For Charity Or Business?

Not far from the strip malls and business parks of Mountlake Terrace, a new ice rink catering to promising young skaters and hockey players proclaims itself "America's Future On Ice."

Equipped with an Olympic-sized sheet of ice, a sports-therapy clinic, a gift shop and a snack bar, the $5.5 million facility is a monument to the prosperity of the Seattle Junior Hockey Association - and to the explosive growth of charity bingo in Washington state.

Seattle Junior Hockey once was a small charity set up to help parents pay for their sons' hockey lessons. It has evolved into a $10 million-a-year business that is the state's largest bingo and pull-tab gambling operation.

It is a remarkable success story.

It also is a story that raises questions about who benefits from charitable gambling and about the state's role as both promoter and regulator of the games.

Supporters say bingo allows nonprofit groups to raise more money than they could otherwise, and that groups do much to help their communities.

Critics say that sometimes, too much of the bingo take goes to cronies and capital projects instead of charitable causes. And they contend that the state Gambling Commission is caught in a conflict of interest by both promoting and policing charity gaming.

Both sides say the Seattle Junior Hockey Association is a case in point.

Frank Miller, executive director of the state Gambling Commission, says Seattle Junior Hockey is a model.

When it comes to donating bingo profits to charities, he said, "they've been a real leader and a real positive force in the industry."

Tom Keefe, a Gambling Commission member from 1983 to 1993, sees it differently. He says charity bingo profits should go to help the truly needy, and he characterizes the $82,138 compensation of John Beadle, Seattle Junior Hockey's executive director, as "exorbitant."

Besides his paycheck - the highest of any bingo operator in the state - Beadle is provided with $10,486 in untaxed medical and disability insurance. He drives a $49,000 Lexus paid for by the charity.

Several longtime friends of John Beadle and his brother, Bob, who is president of the board of Seattle Junior Hockey, are employed in the bingo and ice-rink operations.

"You start to think, is this a real nonprofit?" said Art Dammkoehler, an ice-skating judge who worked with Seattle Junior Hockey to build the ice-skating rink. "Is the business hockey, or is the business bingo, with hockey there to justify the bingo?"

Last year, the state's top 10 bingo games reported net income of more than $7.4 million, and paid out more than half of that to employees and administrators.

Some former legislators and gambling commissioners say this isn't what the state envisioned when bingo was legalized under the Gambling Act of 1973 to benefit charities and nonprofit groups.

State Sen. Larry Vognild, D-Everett, ran a bingo game for a firefighters' group in his hometown in the 1960s. The top prize was $1,000, the workers were volunteers and much of the money was spent on such community projects as baseball fields.

Today, Vognild said: "Let's be honest about it. Bingo is big business."

That's fine with Robert Tull, chairman of the Gambling Commission. He said it was inevitable that bingo would grow.

Tull is glad hundreds of nonprofit groups and charities have prospered because of it, despite competition from unregulated bingo on Indian reservations. State policy has encouraged charity bingo to flourish. And no game has flourished like the Seattle Junior Hockey Association's in Mountlake Terrace.

Operators with foresight

Shortly after passage of the 1973 legislation, John and Bob Beadle had the foresight to realize bingo would one day outgrow Thursday-night sessions down at the church hall.

Bob started the bingo game to raise money for hockey; John, a former Air Force club bingo manager, was brought in a few years later to make the game professional.

Today, the Junior Hockey Association draws as many as 900 people to its 19,200-square-foot bingo hall three days a week, four sessions a day, in part by offering some of the largest prizes in the state - up to $10,000 cash or a $14,000 Ford Mustang convertible.

As the game grew, so did the salaries and perks of the Beadles and of friends involved in the association.

The operation grossed $10.3 million last year. Most of that money went back to bingo players as prizes, leaving net reported income of $1.4 million - twice the net income of any other charity game.

Tax reports show the group paid more than $700,000 a year in salaries and benefits to the Beadles and their more than 40 employees.

Despite its hefty executive overhead, Seattle Junior Hockey is widely praised for sharing its wealth.

Last year, it reported to the state that it spent more than $700,000 on its youth programs and gave $161,839 to other causes. Only one other big bingo operator, the Seattle Jaycees, doled out more than $12,000 to outside charities.

Fans of Seattle Junior Hockey note than it supports some 600 youths aged 5 to 20 each year in an expensive sport. Also, they say, although the new rink near Highway 99 is not open to the public, it has reduced pressure throughout the region for ice time on other rinks.

In recent years, Seattle Junior Hockey poured $1.4 million cash into the new ice arena, doubled its own net assets to $2.6 million and set aside $37,000 for an endowment fund that John Beadle said he'd like to build enough to finance hockey operations if the bingo game should ever fail. With an annual cash surplus of $181,000 to $350,000, there's even been money left over to buy stock in Pacific Northwest Bank.

The Beadles have demonstrated business acumen in other arenas: Bob runs Aircraft Standards Inc., an aerospace-parts company, and was proclaimed National Small Businessman of the Year in 1980, and John runs International Productions Inc., operating auto raceways in Monroe and Tenino, Thurston County.

But they became kings of the bingo hill with a major assist from state government and with a key legislator, state Sen. Ray Moore, D-Seattle, in their corner.

Big games favored

The state's philosophy is to set some guidelines on how the games are played, attempt to keep them clean of fraud or organized crime, and let market forces dictate the rest.

That favors the big games. The number of bingo operators has dropped from 633 to 495 in the past 10 years, while bingo receipts have nearly doubled and pull-tab receipts have tripled. In a 1993 survey, Washington ranked second among 31 states and the District of Columbia in generating revenue from charitable gambling.

Said Miller, the Gambling Commission executive director: "Our philosophy is to work with charities, not to put them out of business."

Seattle Junior Hockey, though, stands apart from other bingo operators and nonprofit groups, in part because many of those who run it are the same people who began it nearly 20 years ago.

Unlike other nonprofits and youth organizations, in which elected officers and boards of directors change as children grow up, the nine-member board of directors at Seattle Junior Hockey includes five people who have served continuously since 1978: the Beadles, head coach Donald Chiupka and two other directors whose kids have long since graduated from junior hockey.

None of the directors has children in the program now.

"This way, we can try to figure out what's best for all the kids, not just what is best for my kid," John Beadle said.

There is some nepotism, but not a lot compared with some other charity bingo operations. John Beadle's son, Rick, holds a $50,000 job running the $4.4 million gambling operation for the Northwest Amateur Hockey Association in Everett, where Bob Beadle also serves on the board. Rick's wife works at John's bingo game. Chiupka's son was hired as the $45,000-a-year manager of the Olympic View Ice Arena in Mountlake Terrace.

Keefe, the former gambling commissioner, wonders whether a charitable group subsidized by gambling should be allowed to build an ice arena that competes with private enterprise, as Olympic View does with the Highland Ice Arena a little farther south on Highway 99 and the Sno-King Ice Arena just 2 1/2 miles to the north.

Bob Beadle says there's more than enough demand for them all. There are only five indoor ice rinks in King, Pierce and Snohomish counties, but more than 50 in the Vancouver, B.C., area.

`Dream come true'

The new rink is "a dream come true," said Kaye Beeson, former president of the Seattle Skating Club, another bingo-funded nonprofit, which co-owns the rink. "The Olympic-size arena is kind of a wave of the future."

Some people are concerned that the Beadles might eventually try to turn the rink into a private, for-profit facility.

"We've got to watch the possibility that a capital facility doesn't end up becoming profit of individuals rather than the charity," said Rep. Mike Heavey, D-Seattle, for the past four years chairman of the House Labor and Commerce Committee, which handles gambling legislation.

John Beadle insists that's not the intention, and points out that the charity group's assets can never be turned to private profit without major tax penalties. The Legislature has relied on the Gambling Commission to police bingo.

When Heavey and other lawmakers gathered a special task force last year to review "gambling creep" in Washington, there was no discussion of bingo.

"Most of us don't go into bingo halls. We don't realize what's going on," Heavey said. "I think most people figure, if it's good enough for the pope, it must be OK."

Thanks in large part to the Beadles, too, the industry has developed a positive reputation.

Helping the police

Seattle Junior Hockey has given the Mountlake Terrace Police Department more than $50,000 in the past five years for drug programs, said police Chief John Turner.

It also has donated money for the department's "Neutral zone" for teenagers, and bicycles for the bicycle patrol. Rick Newgard, the assistant bingo manager, serves on the city's police advisory board.

"Every time I turn around, I hear through rumor that Junior Hockey is willing to give us money for something if we need it," Turner said. "It's gotten to the point where I don't want to go to ask them."

The bingo game also pays $300,000 a year in taxes to the city of Mountlake Terrace. The City Council was happy to annex and rezone land for the new ice arena.

Regulators, too, have mostly positive things to say about the hockey group. Like others in Olympia, Miller, the executive director, views John Beadle as being a "a real professional" who offers valuable expertise.

"They're powerful," he said of Beadle and other top bingo operators. "But for the most part, they represent good things."

Gambling officials say they have focused more on "problem" games and smaller operators.

One large operation that has come under fire recently is the Central Area Youth Association's Aurora Bingo in North Seattle.

CAYA Executive Director Michael Preston was fired by his board of directors last month amid allegations of mismanagement. Preston has denied any wrongdoing.

The Gambling Commission is investigating possible theft in the CAYA bingo operation - the state's fourth-largest - but has said that Preston himself is not under suspicion. However, the manager of Aurora Bingo has resigned and the assistant manager has been suspended until the investigation is finished.

Ben Bishop, Gambling Commission assistant director for licensing, said he prefers to sit down and negotiate with bingo operations that violate the rules instead of fining or suspending them.

"It's difficult dealing with nonprofits, as a regulator," Bishop said. "What do you do? If they raise their funds from gambling, do you fine them? You'd end up fining their kids or their purpose. And a suspension could be almost devastating."

In 21 years, licenses have been revoked for only two operators. One of them was the Mountlake Terrace Lions Club, which opened a big bingo game last year only to end up $400,000 in debt and forced to shut down earlier this year.

In 1982, Gambling Commission staff tried to revoke Seattle Junior Hockey's license after accusing the Beadles and other workers of misspending $26,725 for trips, entertainment and personal benefits. The Beadles turned to legislators, who complained of "overzealousness" on the part of the commission staff, and the action was droppped after the hockey group paid $10,000 for the cost of the audit.

After that, the Beadles and other large operators organized a lobbying group now known as the Washington Civic and Charitable Gaming Association and hired Bill Fritz, an influential lobbyist.

"They have been big supporters of making these games tighter, more accountable, and helping us understand the business side of the game so that we don't make their fund-raising more difficult," said Tull, the Bellingham lawyer who chairs the gambling commission.

The Beadles also cultivated Sen. Moore, a member of the Labor and Commerce Committee and a non-voting member of the Gambling Commission. Moore and his wife, Virginia, and Bob and Dorothy Beadle are co-owners of a $465,000 house and coffee farm in Hawaii. It was Moore's residence in that home that led to the finding by the King County elections office that he was not a legal Washington resident. Moore is appealing that ruling.

Moore has been one of the Legislature's biggest advocates of gambling. For eight years, he has served on or chaired the Senate committee that handles most gambling legislation.

The Beadles also helped establish the Benefit Bingo Political Action Committee, which contributes money to Moore and other legislators.

As a member of the Gambling Commission's Bingo Study Committee, John Beadle has maintained a voice in how the state regulates his industry since the early 1980s.

When smaller operators complained that they were being elbowed out by larger groups, it was John Beadle and other members of the newly formed Bingo Study Committee who suggested limits on prizes and net income in an effort to curb cutthroat competition.

But the commission has never set limits on the size of games, and larger groups such as Seattle Junior Hockey, which regularly send representatives to speak at commission meetings, have successfully gotten the state to raise prize limits.

The commission has many powers under state law. It has enforced all of them except two: the power to limit the size of bingo games and the power to limit salaries.

Keefe, the former gambling commissioner, said the group is guilty of "a complete case of nonfeasance" for failing to limit salaries.

He calls for more audits, tighter inspections, sharing bingo money with other charities, and salary control.

Tony Ward Smith, a Seattle businessman who has been involved with nonprofit groups for several years and now serves on the CAYA board of directors, worries that the bingo industry has become so lucrative and competition so fierce that gambling can seem more important than a nonprofit's original mission.

When the association upgraded its bingo operation a few years ago and moved from the Central Area to North Seattle, with help from John Beadle, it spent thousands of dollars to invest in uniforms, big-screen televisions and high-tech equipment.

"Very soon, bingo can become the tail that's wagging the dog, and there's concern among the nonprofits about that," Ward Smith said. "We've made a lot of money but we haven't done as much with the new money as nonprofits are supposed to do."