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Tip jar profits on the rise

March 04, 2002|BY SCOTT BUTKI

Sales of tip jars declined in Washington County in the last fiscal year but the amount of money earned from the sales increased, according to Washington County Gaming Office documents.

Gaming Office Director Lisa Kalkbrenner said she thinks the apparent contradiction has a simple explanation: Businesses and clubs are buying fewer jars, but they are buying bigger ones containing more tickets and with larger payouts, she said.

Small jars have about 200 to 500 $1 tickets, while large jars have more than 1,000 $1 tickets, she said. The small tip jars cost about $7 and the large ones about $49.

The switch to larger jars is probably due to a state law that took effect at the start of fiscal year 2001 which allows tavern owners to keep a larger share of the profits, she said.

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People gambled $75.8 million on tip jars in Washington County in fiscal 2001 - an average of about $207,200 a day, according to Gaming Office documents. That is compared with $62.8 million gambled in fiscal 2000.

Fiscal year 2001 lasted from July 1, 2000, to June 30, 2001.

Tavern owners previously kept either $45 profit on each tip jar they sold or 50 percent of the profits before taxes, whichever was lower.

When the law changed, tavern owners were permitted to keep 50 percent of the profits, even if the sales were on a more expensive jar.

The law was intended to create larger tip jar games, which would make more money available for distribution to charities.

The law appears to have worked.

Bigger jars sold

Carmen Harbaugh, who sells tip jars wholesale at Harbaugh Coin Machines Inc. in Hagerstown, said she has noticed tavern owners might buy, for example, three large jars instead of four of a smaller size.

Lou Thomas, owner of the Yellow House Tavern in Boonsboro and a former member of the Gaming Commission, said he and other tavern owners have switched to larger jars because customers want the larger payouts.

Some clubs are buying the bigger jars to remain competitive with private businesses, said Jack Tritsch, president of the Washington County Club Association.

About 105 businesses, clubs and fire and rescue companies sold tip jars in fiscal 2000, and about the same in 2001.

In fiscal 2001, 92,898 tip jars were sold, Gaming Office documents said. That compares with 96,351 sold in fiscal 2000.

Total gross proceeds from the tip jars - the amount of proceeds before expenses - increased from about $10.4 million in fiscal 2000 to about $10.8 million in fiscal 2001.

The greater the proceeds, the larger the amount of money that goes to the Washington County Gaming Commission, which distributes half of the tip jar profits for a given period to nonprofit organizations. The other half goes to the Washington County Volunteer Fire and Rescue Association, as mandated by state law.

Taverns give 50 percent of tip jar profits to the commission and clubs give 15 percent. The fire and rescue companies are not obligated to give any money to the commission.

Gaming fund distributions, for nonprofits and fire and rescue companies, increased from about $2.44 million in fiscal 2000 to about $2.55 million in fiscal 2001, Gaming Office documents said.

Distributions increase

The amount of money distributed by the commission has increased steadily since the law was passed in 1995. That has allowed the commission to fund many of the requests it receives, commission Chairwoman Debbie Murphy said.

While gross proceeds are up at taverns and fire and rescue companies, they are down at clubs.

Clubs are trying to find ways to deal with the reduction, including selling more expensive jars, Tritsch said.

The club sales and proceeds are down for a few reasons, he said.

Some club members have shortened their visits - spending less on tip jars - because of tougher laws against drinking and driving, he said.

In addition, he said, members of veterans organizations are dying and are not being replaced by newer members.

The biggest problems may be competition from taverns and from outside the county, Tritsch said.

It's more convenient for some people to stop at a tavern or other business than at a club, he said.

There is also competition from Charles Town Races' slot machines, Tritsch said.

When people gamble there, "that is money that's not being gambled in Washington County," he said.

Slots competition

Charles Town Races wasn't much of a problem when it offered only horse racing, but slot machines are a different story, Tritsch said.

He said he is concerned the impact of Charles Town Races will be even greater following the West Virginia Lottery Commission's approval of a request to install an additional 1,500 slot machines, bringing the total number of machines at the track to 3,500.

There have been slot machines at Charles Town since 1997 but the number of machines remained under 1,000 until fiscal 2000.

Charles Town Races President Jim Buchanan said 34 percent of the business' customers come from Maryland. While more come from Frederick County, he thinks, some probably come from Washington County.

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