent only a small portion of the state’s overall gaming business, just 6%, according to the annual report.
From 2018 to 2019, charitable gaming accounted for a much higher share of total legal gaming revenue in the state, at about 20%.
Charitable gaming regulations require that at least 40% of net revenues be donated to charitable causes, and in 2023, just over 64% of industry-wide net revenues were donated to charitable causes.
Urgent work?
Mr. Hall, the general secretary of the Catholic Conference, is disappointed that so little time has been given to consider a bill that, from his point of view, would bring about major changes. He said he first learned about the bill Tuesday night and had received full parliamentary approval by Thursday.
Hall said he registered to testify at a House committee hearing but was not given the opportunity to speak before the committee voted to approve the bill.
“I’ve been here a long time. I understand that sometimes legislation moves quickly,” Hall said. “But usually at least you know what is being discussed, you have a draft bill on the subject, and you can see where things are heading.
When the bill was first heard in a joint committee of the House and Senate, Hall said, “I had no idea until Tuesday morning that charitable gambling would be placed under the jurisdiction of the Horse Racing Corporation.” “And that completely eliminates the possibility of doing careful analysis and engaging with feedback.”
Hall said he thinks the rushed schedule was intentional.
“I think it gave the impression that no one was against this,” Hall said. “I think that’s why it turned out the way it did… to prevent people from organizing any sort of protest or even really understanding what’s going on with what’s already been done. ”
Mulroney shared that concern, saying he had no idea the changes were coming and, like many others, didn’t have time to read the 282-page document before it was passed.
The bill began life as a “shell bill” introduced by Senator Thayer in late February. A shell bill is a short placeholder bill that lawmakers fill in with the actual version later.
The actual version of the 282-page bill was first unveiled at a joint committee hearing on March 26 and was ready to be sent to the governor for consideration two days later.
Thayer, the bill’s lead sponsor, dismissed concerns about transparency and timelines.
“This topic feels like it’s been in the public domain for several weeks,” Thayer said, pointing to a news article and an earlier, separate version of the proposal that was now attached to a separate bill. It pointed out. he was stuck. “So this concept started its transparency journey a while ago.”
The bill is currently awaiting Beshear’s decision. Last week, he expressed concern about having an independent body with full regulatory and enforcement powers, but he did not say whether he would veto it.
Contact Rebecca Grapevine at rgrapevine@courier-journal.com. Or follow @RebGrapevine on X, formerly known as Twitter.
