HAGERSTOWN - Robert “Smitty” Smith likes to gamble, but his favorite game isn’t offered by the state lottery or Maryland’s casinos.
Smith, 89, has been playing a game of chance for 40 years that’s offered at taverns, restaurants and fraternal organizations across Western Maryland: Tip jars.
“I play these games about five days a week,” Smith said. “Probably about four or five times a week -- I don’t play on Sundays.”
Players pay one dollar for the chance to draw a winning number from a box or jar that could instantly pay $5, $100, or even $350.
The games are more popular than the lottery here. Tip jar revenue for Washington County totaled more than $46 million in 2012, compared to about $28 million spent on 10 types of lottery tickets combined.
The Maryland Lottery, run by the state, returns profits to the state budget. But tip jars are regulated and taxed by county governments -- and the money stays local.
Washington is one of four Western Maryland counties that are allowed to operate tip jars under state law. Allegany, Garrett and Frederick are the others.
Hagerstown, with a population of 40,638, is Washington County’s tip jar hub, with 55 of the county’s 110 operators. Hagerstown’s operators generated about $17.6 million in revenue for the 2012 fiscal year, up more than 3 percent from 2011.
Smith said he grew up in Hagerstown and worked here as an optician. Now retired, he said he spends much of each day in a cozy corner booth at Colonial Sports Bar & Grill, talking with his favorite waitress. When he’s ready to play, Smith walks from his table to the bar, where he exchanges cash with the bartender in return for tip jar packets.
“These are a dollar apiece,” Smith said, displaying a small paper packet that contains four numbers. “I usually buy 20 of these at a time. This is $20 worth here, and it’s all blacks so far… Yup, so there are no winners here. Got to get red to win.”
Sometimes the packets contain a number ending in “00” or the word “holder.” This means the player is eligible for the tip jar’s grand prize, which pays as much as $500, said Scott Hawbaker, an avid tip jar player. Once every packet in the tip jar is sold, the tip jar operator opens an envelope containing the grand prize winning number, and the player whose holder number matches the winning number is awarded the grand prize.
Down the road from Colonial, Break Away II Sports Lounge is a liquor store that opens into a pool hall and restaurant, with high-top tables and a large bar. It’s frequented by groups of motorcyclists. On a recent sunny Wednesday afternoon, they sat around the bar, drinking and spending their cash on tip jar packets and Keno tickets.
Martia Neff, the daytime manager at Break Away, served the customers drinks and brought tip jar packets to those who requested them, occasionally stopping to chat. Neff said the lounge will go through one “mini jar,” which contains 3,000 tip jar packets, or $3,000 worth of sales, every three to four days. For the “hog jar,” which contains fewer than 600 packets, the lounge may sell several full jars a day.
“Tip jar players will often come in with $200 in their pockets, solely for the purpose of playing tip jars,” Neff said.
Hawbaker said he spends “about 100 bucks a week” on the tip jar at an American Legion hall in Funkstown, Md., which features a large bar in a wood-paneled room. He figures he loses money most weeks.
He said he only plays the lotteries when the jackpot reaches $150 million.
“I would rather play tip jars than the lottery. I like the instant gratification, and yes scratch-offs do have instant winners, but tip jars are only sold at one location for that one tip jar,” Hawbaker said. “I just won $500 on a mini jar and I bought my buddy a beer, so there is a social aspect. And then I went out and bought a new gas grill."
Charities, fire departments benefit
James Jenkins, a spokesman for the Washington County Gaming Office, said Washington County first established tip jars in 1995.
Operators need a license from the county to offer tip jars. The operator then buys them through a licensed wholesaler and has to report sales back to the county. For-profit operators like Colonial Sports Bar and Grill send half their gross profit to the Washington County Gaming Fund, and not-for-profit clubs contribute 15 percent.
Of the $46 million played on tip jars in 2012, winners took 82.6 percent or about $38.7 million, according to the Washington County Gaming Report. Tip jar operators kept 10.9 percent or about $5.1 million.
The Washington County Gaming Fund received about 4 percent or $1.8 million, which was allocated to the Washington County Fire and Rescue Association and 95 charities. The rest went to operating expenses and sales taxes.
In Allegany County, gross revenue from paper gaming was $12,262,553, compared to about $10 million Allegany residents spent on lottery tickets.
Paper gaming includes tip jars as well as punchboards, another game of chance. About $9.4 million was paid out in paper gaming winnings. Operators kept 16 percent, or $1.9 million, and 5 percent, or $566,030, paid for the cost of the game.
The Allegany County’s Gaming Fund received about 3.6 percent, or $437,399. Some of that money was distributed to the Board of Education and fire and rescue departments, while the rest funded the Gaming Office’s operating expenses. Allegany County’s revenue breakdown totals 101 percent due to rounding.
Garrett County allows gambling that benefits a charitable organization, which tip jars do. But the county’s director of financial services, Scott Weeks, said it doesn’t keep tabs on them. The Garrett County Board of Commissioners “chose not to designate an agency to issue any types of licenses or permits,” Weeks said. As a result, he said he was unsure how much the county profits or how the money is distributed.
Frederick County officials did not return phone calls regarding tip jar revenue and regulations in Frederick County.