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For 13 years, casino-owning tribes have donated 鈥渞evenue-sharing鈥� money to local nonprofit organizations doing everything from desert conservation to medical treatment for kids to housing the elderly. The exact amount donated locally each year is unclear, but it is probably in the low seven figures.

Now, an interpretation of the tribal casino compacts by the Arizona Gaming Department lays down a rule that seems to choke off that funnel of gambling money.

鈥淐ontributions must be distributed directly to Arizona cities, towns, counties or the Commerce and Economic Development Commission Local Communities Fund,鈥� says a July 9 letter from the assistant director of the department, Michael McGee. It goes on: 鈥淎dditionally, the funds may not be allocated to 501 (c)(3) organizations or other charitable entities because they do not provide 鈥榞overnment services鈥� as a political subdivision of the state.鈥�

This could be a multimillion-dollar problem for local nonprofits. Annually, the Tohono O鈥檕dham Nation sends out letters requesting that charities and other entities submit applications for revenue-sharing money. The tribe picks winners based on their applications.

Over the years, many local charities have benefited 鈥� the Flowing Wells Neighborhood Association received $100,000 one year, for example. So have governmental entities 鈥� the Drexel Heights Fire Department applies every year and has won twice, Chief Douglas Chappell told me.

鈥淭he Tohono O鈥檕dham Nation has always been very sophisticated in how they do it,鈥� Chappell said. 鈥淚t鈥檚 a formal application process.鈥�

The Pascua Yaqui Tribe also makes annual donations based on its casino revenue. This year, this category of donations must be completed by Oct. 25.

The tribes have used a pass-through mechanism to make these donations to nonprofits.The Arizona State Museum, for example, has received revenue-sharing donations from tribes, but they have been funneled through the city of Tucson first.

That鈥檚 because of the wording of the gaming compacts. The compacts lay out a formula for how much each casino-owning tribe will pay in revenue-sharing 鈥� an amount that can add up to between 1 and 8 percent of revenue. This money is essentially the same as taxes, but the state doesn鈥檛 have the power to tax the tribal casinos, so the amounts were worked out in compacts.

Of the total tribes pay in revenue sharing, 88 percent goes to the operational costs of the Department of Gaming and the Office of Problem Gambling, as well as to schools, trauma and emergency care, tourism and conservation. This has added up to about $1 billion over 13 years.

But it鈥檚 the other 12 percent that we鈥檙e talking about 鈥� an amount that has averaged $11 million to $12 million per year statewide during the last five years. The compacts say it should go to cities, towns or counties for government service that benefit the general public, including public safety, mitigation of the impacts of gaming, or the promotion of economic development.

Alternatively, tribes can donate to the Arizona Commerce Authority鈥檚 local communities fund, which can pass it on for the same, limited purposes.

But for 13 years the practice has been otherwise, as Valerie Spicer, executive director of the Arizona Indian Gaming Association, told me.

鈥淭hey all have a process established for the 12 percent funds,鈥� Spicer said. 鈥淭here鈥檚 a lot of great organizations that the tribes make contributions to.鈥�

The Tohono O鈥檕dham Nation used to publicize the recipients of its donations every year 鈥� I covered the 2007 press conference announcing that year鈥檚 winners. That year, recipients included the Steele Children鈥檚 Research Center at UMC, Native Seeds/SEARCH, the TMC Foundation, Desert Survivors and Ajo Ambulance.

But the nation quit listing its recipients after we at the Star tried to calculate its gaming revenue by working backward from the amount it donated to nonprofits. Suffice it to say, the tribe鈥檚 call for applicants has become an extremely popular competition for funds, especially since the recession hit.

鈥淲e don鈥檛 have the corporate headquarters like Phoenix does, so any time there鈥檚 funding (in Tucson) they鈥檙e going to get a multitude of requests,鈥� TMC spokeswoman Julia Strange told me. 鈥淚t鈥檚 been really important for Southern Arizona nonprofits.鈥�

When I asked spokeswoman Amanda Jacinto of the Gaming Department to explain the July 9 letter, she said it was in response to questions from the tribes and said donations to charities would not necessarily end.

鈥淩ecipient cities, towns, or counties may contract with a nonprofit organization if such organization is providing government services to the general public,鈥� she said in an email.

But as McGee made clear in his initial letter, the definition of those government services has narrowed, likely to the detriment of Southern Arizona charities.