BINGO! How One Louisiana Private School Has Made A Fortune From Inner-City Video Bingo

On Tuesday, the City Council of Alexandria, Louisiana voted unanimously (with one noticeable abstention) to lift its moratorium on video bingo parlors for the next 120 days. The moratorium was first championed more than six years ago by former City Councilman Myron K. Lawson, who claimed he was concerned about the unchecked and unregulated proliferation of gambling businesses disguised as social welfare clubs. Video bingo is not the same game played in elementary schools and nursing homes across the country. It’s vastly more sophisticated and much more lucrative. The buy-ins are larger, and so are the prizes. So, too, are the profits. While the moratorium may have effectively ended the opportunity for new, enterprising operators to open up new facilities, it also had the direct effect of protecting the profit margins and granting quasi-monopoly status to established businesses and non-profit organizations. Because of the moratorium, there would no longer be a competitive threat to the existing market.

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Alexandria Country Day School (ACDS), located outside of the city limits on Bayou Rapides Road, was founded in the late 1960s, largely in response to the ugly battles of school desegregation. In the mid 1970s, Alexandria Country Day, shamefully, fought all the way up to the Louisiana State Supreme Court in order to prevent enforcement of laws requiring the school to adopt and implement non-discriminatory admission standards. The court in the now-famous case Brumfield v. Dodd summarizes ACDS’s history and its position (bold mine):

In rebuttal, Alexandria Country Day produced some weak testimony that the school had made overtures to black parents and leaders in the black community in an attempt to enroll black children in the school. Some of this testimony was rebutted and the Court finds as a matter of fact that there is no “active and vigorous” recruitment program for black students. As a matter of fact, Alexandria Country Day has athletic and academic scholarships available, yet it appears that no black student has ever been offered such a scholarship. Finally, the school’s Articles of Incorporation were not amended to reflect a nondiscriminatory admission policy until January 1976, well after this Court’s decision on the merits, and newspaper announcements containing a nondiscriminatory admission statement were not published until after the school was advised that such published announcements were necessary to maintain the school’s IRS tax exemptions.

A few years after the historic decision in Brumfield, ACDS began hosting regular bingo games as a way of supplementing its income, eventually leasing out a large building on Lee Street, in the heart of a poor and working class and majority African-American neighborhood. In the meantime, however, ACDS failed to make any concrete and substantial strides toward integration. To be sure, throughout the 1980s and 1990s, the school began to admit the sons and daughters of wealthy Indian, Pakistani, and Asian immigrants, but the school continues to struggle, to this day, with recruiting and attracting African-Americans, which is notable in a city in which 57% of the population is African-American. Today, the embers of desegregation may still be smoldering, but, for most, they’re largely forgotten. The school’s history is likely not known by the vast majority of parents who enroll their children and fork over the thousands of dollars a year in tuition. And as I learned yesterday on Facebook, the mere mention of ACDS’s history makes many people very uncomfortable, if not downright and reflexively defensive. It was as if I somehow had accused every white person who sent their kids to ACDS of being racist.

I attended ACDS in junior high. I am, therefore, an alum, and my parents are, therefore, Country Day parents. It was a great school, filled with great teachers, and I relished my time there. However, I was then and I am still today a fierce and adamant defender of and believer in the public school system. I didn’t really want to go to ACDS for junior high; I wanted to go my neighborhood public school. But my parents insisted otherwise, and they had their own good reasons. And the truth is: I ended up really loving the place. I don’t have any qualms, whatsoever, with ACDS as a school. But I am deeply disturbed by the ways in which its institutional leadership has used video bingo in the inner-city to subsidize operations, and I am keenly aware of the fact that this scheme is almost completely unknown to the taxpayers of Alexandria and the overwhelming majority of Country Day parents. If we are going to grant gambling monopolies to anyone, the proceeds should benefit those who need it the most. Our public schools- particularly our inner-city schools- desperately, urgently need money and resources, and it defies common sense, common decency, and public policy that the revenue generated by inner-city video bingo would go, instead, almost exclusively to a private school outside of the city limits. And we’re not talking about pocket change.

According to ACDS’s most recent filing with the IRS, it generated $627,275 in gross revenue from video bingo in 2013, doling out $192,478 in prizes. It made about the same amount in 2012. And in 2011. But amazingly, despite the school’s astronomical success, it only takes home a fraction of its earnings. It spends more than three times what it earns on rent and “other expenses.” Remember, this is ostensibly about subsidizing a school- a tax-deductible charitable organization, and no doubt, the school has made a fortune from video gambling. But the school has been paying the lion’s share of its earnings in rental payments and, presumably, salaries. Put another way: How, on earth, could it cost more than $300,000 a year to operate a three-day-a-week video bingo parlor in an old grocery store building on Lee Street? ACDS’s defenders may claim that these exorbitant costs are precisely why they sought out a new rental agreement. It’s unclear, however, whether the new agreement will actually save any money, and more importantly, it’s unclear whether the new agreement, like the old one, is actually at fair market value. Or even who the agreement is actually with. It is against federal and state law for a non-profit organization to unduly enrich anyone, and an inflated lease agreement doesn’t just enrich a landlord; it also distorts the entire real estate market. Even if ACDS spent $4000 a month to rent an old building for a three-day-a-week video bingo business, that still seems like too much. I have no problem kicking over a few hornet’s nests here, knowing full well that, sometimes, when you expose a scam, you can get stung. That’s a risk I’m willing to take, because as an ACDS alum, I think this is a scummy, slimy way for the school to make money. Instead of continuing to operate this farcical and imminently corruptible bingo business, a business that seems to make other people way more money than it makes the school, ACDS should look to the enormous bench of talent that have passed through its doors and challenge itself to figure out a different and more ethical way to raise the $100,000 or so it takes home every year on video bingo. ** Postscript: If any of the landlords or operators want to unpack ACDS’s 990 filings with the IRS, that’d be very helpful and illuminating. I recognize there is always another side to the story.