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Blood v. Legalized Games of Chance Control Commission

Decided: January 28, 1963.


Goldmann, Freund and Foley. The opinion of the court was delivered by Goldmann, S.j.a.d.


Cooley's Anemia Blood and Research Foundation for Children, Inc. (Foundation) appeals from a finding, determination and order of the Legalized Games of Chance Control Commission (Commission), dated February 6, 1962, suspending all outstanding bingo licenses issued to the Foundation for a period of 18 months and declaring it ineligible to apply for such a license for a like period. The order was stayed pending determination of the appeal. The Foundation also filed a supplemental notice of appeal from a subsequent Commission determination denying it permission to pay out of the net proceeds of its bingo games any part of the counsel fees and expenses incurred in connection with the appeal.

The Foundation had duly qualified as a charitable organization for a license to operate weekly bingo games at Passaic Auditorium, Passaic, N.J., for the period October 25, 1960 through February 28, 1961. Its later application to amend the bingo license was approved and resulted in additional weekly games for the period March 7 through June 27 and from September 5 through October 24, 1961.

On August 15, 1961 the Commission notified the Foundation that it would be required to show cause on September 26, 1961 why any outstanding licenses issued to it should not be revoked for a period up to 30 months. The ground for the proposed revocation was that the Foundation had filed false reports of bingo games played at the Passaic Auditorium on January 3, 10, 17, 24 and 31, and on February 7, 14, 21 and 28, 1961, in violation of N.J.S.A. 5:8-25 and 5:8-37 and of Rules 3, 5 and 12 of Part VI, and also Part IX of the rules and regulations of the Commission governing the conduct of bingo games.

N.J.S.A. 5:8-25 provides, in part, that charitable organizations may be licensed to conduct bingo games "under such conditions and regulations for the supervision and conduct thereof as shall be prescribed by rules and regulations duly adopted from time to time" by the Commission, but only "when the entire net proceeds of such games of chance are to be devoted to educational, charitable, patriotic, religious or public-spirited uses."

N.J.S.A. 5:8-37 requires an organization conducting bingo games to file a duly verified statement with the municipal clerk within 15 days after the holding of any game. The report is to show the amount of the gross receipts derived from each game, including receipts from the sale of shares, tickets or rights in any manner connected with participation in said game or the right to participate therein. Further, the report must show each item of expense incurred or paid, and the name and address of each person to whom each such item has been or will be paid, with a detailed description of the merchandise purchased or the services rendered. In addition, the report must include the net profit derived from each game, the uses to which the net profit has been or is to be applied, and a list of the prizes offered and given, with their respective values. The organization is required to maintain such books and records as may be necessary to substantiate the particulars of each report.

Turning to the Commission rules and regulations alleged to have been violated by the Foundation, Rule 3 of Part VI provides:

"The entire net proceeds of the games of chance must be devoted to authorized purposes. (See R.S. 5:8-25 as to Bingo and R.S. 5:8-51 as to Raffles.)"

Rule 5 of Part VI provides:

"No commission, salary, compensation, reward or recompense may be paid to any person for holding, operating or conducting, or assisting in the holding, operating or conducting of a game of chance, except for bookkeepers or accountants who assist by rendering their

professional services for an amount within the schedule of fees fixed by these rules. (See Schedule of Fees "B") (See R.S. 5:8-26 as to Bingo and R.S. 5:8-52 to Raffles.)"

Rule 12 of Part VI provides:

"No item of expense shall be incurred or paid in connection with the holding, operating or conducting of a game of chance, except such expenses as are bona fide items of reasonable amount for goods, wares and merchandise furnished or services rendered, which are reasonably necessary to be purchased or furnished for the holding, operating or conducting of the game of chance. (See R.S. 5:8-34 as to Bingo and R.S. 5:8-61 as to Raffles.)"

The pertinent sections of Part IX, which the Foundation was charged with violating, are Rules 1 and 5. Rule 1 requires that reports of operations be in the form and contain the information called for by Form 8B-A, prescribed by the Commission for bingo games. Rule 5 provides:

"If a licensee fails to file a report within the time required, or if a report is not properly verified, or not fully, accurately and truthfully completed , no further license shall issue to it, and any existing license shall be suspended until such time as the default has been corrected." (Italics ours.)

At the December 5, 1961 hearing, Norman D. Valentine, Executive Officer of the Commission, testified for the State. He said that a comparison of the reports filed by the Foundation with those of other organizations conducting bingo games in the area indicated that the Foundation's figures for the sale of extra bingo boards appeared to be lower than those of the other organizations. He had consequently assigned a team of investigators to audit the Foundation's games. The first audit was made March 7, 1961, and was followed by audits on March 14 and May 2 and 9, 1961. On each ...

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