Card Clubs in British Columbia - How do they make money?

[jeffraider]

I was just curious, I know that in BC gaming profits need to go to charities, and stuff, so how do any places make money? Like GCC or some of the clubs in Vancouver?

[The Goober]

It probably has to do with the definition of profit. Remember that paying the salaries of everyone who works for the club is an expense of the company - so whoever owns the club can hire himself as CEO or whatever and pay himself a nice salary. Any money left over after that (and paying all the floor, dealers, rent, etc...) is what has to be given to charity.

At least, that's my guess based on what I know about US "not for profit" companies.

[StellarWind]

[ QUOTE ]
It probably has to do with the definition of profit. Remember that paying the salaries of everyone who works for the club is an expense of the company - so whoever owns the club can hire himself as CEO or whatever and pay himself a nice salary. Any money left over after that (and paying all the floor, dealers, rent, etc...) is what has to be given to charity.

At least, that's my guess based on what I know about US "not for profit" companies.

[/ QUOTE ]
In the US it is common for small private businesses to pay much of their "profit" to the owner-president in the form of salary and benefits. This avoids double taxation of dividends because the corporation can deduct salary as an expense but many companies cannot deduct the dividends they pay (some types of companies can).

The IRS looks at these arrangements to ensure that the recipient actually works for the company and the compensation level is appropriate for the work being done.