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CSHB 240(EDT): "An Act relating to charitable gaming and establishing a state lottery; and providing for an effective date."

00 CS FOR HOUSE BILL NO. 240(EDT) 01 "An Act relating to charitable gaming and establishing a state lottery; and providing for 02 an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 05.15.020(b) is amended to read: 05 (b) An additional fee of one percent of the net proceeds received during the 06 preceding year from the activities authorized under the permit shall be paid to the 07 department annually by the municipality or qualified organization authorized to 08 conduct activities under this chapter, if the gross receipts for the activities were 09 $20,000 or more. In this subsection, "activities authorized under the permit" does 10 not include activities conducted under an endorsement issued to a permittee 11 under AS 05.15.300. 12 * Sec. 2. AS 05.15.060(a) is amended to read: 13 (a) The department shall adopt regulations under AS 44.62 (Administrative 14 Procedure Act) necessary to carry out this chapter covering, but not limited to,

01 (1) the issuance, renewal, and revocation of permits, licenses, and pull- 02 tab and electronic gaming vendor registrations; 03 (2) a method of ascertaining net proceeds, the determination of items 04 of expense that may be incurred or paid, and the limitation of the amount of the items 05 of expense to prevent the proceeds from the activity permitted from being diverted to 06 noncharitable, noneducational, nonreligious, or profit-making organizations, 07 individuals, or groups; 08 (3) the immediate revocation of permits, licenses, and pull-tab and 09 electronic vendor registrations authorized under this chapter if this chapter or 10 regulations adopted under it are violated; 11 (4) the requiring of detailed, sworn, financial reports of operations 12 from permittees and licensees including detailed statements of receipts and payments; 13 (5) the investigation of permittees, licensees, registered pull-tab or 14 electronic gaming vendors, and their employees, including the fingerprinting of those 15 permittees, licensees, registered pull-tab or electronic gaming vendors, and 16 employees whom the department considers it advisable to fingerprint; 17 (6) the method and manner of conducting authorized activities and 18 awarding of prizes or awards, and the equipment that may be used; 19 (7) the number of activities that may be held, operated, or conducted 20 under a permit during a specified period; however, the department may not allow more 21 than 14 bingo sessions a month and 35 bingo games a session to be conducted under a 22 permit; the holders of a multiple-beneficiary permit under AS 05.15.100(d) may hold, 23 operate, or conduct the number of sessions and games a month equal to the number 24 allowed an individual permittee per month multiplied by the number of holders of the 25 multiple-beneficiary permit; 26 (8) a method of accounting for receipts and disbursements by 27 operators, including the keeping of records and requirements for the deposit of all 28 receipts in a bank; 29 (9) the disposition of funds in possession of a permittee, a person, 30 municipality, or qualified organization that possesses an operator's license, or a 31 registered pull-tab or electronic gaming vendor at the time a permit, a license, or a

01 pull-tab or electronic gaming vendor registration is surrendered, revoked, or 02 invalidated; 03 (10) restrictions on the participation by employees of the Department 04 of Fish and Game in salmon classics and in king salmon classics, and by employees of 05 Douglas Island Pink and Chum in king salmon classics; 06 (11) other matters the department considers necessary to carry out this 07 chapter or protect the best interest of the public. 08 * Sec. 3. AS 05.15.070 is amended to read: 09 Sec. 05.15.070. Examination of books and records. The department may 10 examine or have examined the books and records of a permittee, an operator, a 11 registered pull-tab or electronic gaming vendor, or a person licensed to manufacture 12 or to distribute electronic gaming machines or pull-tab games in the state. The 13 department may issue subpoenas for the attendance of witnesses and the production of 14 books, records, and other documents. 15 * Sec. 4. AS 05.15.095(a) is amended to read: 16 (a) The applications and reports to the department required by this chapter 17 shall be signed under penalty of unsworn falsification by the following person, as 18 applicable: 19 (1) the member in charge for the qualified organization; 20 (2) a person authorized to sign on behalf of the municipality; 21 (3) the operator or the operator's agent; 22 (4) the licensed pull-tab distributor or the distributor's agent; [OR] 23 (5) the licensed pull-tab manufacturer or the manufacturer's agent; 24 (6) the licensed electronic gaming machine distributor or the 25 distributor's agent; 26 (7) the licensed electronic gaming machine manufacturer or the 27 manufacturer's agent; 28 (8) the registered electronic gaming vendor or the vendor's agent; 29 or 30 (9) the registered pull-tab vendor or the vendor's agent. 31 * Sec. 5. AS 05.15.100 is amended by adding a new subsection to read:

01 (e) The department may issue a permit to a municipality or qualified 02 organization to conduct electronic gaming activities through the use of electronic 03 gaming machines. 04 * Sec. 6. AS 05.15.105(a) is amended to read: 05 (a) If a person has been convicted of a violation of a law of this state that is, or 06 a law or ordinance of another jurisdiction that would be if it had been committed in 07 this state, a felony, or a violation of a law or ordinance of this state or another 08 jurisdiction that is a crime involving theft or dishonesty or a violation of gambling 09 laws 10 (1) the department may not issue a license to the person; 11 (2) the department may not issue a license to, or register as a pull-tab 12 or electronic gaming vendor, an applicant who employs the person in a managerial or 13 supervisory capacity or uses the person as a fund raiser or consultant; 14 (3) the department may not issue a permit for an activity if the person 15 is responsible for the operation of the activity; 16 (4) the person may not be employed in a managerial or supervisory 17 capacity by a licensee or vendor or used as a fund raiser or consultant by a licensee or 18 a pull-tab or electronic gaming vendor; 19 (5) the person may not participate in charitable gaming as a permittee, 20 licensee, or pull-tab or electronic gaming vendor. 21 * Sec. 7. AS 05.15.115(c) is amended to read: 22 (c) A permittee may not contract with more than one operator at a time to 23 conduct the same type of activity. For the purposes of this subsection, bingo games, 24 raffles, lotteries, pull-tab games, ice classics, race classics, rain classics, goose 25 classics, mercury classics, deep freeze classics, canned salmon classics, salmon 26 classics, king salmon classics, dog mushers' contests, snow machine classics, fish 27 derbies, and contests of skill are each a different type of activity. A permittee may 28 not contract with an operator to conduct electronic gaming activities. 29 * Sec. 8. AS 05.15.124 is amended to read: 30 Sec. 05.15.124. Municipal regulation of operators or vendors. A 31 municipality may by ordinance prohibit an operator, a pull-tab vendor, or an

01 electronic gaming [A] vendor from conducting activities under this chapter within the 02 municipality. 03 * Sec. 9. AS 05.15.128(a) is amended to read: 04 (a) The department shall revoke the license of an operator who does not 05 (1) report an adjusted gross income of at least 15 percent of gross 06 income annually based on the total operation of the operator; or 07 (2) pay to each authorizing permittee annually at least 30 percent of the 08 adjusted gross income, as determined under (1) of this subsection, from a pull-tab 09 activity or at least 10 percent of the adjusted gross income, as determined under (1) of 10 this subsection, from a gaming activity other than electronic gaming activities and 11 pull-tabs, received from activities conducted on behalf of the authorizing permittee. 12 * Sec. 10. AS 05.15.150(a) is amended to read: 13 (a) The authority to conduct the activity authorized by this chapter is 14 contingent upon the dedication of the net proceeds of the charitable gaming activity to 15 the awarding of prizes to contestants or participants and to political, educational, civic, 16 public, charitable, patriotic, or religious uses in the state. "Political, educational, civic, 17 public, charitable, patriotic, or religious uses" means uses benefiting persons either by 18 bringing them under the influence of education or religion or relieving them from 19 disease, suffering, or constraint, or by assisting them in establishing themselves in life, 20 or by providing for the promotion of the welfare and well-being of the membership of 21 the organization within their own community, or through aiding candidates for public 22 office or groups that support candidates for public office, or by erecting or maintaining 23 public buildings or works, or lessening the burden on government, but does not 24 include 25 (1) the direct or indirect payment of any portion of the net proceeds of 26 a bingo, electronic gaming, or pull-tab game to a lobbyist registered under AS 24.45; 27 (2) the erection, acquisition, improvement, maintenance, or repair of 28 real, personal, or mixed property unless it is used exclusively for one or more of the 29 permitted uses; or 30 (3) the direct or indirect payment of any portion of the net proceeds of 31 a charitable gaming activity, except the proceeds of a raffle and lottery,

01 (A) to aid candidates for public office or groups that support or 02 oppose candidates for public office; 03 (B) to a political party or to an organization affiliated with a 04 political party; or 05 (C) to a group, as that term is defined in AS 15.13.400, or a 06 political group, as that term is defined in AS 15.60, that seeks to influence the 07 outcome of an election. 08 * Sec. 11. AS 05.15.160(d) is amended to read: 09 (d) The total amount of authorized expenses that may be incurred under (a) of 10 this section in connection with any gaming activity other than electronic gaming 11 activities and pull-tabs may not exceed 90 percent of the adjusted gross income from 12 that gaming activity. 13 * Sec. 12. AS 05.15.170 is amended to read: 14 Sec. 05.15.170. Suspension or revocation of permit, license, or vendor 15 registration. (a) The department may suspend, for a period of up to one year, or 16 revoke a permit, license, or pull-tab or electronic gaming vendor registration, after 17 giving notice to and an opportunity to be heard by the permittee or licensee, if the 18 permittee, licensee, or pull-tab or electronic gaming vendor 19 (1) violates or fails to comply with a requirement of this chapter or of a 20 regulation adopted under this chapter; 21 (2) breaches a contractual agreement with a permittee, licensee, or 22 registered pull-tab or electronic gaming vendor; 23 (3) becomes disqualified to participate in charitable gaming as 24 provided in AS 05.15.105; for the purposes of this paragraph, a permittee, licensee, or 25 pull-tab or electronic gaming vendor that is not a natural person is considered 26 convicted if an owner or manager of the permittee, licensee, or pull-tab or electronic 27 gaming vendor is convicted; 28 (4) knowingly submits false information to the department or, in the 29 case of a registered pull-tab or electronic gaming vendor, to a permittee when the 30 pull-tab or electronic gaming vendor knows that the false information will be 31 submitted to the department as part of an application for registration; or

01 (5) gives or acts upon any inside information on the status of the prizes 02 awarded or to be awarded in a pull-tab game. 03 (b) If the department revokes a license or pull-tab or electronic gaming 04 vendor registration under this section, it may prohibit the licensee or pull-tab or 05 electronic gaming vendor from reapplying for a license or pull-tab or electronic 06 gaming vendor registration for a period of not more than five years. If the department 07 revokes a permit under this section, it may prohibit the permittee from reapplying for a 08 permit for a period of not more than one year. 09 * Sec. 13. AS 05.15.180(a) is amended to read: 10 (a) Except as provided in AS 05.15.300 - 05.15.350, this [THIS] chapter 11 does not authorize the use of playing cards, dice, roulette wheels, coin-operated 12 instruments or machines, or other objects or instruments used, designed, or intended 13 primarily for gaming or gambling or any other method or implement not expressly 14 authorized by the department. 15 * Sec. 14. AS 05.15.180(b) is amended to read: 16 (b) With the exception of raffles, lotteries, bingo games, electronic gaming 17 activities, pull-tab games, race classics, rain classics, goose classics, mercury classics, 18 deep freeze classics, dog mushers' contests, snow machine classics, canned salmon 19 classics, salmon classics, and king salmon classics, an activity may not be licensed 20 under this chapter unless it existed in the state in substantially the same form and was 21 conducted in substantially the same manner before January 1, 1959. A snow machine 22 classic may not be licensed under this chapter unless it has been in existence for at 23 least five years before the licensing. 24 * Sec. 15. AS 05.15.180(g) is amended to read: 25 (g) A municipality or a qualified organization may award a maximum of 26 $1,000,000 in prizes each year in activities authorized under this chapter; however, if a 27 municipality or a qualified organization contracts with an operator to conduct on its 28 behalf activities authorized under this chapter, the municipality or qualified 29 organization may award a maximum of $500,000 in prizes each year. The holders of a 30 multiple-beneficiary permit under AS 05.15.100(d) may award a maximum in prizes 31 each year of $1,000,000 times the number of holders of the permit for activities

01 authorized under this chapter. In this subsection, "activities authorized under this 02 chapter" means all activities subject to this chapter other than bingo and electronic 03 gaming activities. 04 * Sec. 16. AS 05.15.183(e) is amended to read: 05 (e) A distributor may not 06 (1) take an order for the purchase of a pull-tab series from a pull-tab 07 vendor; 08 (2) sell a pull-tab series to a pull-tab vendor; or 09 (3) deliver a pull-tab series to a pull-tab vendor. 10 * Sec. 17. AS 05.15.187(h) is amended to read: 11 (h) An owner, manager, or employee of a person holding a permit or license 12 under this chapter, or registered under this chapter as a pull-tab vendor, may not 13 purchase a pull-tab from a pull-tab series manufactured, distributed, or sold by the 14 permittee, licensee, or registered pull-tab vendor. 15 * Sec. 18. AS 05.15.187(i) is amended to read: 16 (i) A permittee, operator, or registered pull-tab vendor may not turn over a 17 prize of $50 or more to a person with a pull-tab card entitling the person to that prize 18 unless the person signs a receipt for the prize and returns the receipt to the permittee, 19 operator, or pull-tab vendor. The receipt must be in a form approved by the 20 department. 21 * Sec. 19. AS 05.15.188 is amended to read: 22 Sec. 05.15.188. Pull-tab sales by pull-tab vendors on behalf of permittees; 23 pull-tab vendor registration. (a) A permittee may contract with a pull-tab vendor 24 to sell pull-tabs on behalf of the permittee [,] if the permittee first registers the pull- 25 tab vendor with the department by applying for registration on a form prescribed by 26 the department and by submitting the registration fee of $50 for each location at which 27 the pull-tab vendor will sell pull-tabs. 28 (b) Upon approval of the pull-tab vendor registration, the department shall 29 issue an endorsement to the permittee's permit that authorizes the conduct of pull-tab 30 sales at that pull-tab vendor location. 31 (c) The endorsement issued under (b) of this section is an extension of the

01 permittee's privilege under AS 05.15.100 to conduct pull-tab sales in this state. A 02 pull-tab vendor may not sell a pull-tab series until a copy of the permit containing the 03 endorsement for the new pull-tab vendor location has been posted by the permittee in 04 the registered pull-tab vendor establishment. The endorsed permit must be clearly 05 visible to the gaming public. 06 (d) A separate endorsement shall be issued for each pull-tab vendor location. 07 The permittee shall inform the department when a pull-tab vendor with whom the 08 permittee is contracting changes the physical location at which pull-tabs are sold, and 09 shall return to the department all copies of a permit endorsed to a pull-tab vendor that 10 is no longer selling pull-tabs on behalf of the permittee. Failure to inform the 11 department of a change in pull-tab vendor location, or to return the endorsed copies of 12 a permit to the department after a pull-tab vendor change, may constitute grounds for 13 the suspension or revocation of a permittee's permit. 14 (e) At the time that a permittee annually renews its permit, it shall also renew 15 the registration of all locations where a pull-tab vendor is selling pull-tabs on the 16 permittee's behalf and shall pay a registration fee of $50 for each pull-tab vendor 17 location. 18 (f) A permittee that uses a pull-tab vendor to sell pull-tabs on its behalf shall 19 enter into a written contract with that pull-tab vendor. The department may inspect 20 this contract. If the contract contains provisions that violate this chapter or the 21 regulations adopted under it, the department may declare the contract void, and may 22 suspend or revoke the registration of the pull-tab vendor and the permit of the 23 permittee. 24 (g) A person, other than a permittee's member-in-charge, may not directly 25 supply a pull-tab series to a registered pull-tab vendor for sale by that pull-tab vendor 26 on behalf of the permittee. 27 (h) If a permittee contracts with a pull-tab vendor under (a) of this section, the 28 contract must provide that the permittee shall receive no less than 70 percent of the 29 ideal net. 30 (i) An amount equal to the ideal net less the compensation owed to the pull- 31 tab vendor shall be paid by the pull-tab vendor to the member-in-charge upon

01 delivery of a pull-tab series to the pull-tab vendor for sale. The amount required to be 02 paid by the pull-tab vendor shall be paid by check and the check may not be drawn in 03 a manner that the payee is not identified. 04 (j) An operator may not contract with or use a pull-tab vendor to sell pull- 05 tabs. 06 (k) A permittee may not contract with more than five pull-tab vendors under 07 this section. 08 * Sec. 20. AS 05.15 is amended by adding new sections to read: 09 Article 2A. Electronic Gaming Activities. 10 Sec. 05.15.300. Electronic gaming. (a) The department may issue an 11 electronic gaming endorsement to a permittee to conduct electronic gaming charitable 12 gaming. The endorsement provides the permittee with the authority to 13 (1) contract with electronic gaming vendors to conduct electronic 14 gaming by use of electronic gaming machines; 15 (2) if the permittee has a club license under AS 04.11.110, conduct 16 electronic gaming by use of electronic gaming machines at the location of the club. 17 (b) To obtain an electronic gaming endorsement under 18 (1) (a)(1) of this section, a permittee shall register each electronic 19 gaming vendor with the department by applying for registration on a form prescribed 20 by the department and 21 (A) identify the locations of the electronic gaming machines; 22 (B) identify the number of electronic gaming machines the 23 permittee will have at each location; and 24 (C) pay an annual fee of $100 for each electronic gaming 25 machine; 26 (2) (a)(2) of this section, the permittee shall submit proof of the club 27 license to the department and 28 (A) identify the location of the club; 29 (B) identify the number of electronic gaming machines the 30 permittee will have at the club; and 31 (C) pay an annual fee of $100 for each electronic gaming

01 machine. 02 (c) A permittee issued an endorsement to conduct electronic gaming activities 03 under 04 (1) (a)(1) of this section may not be issued an endorsement under 05 (a)(2)of this section; 06 (2) (a)(2) of this section may not be issued an endorsement under 07 (a)(1) of this section. 08 (d) The endorsement issued under (a) of this section is an extension of the 09 permittee's privilege to conduct charitable gaming in this state. In addition to the 10 endorsement, the department shall issue a machine permit for each electronic gaming 11 machine the permittee has identified under (b) of this section. A permittee or 12 registered electronic gaming vendor may not conduct electronic gaming until a copy 13 of the permit and the endorsement is posted by the permittee at the establishment 14 where the machine is located and the machine permit is posted on the machine. The 15 permit, endorsement, and each machine permit must be clearly visible to the public. 16 (e) A separate endorsement shall be issued for each permittee location or 17 electronic gaming vendor location. The endorsement for a location may not be 18 transferred to another location. The permittee shall inform the department if the 19 permittee or its electronic gaming vendor discontinues conducting electronic gaming. 20 Failure to return the endorsed copies of a permit to the department after a permittee or 21 an electronic gaming vendor change constitutes grounds for the suspension or 22 revocation of a permittee's permit. 23 (f) At the time that a permittee annually renews its permit, the permittee shall 24 also renew the registration of the locations where the permittee or an electronic 25 gaming vendor is conducting electronic gaming. 26 (g) A permittee that uses an electronic gaming vendor to conduct electronic 27 gaming on its behalf shall enter into a written contract with that electronic gaming 28 vendor. The department may inspect this contract. If the contract contains provisions 29 that violate this chapter or the regulations adopted under it, the department may 30 declare the contract void, and may suspend or revoke the registration of the electronic 31 gaming vendor and the permit of the permittee. The contract must contain provisions

01 regarding the allocation of the costs of purchasing or leasing the electronic gaming 02 machines. 03 (h) Only electronic gaming machines approved by the department may be used 04 for electronic gaming. A permittee may purchase the machines directly from a licensed 05 electronic gaming machine distributor or may enter into a lease or lease-purchase 06 arrangement for the machines with the distributor. A lease or lease-purchase arrangement 07 must be approved by the department. 08 (i) If a permittee 09 (1) contracts with an electronic gaming vendor under (a)(1) of this 10 section, the contract must provide that the 11 (A) permittee shall receive 30 percent of the net machine 12 income; 13 (B) registered electronic gaming vendor shall receive 30 14 percent of the net machine income; 15 (C) state shall receive 30 percent of the net machine income; 16 and 17 (D) municipality in which each machine is located, or the state 18 if the machine is located in the unorganized borough outside of municipalities, 19 shall receive 10 percent of the net machine income; if the machine is located in 20 a city within an organized borough, five percent shall be paid to the city and 21 five percent to the borough; 22 (2) conducts electronic gaming under (a)(2) of this section, the 23 permittee must remit the percentages of net machine income under (1) of this 24 subsection to the state and municipality, if any, at times set by the department by 25 regulation. 26 (j) The odds of winning each electronic gaming game shall be posted on or 27 near each electronic gaming machine. The manner in which the odds are calculated 28 and how they are posted shall be set by the department by regulation. 29 (k) An electronic gaming machine may 30 (1) not be played by a person under the age of 21 and may not be 31 located in any place accessible to persons under the age of 21; 32 (2) only be played during the regular business hours for the location

01 and, if the permittee or electronic gaming vendor is licensed under AS 04.11, during 02 the legal hours of operation allowed by the license and applicable municipal 03 ordinance; 04 (3) not be played if the machine permit is not posted on the machine. 05 (l) A permittee may not have more than 5 electronic gaming machines at a 06 location for which the permittee has an endorsement. An electronic gaming vendor 07 may not have endorsements from permittees for more than 10 machines. A permittee 08 may not contract with more than five electronic gaming vendors. A permittee may not 09 have endorsements cumulatively totaling more than 5 machines. 10 (m) All electronic gaming machines shall be monitored by the permittee or the 11 electronic gaming vendor during business hours. Monitoring shall be accomplished 12 by the physical presence of an employee of the permittee or the electronic gaming 13 vendor or by an employee using video cameras or mirrors and by periodic personal 14 inspections of the machines and the area in which the machines are located. 15 (n) A permittee or a registered electronic gaming vendor may not advertise in 16 any manner the possession or availability of electronic gaming machines on their 17 premises or under their permit or registration. 18 (o) If the sale of alcoholic beverages has been prohibited within a municipality 19 under AS 04.11.491, the department may issue an electronic gaming endorsement to a 20 permittee within the municipality that provides the permittee with the authority to 21 conduct electronic gaming by use of electronic gaming machines in the manner 22 permittees with club licenses under AS 04.11.110 are authorized to conduct electronic 23 gaming if the electronic gaming is only conducted within a location into which the 24 access is restricted to persons 21 years of age or older. 25 (p) The department may by regulation exempt a permittee under this section 26 from the reporting requirements of AS 05.15.080 if the information required to be 27 submitted in the report can be obtained directly by the department from the electronic 28 gaming machines. 29 Sec. 05.15.310. Electronic gaming machines. The department may not 30 approve an electronic gaming machine unless the machine 31 (1) offers only games authorized by the department;

01 (2) does not have any means of manipulation that affect the random 02 probabilities of winning a game; 03 (3) is designed to accept cash, in the form of coins or bills, to prevent 04 the obtaining of plays or credits without paying by stringing, slamming, drilling, or 05 other means of manipulation, and to suspend itself from operation until it is physically 06 reset if physically tampered with; 07 (4) has nonresettable meters housed in a readily accessible locked 08 machine area that keeps a permanent record of all money inserted into the machine, all 09 refunds of winnings made by the machine's printer, credits played for electronic 10 gaming games, and credits won by electronic gaming players; 11 (5) does not directly pay off winning players by means of tokens or 12 cash, in the form of coins or bills, but is capable of printing a ticket voucher stating the 13 value of the prize for the player at the completion of each electronic gaming game, the 14 time of day in a 24-hour format showing hours and minutes, the date, the machine 15 serial number, the sequential number of the ticket vouchers, and an encrypted 16 validation number from which the validity of the prize may be determined; 17 (6) has accounting software that keeps an electronic record that 18 includes total money inserted into the machine, the value of winning tickets claimed 19 by players, the total electronic gaming credits awarded by an electronic gaming game, 20 and the payback percentages credited players of each electronic gaming game; 21 (7) is linked under a central communications system to provide 22 auditing program information as approved by the department; the communications 23 system approved by the department under this paragraph may not limit participation to 24 only one manufacturer of electronic gaming machines by either the cost of 25 implementing the necessary program modifications to communicate or the inability to 26 communicate with the central communications system; this paragraph does not require 27 that a machine to be approved must be on-line or otherwise in constant communication 28 with a central computer; 29 (8) does not allow more than $2 to be played on a game or award free 30 games or credits in excess of the value of $75 for each credit value of $.25 played; and 31 (9) has a total payoff of at least 85 percent of the value of one $.25

01 credit. 02 Sec. 05.15.320. Electronic gaming machine manufacturers. (a) A person 03 may not manufacture electronic gaming machines or associated equipment in the state, 04 and may not sell or distribute an electronic gaming machine or associated equipment 05 that the person has manufactured outside of the state to persons in the state, unless the 06 person has received an electronic gaming manufacturer's license issued by the 07 department. 08 (b) The department may issue an electronic gaming machine manufacturer's 09 license to a person who pays an annual fee of $5,000. 10 (c) An electronic gaming machine or associated equipment may not be 11 manufactured, sold, or distributed in the state unless it has been approved by the 12 department. The department shall examine prototypes of electronic gaming machines 13 and associated equipment that a licensed manufacturer wishes to manufacture, sell, or 14 distribute in the state. The manufacturer shall pay in advance the costs of the 15 examination and approval of an electronic gaming machine or associated equipment. 16 The department may contract with another state or person for the examination required 17 under this subsection. 18 (d) An electronic gaming machine manufacturer may distribute electronic 19 gaming machines and associated equipment only to a licensed electronic gaming 20 machine distributor unless the electronic gaming machine manufacturer is also a 21 licensed electronic gaming machine distributor. 22 (e) An electronic gaming machine manufacturer shall report to the department 23 by the last business day of the month on each machine or associated equipment sold or 24 distributed within the state during the preceding month, including the serial number of 25 each machine or associated equipment distributed and the name of the distributor to 26 whom the machine or associated equipment was sold or distributed. 27 Sec. 05.15.330. Electronic gaming machine distributors. (a) A person may 28 not distribute electronic gaming machines or associated equipment in this state unless 29 the person has received an electronic gaming machine distributor's license issued by 30 the department. 31 (b) The department may issue an electronic gaming machine distributor's

01 license to a person who pays an annual fee of $5,000. 02 (c) Electronic gaming machines and associated equipment may be distributed 03 only from a location in the state. A person may not distribute electronic gaming 04 machines or associated equipment directly to another person in the state from a 05 location outside of this state. 06 (d) An electronic gaming distributor shall report to the department by the last 07 business day of each month on each electronic gaming machine and associated 08 equipment distributed in the preceding month. The report must include the name of 09 the permittee to whom each electronic gaming machine or associated equipment is 10 distributed and the serial number of each machine. 11 (e) A distributor may only sell or lease an electronic gaming machine and 12 associated equipment to the permittee. A distributor may not 13 (1) take an order for the purchase or lease of an electronic gaming 14 machine or associated equipment from an electronic gaming vendor; or 15 (2) sell or lease an electronic gaming machine or associated equipment 16 to an electronic gaming vendor. 17 Sec. 05.15.340. Distribution of net income from electronic gaming; 18 appropriations for education. (a) The department shall immediately revoke the 19 electronic gaming endorsement of a permittee or the electronic gaming registration of 20 an electronic gaming vendor that fails to pay the following percentages of net machine 21 income from each electronic gaming machine at the times directed by the department: 22 (1) 60 percent to the permittee or, if the permittee uses an electronic 23 gaming vendor, 30 percent to the permittee and 30 percent to the electronic gaming 24 vendor; 25 (2) 30 percent to the state; and 26 (3) 10 percent to the municipality in which the machine is located, or 27 to the state if the machine is located in the unorganized borough outside of 28 municipalities; if the machine is located in a city within an organized borough, five 29 percent shall be paid to the city and five percent to the borough. 30 (b) The state's percentage of video lottery charitable adjusted gross income 31 received under this section shall be deposited in the general fund. The annual

01 estimated balance in the account maintained under AS 37.05.142 for money received 02 under this section may be appropriated by the legislature to provide for education. 03 Nothing in this subsection creates a dedicated fund. 04 Sec. 05.15.350. Department to contract. The department, to the maximum 05 extent practicable, shall solicit bids and contract for the performance of duties required 06 to monitor and conduct electronic gaming when the contracting will not jeopardize the 07 integrity of the gaming and enforcement of the laws of the state. 08 * Sec. 21. AS 05.15.620(c) is amended to read: 09 (c) If a majority of the voters vote "yes" on the question set out in (a), (b), or 10 (d) [(a) OR (b)] of this section, the department shall be notified immediately after 11 certification of the results of the election and thereafter the department may not issue a 12 license, permit, endorsement, or pull-tab or electronic gaming vendor registration 13 authorizing charitable gaming, electronic gaming activities, or pull-tab sales, as 14 appropriate, within the boundaries of a municipality and in unincorporated areas 15 within five miles of the boundaries of the municipality or within the perimeter of an 16 established village. As necessary to implement the results of an election under (a), 17 (b), or (d) [(a) OR (b)] of this section, existing licenses, permits, endorsement, and 18 pull-tab or electronic gaming vendor registrations for charitable gaming, electronic 19 gaming activities, or pull-tab sales within the boundaries of a municipality and in 20 unincorporated areas within five miles of the boundaries of the municipality or within 21 the perimeter of an established village are void 90 days after the results of the election 22 are certified. A license, endorsement, or pull-tab or electronic gaming vendor 23 registration that will expire during the 90 days after the results of a local option 24 election under this section are certified is void as of the expiration date. 25 * Sec. 22. AS 05.15.620 is amended by adding a new subsection to read: 26 (d) The following question, appearing alone, may be placed before the voters 27 of a municipality or an established village in accordance with AS 05.15.625: "Shall 28 electronic gaming activities in . . . . . . . . (name of municipality or village) be 29 prohibited? (yes or no)." 30 * Sec. 23. AS 05.15.680 is amended to read: 31 Sec. 05.15.680. Penalties. (a) Except as provided in (e) of this section, a

01 [A] person who knowingly violates or aids or solicits a person to violate this chapter is 02 guilty of a violation for the first offense and a class B misdemeanor for the second and 03 each subsequent offense. In this subsection, "knowingly" has the meaning given in 04 AS 11.81.900. 05 (b) A person who, with [THE] intent to mislead a public servant in the 06 performance of the public servant's duty, submits a false statement in an application 07 for a permit, license, endorsement, or pull-tab or electronic gaming vendor 08 registration under this chapter is guilty of unsworn falsification. In this subsection, 09 "with intent" has the meaning given to "intentionally" in AS 11.81.900. 10 * Sec. 24. AS 05.15.680 is amended by adding new subsections to read: 11 (c) A person 12 (1) may not with criminal negligence allow a person under 21 years of 13 age to use an electronic gaming machine; 14 (2) who is under the age of 21 may not with criminal negligence use an 15 electronic gaming machine; 16 (3) may not with criminal negligence manipulate or attempt to 17 manipulate the outcome or payoff of an electronic gaming machine by tampering or 18 otherwise interfering with the proper functioning of the machine. 19 (d) In this section, "criminal negligence" has the meaning given in 20 AS 11.81.900. 21 (e) Violation of (c) of this section is a class A misdemeanor. 22 * Sec. 25. AS 05.15.690 is amended by adding new paragraphs to read: 23 (46) "electronic gaming" means a game of chance that uses an 24 electronic gaming machine; 25 (47) "electronic gaming machine" means an electronic video game 26 machine that, upon insertion of cash, in the form of coins or bills, is able to play or 27 simulate the play of a video game, including video poker, keno, or blackjack, 28 authorized by the department, using a video display and microprocessors so that, by 29 chance, the player may receive free games or credits that can be redeemed for cash; 30 (48) "electronic gaming vendor" means a business whose primary 31 activity is not regulated by this chapter but that

01 (A) conducts electronic gaming activities on behalf of a 02 permittee; 03 (B) holds a business license under AS 43.70; and 04 (C) is an establishment holding a beverage dispensary license 05 under AS 04.11.090 that has not been designated by the Alcoholic Beverage 06 Control Board under AS 04.16.049(a)(2) - (3), has not been exempted by the 07 Department of Labor and Workforce Development under AS 04.16.049(c) and 08 AS 23.10.355, and, if the establishment is a hotel, motel, resort, or similar 09 business that caters to the traveling public as a substantial part of its business, 10 does not conduct the electronic gaming activities in a dining room, banquet 11 room, guest room, or other public areas other than a room in which there is 12 regularly maintained a fixed counter or service bar at which alcoholic 13 beverages are sold or served to members of the public for consumption; 14 (49) "net machine income" means money put into an electronic gaming 15 machine minus credits paid out in cash; 16 (50) "pull-tab vendor" means a business whose primary activity is not 17 regulated by this chapter but that 18 (A) is engaged in the sale of pull-tabs on behalf of a permittee; 19 (B) holds a business license under AS 43.70; and 20 (C) is an establishment holding a 21 (i) beverage dispensary license under AS 04.11.090 that 22 has not been designated by the Alcoholic Beverage Control Board 23 under AS 04.16.049(a)(2) - (3), has not been exempted by the 24 Department of Labor and Workforce Development under 25 AS 04.16.049(c) and AS 23.10.355, and if the establishment is a hotel, 26 motel, resort, or similar business that caters to the traveling public as a 27 substantial part of its business, does not allow the sale of pull-tabs in a 28 dining room, banquet room, guest room, or other public areas other 29 than a room in which there is regularly maintained a fixed counter or 30 service bar at which alcoholic beverages are sold or served to members 31 of the public for consumption;

01 (ii) package store license under AS 04.11.150. 02 * Sec. 26. AS 05 is amended by adding a new chapter to read: 03 Chapter 18. State Lottery. 04 Article 1. Administration. 05 Sec. 05.18.010. Creation of commission. (a) The Alaska State Lottery 06 Commission is established for the purpose of generating revenue for the state. The 07 commission is established in the Department of Revenue. The commission consists of 08 five members appointed by the governor, subject to confirmation by the legislature. 09 One member shall be appointed from each of the four judicial districts of the state. 10 The fifth member shall be an at-large member. Not more than three of the five 11 members may be members of the same political party. The governor shall appoint one 12 member to serve as chair of the commission. 13 (b) Members serve staggered terms of five years. A member may be 14 reappointed but may not serve for more than 10 years. 15 (c) A member of the commission does not receive a salary for service on the 16 commission but is entitled to per diem and travel expenses authorized for members of 17 boards and commissions under AS 39.20.180. 18 (d) A member of the commission may not have a pecuniary interest in a 19 contract or agreement entered into by the commission. 20 (e) A person may not serve as a member of the commission if that person 21 (1) has been convicted of 22 (A) a felony; or 23 (B) an offense under this chapter, AS 11.66.200 - 11.66.280, or a 24 comparable provision of municipal, state, or federal law; 25 (2) holds a license, permit, or registration under AS 05.15; or 26 (3) is an elected official of the state or of a political subdivision of the 27 state. 28 (f) A person may not serve as a member of the commission until the 29 investigation required under AS 18.65.080(b) is completed. 30 (g) Three members of the commission constitute a quorum for the transaction of 31 business.

01 (h) The governor may remove a member for cause, including incompetence, ne- 02 glect of duty, or misconduct in office. A member being removed for cause shall be given 03 a copy of the charges and afforded an opportunity to publicly present a defense in person 04 or by counsel upon not less than 10 days' notice. If a member is removed for cause, the 05 governor shall file with the lieutenant governor a complete statement of all charges made 06 against the member and the governor's findings based on the charges, together with a 07 complete record of the proceedings. 08 (i) The governor may immediately suspend a member for a violation of law or 09 for misconduct in office pending removal from office under (a) of this section. 10 Sec. 05.18.020. Meetings. (a) The commission shall meet at least quarterly at 11 the call of the chair, at the request of a majority of the members, or at a regularly 12 scheduled time set by the commission. 13 (b) An action of the commission is not binding unless taken at a meeting 14 where three or more of the members are present and vote in favor of the action. 15 Sec. 05.18.030. Duties and powers of commission. The commission shall 16 (1) enter into contracts and agreements necessary to carry out the 17 provisions of this chapter; 18 (2) adopt regulations necessary to carry out the provisions of this 19 chapter; 20 (3) determine policy direction for the operation and administration of 21 the lottery; 22 (4) report to the governor and the legislature each year, including a full 23 and complete statement of lottery revenue, prize disbursement, and other expenses, 24 and recommendations for changes in this chapter; 25 (5) report to the governor and the legislature as frequently as the 26 commission determines necessary on conclusions from the analysis of the reaction of 27 state residents to the lottery, and on matters that require changes in the law to prevent 28 violations or evasions of this chapter or to correct undesirable conditions in connection 29 with the operation or administration of the lottery; 30 (6) monitor the operation of the lottery throughout the state; 31 (7) study and investigate the operation and administration of the lottery

01 laws of other states and of federal laws that affect the lottery; and 02 (8) conduct two lotteries each year with one winner at each lottery; the 03 winner of the lottery shall receive 50 percent of the ticket sales for that lottery less the 04 expenses of the lottery not to exceed five percent of the total sales; the remaining 05 revenues from the ticket sales shall be deposited in the general fund. 06 Sec. 05.18.040. Regulations. The commission shall adopt regulations under 07 AS 44.62 (Administrative Procedure Act) to establish 08 (1) the manner of conducting the lotteries identified under 09 AS 05.18.030(8), and the calculation and awarding of prizes; 10 (2) the procedures for contracting with persons to be agents; 11 (3) the manner and amount of compensation to be paid agents; 12 (4) other matters necessary or desirable to carry out this chapter, to 13 operate the lottery efficiently and economically, and to make the purchase of lottery 14 tickets and the distribution of prizes convenient. 15 Sec. 05.18.050. Executive director and employees. (a) The commission 16 shall employ an executive director who is qualified by training and experience to 17 conduct the day-to-day work of the commission. The director may not engage in 18 another profession or occupation. 19 (b) Subject to the approval of the commission, the director may appoint 20 deputies required to carry out the functions and duties of the commission. The 21 director may appoint professional, technical, and clerical employees necessary to 22 perform the duties of the commission. 23 (c) The director and other employees of the commission are in the exempt 24 service under AS 39.25.110. 25 (d) The commission may not employ a person who has been convicted, 26 including conviction based on a guilty plea or plea of nolo contendere, of an offense 27 that disqualifies a person from being a member of the commission. 28 Sec. 05.18.060. Duties of director. The director shall 29 (1) supervise the operation and administration of the lottery; 30 (2) act as secretary to the commission; 31 (3) contract with agents to sell lottery tickets;

01 (4) meet at least quarterly with the commission on the operation and 02 administration of the lottery; 03 (5) make available for inspection by the commission, upon request, all 04 books, records, files, and other information and documents of the commission; 05 (6) advise the commission and make recommendations to improve the 06 operation and administration of the lottery; 07 (7) suspend or revoke a contract issued under this chapter for a 08 violation of this chapter or the regulations adopted under this chapter; 09 (8) subject to the approval of the commission, enter into contracts for 10 the operation and administration of the lottery, except that agent contracts are not 11 subject to the approval of the commission; and 12 (9) provide each six months to the commission a full and complete 13 statement of the lottery revenue, prize disbursements, and other expenses for the 14 preceding period. 15 Sec. 05.18.070. Subpoenas. (a) The director or the commission may 16 subpoena witnesses and documents in a matter over which the commission has 17 jurisdiction, control, or supervision. The director or the commission may administer 18 oaths and affirmations to persons whose testimony is required. 19 (b) If a person fails to obey a subpoena, or if a person refuses to answer a 20 relevant question or to exhibit a document when ordered to do so by the director or the 21 commission, the director or the commission may apply to the superior court for an 22 order directing the person to comply with the subpoena or the order. The court may 23 order the person to comply. 24 Article 2. Lottery Retail Sales Agents. 25 Sec. 05.18.100. Lottery retail sales agents. (a) The director may contract 26 with persons on behalf of the commission to be lottery retail sales agents. 27 (b) A lottery retail sales agent may 28 (1) sell lottery tickets; 29 (2) hire employees to perform the services under (1) of this subsection. 30 (c) An agent shall supervise each employee of the agent in the employee's 31 performance of the services under (b)(1) of this section.

01 Sec. 05.18.110. Qualifications for agent contracts. (a) A person who 02 wishes to contract with the commission to be an agent shall apply on a form provided 03 by the commission. The director shall charge the applicant a fee to cover the costs of 04 processing the application and checking the background of the applicant. 05 (b) Before contracting with an applicant to be an agent, the director shall 06 consider 07 (1) the financial responsibility and security of the applicant and the 08 applicant's business or activity; 09 (2) the accessibility of the applicant's place of business or activity to 10 the public; 11 (3) the ability of the applicant to promote the retail sale of lottery 12 tickets; 13 (4) the sufficiency of existing agent contracts to serve the public 14 convenience; 15 (5) the volume of expected sales; and 16 (6) other factors the director determines are relevant. 17 (c) The director may not contract with an applicant to be an agent if the 18 applicant 19 (1) would be engaged in business exclusively as an agent; 20 (2) is an individual under 18 years of age; or 21 (3) has been convicted of a felony or a gambling or gaming 22 misdemeanor, including conviction based on a guilty plea or plea of nolo contendere. 23 Sec. 05.18.120. Duration of agent contracts. The director may contract with 24 an agent for a term of not more than two years, but may renew the contract. 25 Sec. 05.18.130. Revocation or suspension of agent contracts. (a) The 26 director shall suspend or cancel the contract of an agent who violates AS 05.18.320. 27 (b) The director may suspend or cancel the contract of an agent who violates a 28 regulation adopted under this chapter or a provision of this chapter other than 29 AS 05.18.320. 30 (c) The director shall conduct proceedings to suspend or cancel an agent 31 contract under AS 44.62 (Administrative Procedure Act).

01 Sec. 05.18.140. Compensation of agents. (a) The director shall establish the 02 levels of compensation for agents. The director may establish bonus or incentive 03 awards. 04 (b) When establishing the compensation for agents, the director shall consider 05 (1) the time and the cost of overhead necessary to make the lottery 06 tickets available at convenient times and for sufficient hours to accommodate the 07 public; 08 (2) the time necessary for an agent to keep adequate records of the 09 sales of lottery tickets and to prepare the deposits and reports required under 10 AS 05.18.150; 11 (3) other criteria the director considers relevant. 12 Sec. 05.18.150. Deposit of receipts and reports. (a) Each agent shall 13 deposit to the credit of the state in a bank designated by the director all money 14 received by the agent from the sale of lottery tickets. 15 (b) Each agent shall file with the director on a form provided by the 16 commission weekly reports of the receipts and transactions in the sale of lottery 17 tickets. 18 (c) The director shall impose a service charge on an agent if the payor bank 19 dishonors 20 (1) a check that is deposited to the credit of the state by the agent; or 21 (2) an electronic transfer of funds to the state lottery account from the 22 account of the agent for money received from the sale of lottery tickets. 23 (d) The director may charge an agent interest on money that is not paid to the 24 state within 10 days after the due date and may impose an additional service charge in 25 an amount to cover administrative costs if the debt is referred for collection. 26 (e) The amount, including any interest or service charge, owed to the 27 commission by an agent is a lien on the property of the agent at the time that the 28 commission files a claim of lien in the recorder's office of the recording district of the 29 principal place of business of the agent. 30 Sec. 05.18.160. Bond. (a) Each applicant for an agent contract shall, at the 31 time of application under AS 05.18.110, file with the commission and maintain during

01 the term of an agent contract a bond running to the state with a corporate surety 02 qualified to do business in the state. The amount of the bond shall be determined by 03 the commission. 04 (b) The bond required by this section remains in effect until cancelled by 05 action of the surety, the principal, or the commission. 06 (c) The state or another person may not bring an action on the bond more than 07 three years after its cancellation. 08 Article 3. Prizes. 09 Sec. 05.18.200. Assignment of prizes. A person may not assign a right to a 10 prize. However, a prize may be paid to a person other than the prize winner under a 11 court order or to the estate of a deceased prize winner. The state is discharged of all 12 further liability when a prize has been paid under this section. 13 Sec. 05.18.210. Payment of prizes to persons under 18 years. (a) If a 14 person entitled to a prize is under 18 years of age, the director may deliver the prize by 15 depositing the amount of the prize in a bank to the credit of an adult member of the 16 minor's family, or a guardian of the minor, as custodian for the minor. The person 17 named as custodian shall have the same duties and powers as a person designated as a 18 custodian under AS 13.46. 19 (b) The state is discharged of all further liability after payment of a prize to a 20 minor under this section. 21 (c) In this section, 22 (1) "bank" has the meaning given in AS 45.14.105; 23 (2) "guardian" has the meaning given in AS 13.06.050; 24 (3) "member of the minor's family" has the meaning given in 25 AS 13.46.990. 26 Sec. 05.18.220. Unclaimed prize money. The director shall retain unclaimed 27 prize money for the person entitled to it for one year after the prize is awarded. If the 28 winner does not claim the prize money within the year, the commission shall return 29 the money and accrued interest to the state lottery fund. 30 Article 4. Miscellaneous Provisions. 31 Sec. 05.18.300. State lottery fund and appropriations. There is created in

01 the general fund the state lottery fund. The state lottery fund consists of all revenue 02 received from the sale of lottery tickets and all other money credited or transferred to 03 the fund from another fund or source. 04 Sec. 05.18.310. Audit. The commission shall have an audit of the books and 05 accounts of the commission performed at least once in each year by certified public 06 accountants. The commission may have special audits performed at any time on its 07 own motion or at the request of the director. The commission shall file a copy of each 08 audit with the commissioner of revenue and the legislature. 09 Sec. 05.18.320. Prohibited acts. (a) A person may not 10 (1) knowingly act as an agent or sell a lottery ticket unless the person 11 has a contract with the commission to be an agent, or is an employee of an agent and 12 sells lottery tickets under the supervision of the agent; 13 (2) knowingly sell a lottery ticket at a price greater than that fixed by 14 the commission; 15 (3) knowingly sell or offer to sell a lottery ticket to a person under 18 16 years of age; 17 (4) knowingly present a counterfeit or altered lottery ticket for 18 payment or transfer a counterfeit or altered lottery ticket to another person to present 19 for payment; 20 (5) with intent to defraud, falsely make, alter, forge, utter, pass or 21 counterfeit a lottery ticket; or 22 (6) impersonate a lottery representative. 23 (b) A lottery retail sales agent, the governor, or an officer, employee, or 24 contractor of the commission or the Office of the Governor may not purchase a lottery 25 ticket or receive a lottery prize. 26 (c) An agent may not knowingly withhold funds owed to the lottery. 27 (d) This section does not prohibit a person from giving a lottery ticket to 28 another person of any age. 29 (e) In this section, "knowingly" has the meaning given in AS 11.81.900. 30 Sec. 05.18.330. Assignment of contracts. A person that enters into a contract 31 under this chapter may not assign the contract without the approval of the commission.

01 Sec. 05.18.340. Penalty. A person that violates AS 05.18.150 - 05.18.200, 02 05.18.320, or 05.18.330 is guilty of a class C felony. 03 Sec. 05.18.350. Statement of odds. Each lottery ticket must indicate the odds 04 of winning a prize in the particular lottery game represented by the lottery ticket. 05 Sec. 05.18.360. Applicability of other laws. Other laws regarding the sale of 06 lottery tickets or the administration of a lottery do not apply to the sale of lottery 07 tickets under this chapter. 08 Article 5. General Provisions. 09 Sec. 05.18.900. Definitions. In this chapter, unless the context requires 10 otherwise, 11 (1) "agent" means a person who has contracted with the commission to 12 be a lottery retail sales agent under this chapter; 13 (2) "agent contract" means a contract under AS 05.18.100 between the 14 state and a person for the person to be an agent; 15 (3) "commission" means the Alaska State Lottery Commission; 16 (4) "director" means the executive director of the commission; 17 (5) "lottery" or "state lottery" means the lottery established and 18 operated under this chapter; 19 (6) "lottery ticket" means a ticket, receipt, card, or other item, received 20 by a person from an agent or an employee of an agent as evidence of participation in 21 the lottery; 22 (7) "operation and administration" includes accounting, sales, 23 promotion, and security; 24 (8) "person" has the meaning given in AS 01.10.060 and also includes 25 an estate, receiver, trustee, assignee, referee, or other person acting in a fiduciary or 26 representative capacity, whether appointed by a court or otherwise, and a department, 27 commission, agency, or instrumentality of the state, including a municipality and an 28 agency or instrumentality of a municipality. 29 * Sec. 27. AS 11.66.280(2) is amended to read: 30 (2) "gambling" means that a person stakes or risks something of value 31 upon the outcome of a contest of chance or a future contingent event not under the

01 person's control or influence, upon an agreement or understanding that that person or 02 someone else will receive something of value in the event of a certain outcome; 03 "gambling" does not include 04 (A) bona fide business transactions valid under the law of 05 contracts for the purchase or sale at a future date of securities or commodities 06 and agreements to compensate for loss caused by the happening of chance, 07 including contracts of indemnity or guaranty and life, health, or accident 08 insurance; [OR] 09 (B) playing an amusement device that 10 (i) confers only an immediate right of replay not 11 exchangeable for something of value other than the privilege of 12 immediate replay; and 13 (ii) does not contain a method or device by which the 14 privilege of immediate replay may be cancelled or revoked; 15 (C) an activity authorized by the Department of Revenue under 16 AS 05.15 or AS 05.18; 17 * Sec. 28. AS 11.66.280(3) is amended to read: 18 (3) "gambling device" means any device, machine, paraphernalia, or 19 equipment that is used or usable in the playing phases of unlawful gambling, whether 20 it consists of gambling between persons or gambling by a person involving the playing 21 of a machine; "gambling device" does not include 22 (A) lottery tickets, policy slips, or other items used in the 23 playing phases of lottery or policy schemes; [OR] 24 (B) an amusement device as described in (2)(B) of this section; 25 or 26 (C) an electronic gaming machine permitted by the 27 commissioner of revenue under AS 05.15; 28 * Sec. 29. AS 18.65.080 is amended by adding a new subsection to read: 29 (b) The Department of Public Safety shall investigate and ascertain whether a 30 person appointed by the governor to serve as a member of the Alaska Gaming 31 Commission has been convicted of a crime set out in AS 05.18.010(e).

01 * Sec. 30. AS 29.10.200(51) is amended to read: 02 (51) AS 29.45.650(c), (d), (e), [AND] (f), and (i) (sales and use tax); 03 * Sec. 31. AS 29.45.650 is amended by adding a new subsection to read: 04 (i) A borough may not levy or collect a sales tax on sales, rents, and services, 05 or a use tax on the storage, use, or consumption of personal property on electronic 06 gaming machines and electronic gaming. This subsection applies to home rule and 07 general law municipalities. 08 * Sec. 32. AS 29.45.700(d) is amended to read: 09 (d) A city that levies and collects sales and use taxes under (a) of this section 10 may not levy and collect a sales tax on a purchase made with (1) food coupons, food 11 stamps, or other types of allotments issued under 7 U.S.C. 2011 - 2036 (Food Stamp 12 Program); or (2) food instruments, food vouchers, or other type of certificate issued 13 under 42 U.S.C. 1786 (Special Supplemental Food Program for Women, Infants, and 14 Children). For purposes of this subsection, the value of a food stamp allotment paid in 15 the form of a wage subsidy as authorized under AS 47.25.975(b) is not considered to 16 be an allotment issued under 7 U.S.C. 2011 - 2036 (Food Stamp Program). A city 17 that levies and collects sales and use taxes under (a) of this section may not levy 18 and collect a sales or use tax on sales, rents, services, storage, use, or 19 consumption, of electronic gaming machines or electronic gaming. This 20 subsection applies to home rule and general law municipalities. 21 * Sec. 33. AS 39.25.110(11) is amended to read: 22 (11) the officers and employees of the following boards, commissions, 23 and authorities: 24 (A) [REPEALED 25 (B)] Alaska Permanent Fund Corporation; 26 (B) [(C)] Alaska Industrial Development and Export Authority; 27 (C) [(D)] Alaska Commercial Fisheries Entry Commission; 28 (D) [(E)] Alaska Commission on Postsecondary Education; 29 (E) [(F)] Alaska Aerospace Development Corporation; 30 (F) Alaska State Lottery Commission; 31 * Sec. 34. AS 39.50.200(b) is amended by adding a new paragraph to read:

01 (57) Alaska State Lottery Commission (AS 05.18). 02 * Sec. 35. AS 05.15.690(44) is repealed. 03 * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 REGULATIONS. Notwithstanding the effective date of secs. 1 - 25, 28, 30 - 32, and 06 35 of this Act, the Department of Revenue shall begin the process under AS 44.62 07 (Administrative Procedure Act) of adopting regulations to implement those sections of this 08 Act so that the regulations can take effect January 1, 2004, or as soon thereafter as is possible. 09 * Sec. 37. Except as provided in sec. 38 of this Act, this Act takes effect January 1, 2004. 10 * Sec. 38. Sections 26, 27, 29, 33, 34, and 36 of this Act take effect immediately under 11 AS 01.10.070(c).