Updated 11:46 a.m. July 16, 2019.

The State of Vermont will require nonprofits that raise funds with "break-open" tickets to routinely report their earnings — a new regulation meant to help law enforcement officials spot potential theft.

Last year, Seven Days reported in Give and Take, a series on Vermont nonprofits, about the lack of oversight and accountability in the sales of break-open tickets. Nonprofit organizations in Vermont purchased 39.3 million tickets wholesale the year before the series ran; many were sold to patrons of local bars, which are supposed to give profits to the nonprofits.

Despite the size of this legal gaming industry, nobody was checking to see how much money nonprofits were actually earning. Skyler Genest, who heads the enforcement office of the Vermont Department of Liquor and Lottery, said the tickets were sold in "the perfect storm environment for fraud."

Nonprofits purchase tickets by the boxful, and each has a set amount of winners. While there are many versions of games, people typically pay $1 or $2 per ticket to peel back a series of tabs to see if they've won up to $100 or so.

Theoretically, each box of the tickets guarantees the seller a set profit — if all of them are sold. But many bars don't sell all the tickets in a box, so determining whether a charity gets its fair share can be an accounting nightmare.

From time to time, the state charges people with crimes related to the fundraising. That's what happened to the former owner of the Spanked Puppy
in Colchester, one of the establishments where the gambling was described in the Seven Days' story. Michelle Simms was charged with felony embezzlement. Her case was routed to a court diversion program that is an alternative to criminal prosecution.

In 2018, state leaders tasked the Department of Liquor and Lottery with creating a reporting system. The department partnered with the Vermont Information Consortium to create an online mechanism. "It was a lengthy process building this reporting tool out," Genest said. With that in place, the department has begun mandating the reporting.

 It allows the state to compare the profits that nonprofits report with how many tickets a charity purchases wholesale, Genest said. Officials will be able to spot "outliers" that merit a closer look.
"What we think this reporting does is cast not just a beam of light but a floodlight on the way these nonprofits generate their funds and how they use break-open tickets, so that we can very clearly see what's going on out there," he said.

Only a handful of ticket distributors operate in Vermont. Should a nonprofit fail to report as required, Genest said, the state can order the distributors to stop selling them tickets.