KRS 238.550: Standards for management and accounting of funds -- Reports --

Charitable gaming expenses.

(1) All adjusted gross receipts from charitable gaming shall be handled only by

chairpersons, officers, or employees of the licensed charitable organization.

(2) Except as authorized by subsection (11) of this section, within five (5) business

days after the completion of a charitable gaming event or session, all gross receipts

and adjusted gross receipts shall be deposited into one che cking account devoted

exclusively to charitable gaming. This checking account shall be designated the

"charitable gaming account," and the licensed charitable organization shall maintain

its account at a financial institution located in the Commonwealth of Kentucky.

Other funds shall not be deposited or transferred into the charitable gaming account.

(3) All payments for charitable gaming expenses, payments made for prizes purchased,

and any charitable donations from charitable gaming receipts shall be made from

the charitable gaming account and the payments or donations shall be made only by

bona fide officers of the organization by checks having preprinted consecutive

numbers and made payable to specific persons or organizations. No check drawn on

the charitable gaming account may be made payable to "cash," or "bearer," except

that a licensed charitable organization may withdraw start -up funds for a charitable

gaming event or session from the charitable gaming account by check made payable

to "cash" or "bea rer," if these start -up funds are redeposited into the charitable

gaming account together with all adjusted gross receipts derived from the particular

event or session. Checks shall be imprinted with the words "charitable gaming

account" and shall contain the organization's license number on the face of each

check. Payments for charitable gaming expenses, prizes purchased, and charitable

donations may be made by electronic funds transfer if the payments are made to

specific persons or organizations. The corporation may by administrative regulation

adopt alternative reporting requirements for charitable gaming of limited scope or

duration, if these requirements are sufficient to ensure accountability for all moneys

handled.

(4) A licensed charitable organizat ion shall expend net receipts exclusively for

purposes consistent with the charitable, religious, educational, literary, civic,

fraternal, or patriotic functions or objectives for which the licensed charitable

organization received and maintains federal tax-exempt status, or consistent with its

status as a local school district, a common school, an institution of higher education,

or a state college or university. No net receipts shall inure to the private benefit or

financial gain of any individual.

(5) Accurate records and books shall be maintained by each organization exempt from

licensure under KRS 238.535(1) and each licensed charitable organization for a

period of three (3) years. Office staff shall have access to these records at

reasonable times. Licensed charitable organizations and exempt organizations shall

maintain their charitable gaming records at their offices or places of business within

the Commonwealth of Kentucky as identified in their license applications or

applications for exempt status. An exempt organization shall submit a yearly

financial report in accordance with KRS 238.535(2), and failure to file this report

shall constitute grounds for revocation of the organization's exempt status.

(6) All licensed charitable organizations that have annual gross receipts of two hundred

thousand dollars ($200,000) or less and do not have a weekly bingo session shall

report to the office annually at the time and on a form established in administrative

regulations promulgated by the corporation.

(7) All other licensed charitable organizations shall submit reports to the office at least

quarterly at the time and on a form established in administrative regulations

promulgated by the corporation.

(8) Failure by a licensed charitable organization to file r eports required under this

chapter shall constitute grounds for revocation of the organization's license or

denial of the organization's application to renew its license in accordance with KRS

238.560(4). Reports filed by a licensed charitable organization shall include but

shall not be limited to the following information:

(a) All gross receipts received from charitable gaming for the reporting period,

classified by type of gaming activity;

(b) The names and addresses of all persons who are winners of priz es having a

fair market value of six hundred dollars ($600) or more;

(c) All expenses paid and the names and addresses of all persons to whom

expenses were paid;

(d) All net receipts re tained and the names and addresses of all charitable

endeavors that received money from the net receipts; and

(e) Any other information the office deems appropriate.

(9) A licensed charitable organization shall not incur charitable gaming expenses,

except as provided in this chapter. A licensed charitable organization shall not be

permitted to expend amounts in excess of prevailing market rates for the following

charitable gaming expenses:

(a) Charitable gaming supplies and equipment;

(b) Rent;

(c) Utilities;

(d) Insurance;

(e) Advertising;

(f) Janitorial services;

(g) Bookkeeping and accounting services;

(h) Security services;

(i) Membership dues for its participation in any charitable gaming trade

organization; and

(j) Any other expenses the corporation ma y determine by administrative

regulation to be legitimate.

(10) A licensed charitable organization shall not expend receipts from charitable gaming

activities nor incur expenses to form, maintain, or operate as a labor organization.

(11) For the purposes o f deposits under subsection (2) of this section, a licensed

charitable organization conducting charitable gaming events or sessions shall only

be required to deposit its gross receipts and adjusted gross receipts one (1) time per

week if the following conditions are met:

(a) The charitable gaming involves only games using charity game tickets;

(b) The charitable gaming is not part of a charity fundraising event; and

(c) The licensed charitable organization's deposits of gross receipts and adjusted

gross rec eipts from charitable gaming total less than two thousand five

hundred dollars ($2,500) in the week prior to the deposit.