Audit finds problems in state gambling oversight

Wednesday, Jan. 19, 2005 | 9:14 a.m.

ST. PAUL -- State auditors have found that charitable causes supported by legalized gambling in Minnesota are being shortchanged as more than 40 percent of the groups sponsoring gambling spend too much of their revenue on business expenses.

The Office of the Legislative Auditor reported Tuesday that 43 percent of the more than 1,400 licensed nonprofits that run charitable gambling are spending more than 55 percent of their profits -- gross receipts minus prizes -- on business expenses.

That's a violation of state law, but it's gone undetected because of a quirk in the way compliance is checked, the audit said.

"The amount of money consumed by gambling business expenses is important because it affects the amount of money available for charities," the audit said.

Those business expenses include paying rent and employees and the cost of goods, among a number of others.

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