Legislature(1993 - 1994)
04/22/1993 01:00 PM House JUD
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
TAPE 93-69, SIDE A
Number 000
The House Judiciary Standing Committee meeting was called to
order at 1:15 p.m. on April 22, 1993. Vice-Chair Jeannette
James, chairing the meeting in the absence of Chairman
Porter, announced that the purpose of the meeting was to
hold a work session on SB 76. She noted that the bill would
be back before the committee again on the following day.
SB 76 CHARITABLE GAMING RESTRICTIONS
Number 026
KEN ERICKSON, LEGISLATIVE AIDE TO SEN. DRUE PEARCE, PRIME
SPONSOR OF SB 76, read a sponsor statement. In summary, he
said that although many rumors surrounded SB 76, it was
really a very simple bill which accomplished two main
things: it increased the amount of money going to
charitable organizations, and it prevented the criminal
element from gaining a foothold in the state's charitable
gaming industry. He said the bill would not increase the
amount of gaming in the state.
MR. ERICKSON added that SB 76 restricted the ways in which
profits derived from gambling could be used by prohibiting
the current diversion of profits to political campaigns. He
commented that the bill increased charities' guaranteed
percentage of return from gaming activities and allowed
charities alternatives to placing their permits with "for
profit" operators. He stated SB 76 gave non-profit entities
additional avenues by which to generate money using their
permits while restricting the activities of "for profit"
operators.
MR. ERICKSON discussed SB 76, as originally introduced by
Sen. Pearce. He noted that the original SB 76 prevented
criminals from gaining a foothold in gaming by denying some
felons access and controlling the access of others. Also,
he said, the original SB 76 disallowed the use of bingo or
pull-tab net proceeds for direct political contributions to
candidates. All non-profit organizations, including
political parties and labor organizations, would still be
allowed to hold permits and use their proceeds for
administrative expenses or other uses. They could still use
raffles and other permitted games to earn money which could
then be used for direct contributions to candidates, he
noted.
MR. ERICKSON next outlined additions which the Senate
Finance Committee had made to SB 76. He said that a
prohibition against using net proceeds to directly or
indirectly pay registered lobbyists was added to the bill.
Also, he said, the Senate Finance Committee added third
party vendor language, giving non-profit organizations a
profitable alternative to placing their permits with "for
profit" operators. He stated that the committee had also
added multiple beneficiary permit language to SB 76. That,
he said, would allow two to six permittees to jointly
operate their permits.
MR. ERICKSON noted that the Senate Finance Committee also
added a requirement that the Department of Commerce and
Economic Development (DCED) approve contracts between
operators and permittees. Language allowing the DCED to
revoke a permit, license, or vendor registration upon proof
that "inside" information was given or acted upon was also
added to the bill, he said. Requirements that the DCED
license out-of-state pull-tab manufacturers and that
operators increase the return of net proceeds from pull-tabs
to charities from 15% to 30% were also added to SB 76, he
said. The minimum required return on other gaming
activities was increased from 0% to 10%, he added.
MR. ERICKSON commented that, under existing law, pull-tabs
could be sold in bars and liquor stores, but current
statutes did not provide clear guidelines for direct third-
party relationships between permittees and those facilities.
Senate Bill 76's third-party provisions, he said, provided a
reasonable licensing scheme for activities which were
already occurring. Also, the bill provided DCED with the
tools it needed for effectively regulating third-party
activities.
MR. ERICKSON stated that, under current law, all bars and
package liquor stores could sell pull-tabs, but many chose
not to do so. Senate Bill 76 would not change that. He
asserted that the bill would not expand gambling, nor would
it put genuine charitable organizations out of business.
The bill would not set unrealistic minimum returns to
charities, nor would it prevent non-profit charities from
holding permits. What SB 76 would do, he said, was to
increase by 100% guaranteed pull-tab receipts to charities.
Every non-profit now eligible to conduct gaming would remain
eligible under SB 76. And, he said, they would be allowed
to retain even greater proceeds if they became direct
operators by placing their permits with third-party vendors.
He said that Sen. Pearce urged the committee to pass CSSB
76(FIN), unamended, out of committee as soon as possible.
Number 198
REP. NORDLUND thanked Mr. Erickson for his explanation. He
noted that, as a member of the House, he was somewhat
insulted that the sponsor asked that the committee pass the
bill without amendment. He said that the House should have
the right to improve SB 76 in any way that it saw fit.
Given the restrictive title of the bill, he said, the House
had little choice but to pass it unamended. He asked Mr.
Erickson to explain why the Senate had chosen to put such a
restrictive title on the bill.
Number 212
MR. ERICKSON commented that charitable gaming was a very
contentious issue. He said that the length of the title was
an effort to provide clarity regarding the Senate's wishes.
He stated that the title allowed for some changes to be made
to the bill.
Number 222
REP. NORDLUND stated that he intended to introduce a
concurrent resolution to suspend the rules on SB 76's title,
so that the House could amend the bill if it saw fit.
REP. DAVIDSON asked Mr. Erickson to provide a comprehensive
list of the regulatory tools provided to the DCED in SB 76.
MR. ERICKSON replied that Mr. John Hansen, from the DCED,
could more adequately respond to Rep. Davidson's question.
Number 245
REP. DAVIDSON asked Mr. Erickson if the current situation of
all bars and package liquor stores being allowed to sell
pull-tabs if they so chose would continue upon enactment of
SB 76.
Number 254
MR. ERICKSON commented that the existing situation would
continue.
Number 257
REP. DAVIDSON asked Mr. Erickson if he anticipated that SB
76 would result in more vendors selling pull-tabs.
Number 261
MR. ERICKSON replied that because "vendors" did not exist
under current law, the answer to Rep. Davidson's question
was "yes." What SB 76 did, he added, was to legitimize an
activity which was currently occurring.
Number 263
REP. DAVIDSON asked Mr. Erickson to explain SB 76's effect
on beverage licensees.
Number 269
MR. ERICKSON noted that beverage licensees, under SB 76,
would be allowed to become vendors.
Number 272
REP. DAVIDSON asked who would receive the profits if a
beverage licensee agreed to sell pull-tabs.
Number 277
MR. ERICKSON stated that, under current law, there were
permittees and operators. Permittees could sell pull-tabs
themselves, and run the selling organization themselves, he
said. Or they could contract with an operator, a for-profit
entity that took his or her cut for providing the service to
the non-profit, he said. By allowing permittees to sell
directly to vendors, he added, the "middle man" was
bypassed. He said that not all non-profits would choose to
sell to vendors: they might choose to operate the game
themselves, or continue to contract with an operator.
Number 303
REP. DAVIDSON asked Mr. Erickson if SB 76 would result in
more alcoholic beverage establishments selling pull-tabs.
Number 310
MR. ERICKSON predicted that SB 76 would result in a
redistribution of how the money flowed, but not an increase
in gaming activity. He said that if some bars currently
chose not to sell pull-tabs, as they did not fit in with the
bar's image, those bars would probably continue not to sell
pull-tabs after passage of SB 76.
Number 315
REP. DAVIDSON expressed his concerns about the increased
mixing of alcohol and gaming throughout the state, but
particularly in rural areas.
Number 329
CHAIR JAMES asked Mr. Erickson to explain the difference
between a vendor and an operator.
Number 330
MR. ERICKSON stated that, statutorily, a vendor would be
required to return 50% of the "ideal net proceeds" up-front.
A permittee would go to a distributor of pull-tabs, he said,
buy the pull-tabs, and present them to a vendor. The vendor
would then write a check right then to the permittee for 50%
of the ideal net. The vendor would then sell the pull-tabs,
award the prizes, and pay for his or her overhead out of the
remaining 50%.
MR. ERICKSON noted that an operator tended to be an
organization like a bingo palace or a bar. An operator,
under current law, was required to return 15% of adjusted
gross income to a permittee every two quarters. Operators
ran businesses which focused on running bingo games and
pull-tabs, he said. Few operators also sold alcohol.
Number 358
REP. DAVIDSON asked Mr. Erickson to explain the meaning of
"ideal net proceeds."
Number 362
MR. ERICKSON offered an example that, if every pull-tab in a
box were sold, a person would have $100. Prizes awarded to
the pull-tab players would equal $80. The "ideal net" would
be the remaining $20, he said, minus a very small amount for
taxes.
Number 382
REP. DAVIDSON said that, assuming that SB 76 would result in
more alcoholic beverage licensees selling pull-tabs, what
kind of enforcement would occur, particularly in light of
budget cuts to the Alcoholic Beverage Control (ABC) Board?
Number 396
COMMISSIONER (COMM.) PAUL FUHS, DEPARTMENT OF COMMERCE AND
ECONOMIC DEVELOPMENT, noted that the ABC Board would have
nothing to do with gaming operations.
Number 399
REP. DAVIDSON asked how the DCED would oversee gaming
operations in bars.
MR. ERICKSON stated that Mr. Hansen could best address Rep.
Davidson's question.
COMM. FUHS distributed several documents, one of which
compared SB 76 with HB 168, CHARITABLE GAMING AMENDMENTS.
He noted that SB 76, as passed by the Senate, enjoyed the
strong support of the Governor.
REP. DAVIDSON noted that the Schedule E document distributed
by the Commissioner seemed somewhat "stacked" and asked that
another example of a Schedule E be provided to the
committee, one which contained examples of bipartisan
contributions.
Number 464
COMM. FUHS said that he would provide another example of a
Schedule E, per Rep. Davidson's request. He outlined the
components of SB 76, as indicated on the document entitled
"COMPARITIVE (sic) ANALYSIS." He said that SB 76 allowed
for multiple beneficiary permits, which helped smaller
permittees with reporting requirements. Also, the bill
would require the DCED to approve contracts between
operators and permittees. Senate Bill 76 would also raise
the amount of money received by non-profit organizations:
from 0% to 10% for bingo, and from 15% to 30% for pull-tab
operations.
COMM. FUHS commented that SB 76 would also prohibit the
exchange of "inside" information, and require vendors to pay
50% of the ideal net at the time of pull-tab delivery. He
said that the bill also required NAGRA (North American
Gaming Regulators Association) standards for pull-tab
manufacturers. Additionally, he said, SB 76 prohibited
felons from becoming involved in gaming operations, but
loosened up to some degree prohibitions against people
convicted of misdemeanors.
COMM. FUHS stated that the bill would also prohibit the
diversion of net proceeds to political campaigns and
lobbyists.
Number 561
REP. DAVIDSON asked why contributions to lobbyists and
candidates were prohibited, but contributions to ballot
measure campaigns were not.
Number 569
COMM. FUHS responded that most abuse occurred in relation to
lobbyist and candidate contributions. He expressed his
opinion that, until campaign contributions were removed from
the gaming equation, it would be very difficult to achieve
significant gaming reform.
Number 580
CHAIR JAMES mentioned that organizations which fit under the
federal government's 501(c)(3) category were strictly
prohibited from doing anything which affected legislation.
She asked why Alaska did not restrict gaming activities to
501(c)(3) organizations.
Number 590
COMM. FUHS replied that, by restricting gaming to 501(c)(3)
organizations, the state might end up excluding some
organizations, like Little League baseball, or community
theater groups, that everyone could agree were charitable
organizations.
REP. DAVIDSON asked Comm. Fuhs to discuss the Alaska
Charitable Gaming Association.
COMM. FUHS noted that for-profit gaming operators had banded
together to form a non-profit trade association to lobby for
their industry. He continued outlining the components of
SB 76, as described on the document entitled "COMPARITIVE
(sic) ANALYSIS." He said SB 76 would give the DCED specific
authority to suspend or revoke the permits of licensees or
vendors for up to five years. Finally, he said, the bill
would give the Commissioner of DCED the authority to issue
an emergency 60-day order to stop illegal gaming activities.
COMM. FUHS stated that SB 76 significantly increased the
regulation of gaming, and increased the proceeds that must
be transmitted to charitable organizations. He called the
committee members' attention to a graph entitled, "Numbers
as reported by permittees and operators 1991."
Number 662
REP. GREEN noted that the numbers on the graph did not add
up.
Number 675
JOHN HANSEN, GAMING MANAGER FROM THE DCED, responded that
the numbers which appeared on the graph were unaudited
numbers which had been submitted on permittees' and
operators' financial statements.
Number 683
REP. GREEN asked Mr. Hansen if he found the fact that the
numbers did not add up to be "scary."
Number 686
MR. HANSEN replied that he found it very scary.
Number 688
COMM. FUHS stated that one advantage of using a vendor was
that a charitable organization would receive 50% of the
ideal net up front.
Number 691
REP. GREEN asked if the "net" portion of the graph referred
to "ideal net."
Number 693
COMM. FUHS explained that ideal net was the amount that a
person would receive if he or she sold all of the pull-tabs
in a box, less prizes awarded.
Number 700
REP. GREEN asked for an explanation of how much money a
vendor would write a permittee a check for, if the permittee
brought the vendor $204 million worth of pull-tabs.
Number 709
MR. HANSEN offered an example of a box of pull-tabs
containing 2,000 tickets. The DCED would collect an excise
tax on the ideal net, he said. If out of that box of pull-
tabs, $1,500 would be paid out in prizes, then $500 would be
the ideal net. The state collected a 3% tax on the ideal
net, he added. The only difference between ideal net and
adjusted gross income, was that in the computation of
adjusted gross income, taxes were included.
Number 720
REP. GREEN asked if, on the graph, the adjusted gross income
was approximately the amount of the ideal net.
MR. HANSEN said that Rep. Green was correct.
REP. GREEN questioned why, on the graph, the amount which
went to charity was substantially less than half of the
adjusted gross income.
Number 727
COMM. FUHS commented that expenses included salaries for
employees and facility rental and utilities. Also included
in the expenses category was the operator's profit, he
added.
Discussion ensued among Mr. Hansen, Comm. Fuhs, and Rep.
Green over the numbers on the graph.
Number 747
CHAIR JAMES asked if it would be legal for a vendor to not
sell all of the pull-tabs in a series, if he or she knew
that the biggest prize had not yet been won.
Number 755
MR. HANSEN replied that that would be illegal. But, he
said, a new pull-tab game could be mixed in with a "stale"
jar of pull-tabs, as long as no more than ten percent of the
existing game remained in the jar. He noted that, under
current law, there was no prohibition against trading
information about pull-tab games. Attempts to address that
problem through regulation, he said, resulted in a
prohibition against family members playing pull-tab games
which were sold by other family members. However, that
presented problems in rural Alaska. He said SB 76 prohibited
the disclosure of "inside" information.
Number 770
CHAIR JAMES questioned how the trading of "inside"
information could be controlled.
Number 772
COMM. FUHS acknowledged that it was difficult to detect the
disclosure of "inside" information. But, he said, having a
sanction on the books could help limit its occurrence.
Those who would be watching for information trading would be
patrons of the establishments which sold pull-tabs, he
noted.
Number 788
REP. DAVIDSON asked Comm. Fuhs to explain to the committee
how a pull-tab game worked.
COMM. FUHS stated that there were 2,000 tickets in a series
of pull-tabs. He explained that pull-tabs were small cards
which came in a box and likened them to "paper slot
machines."
Number 801
REP. GREEN asked about the odds of winning when playing
pull-tabs. He asked if the prizes were cash awards.
COMM. FUHS replied that the prizes were cash awards.
REP. GREEN asked Comm. Fuhs if he had any idea what kind of
people played pull-tabs. He discussed a woman whom he had
seen playing pull-tabs in the past, and noted that it
appeared that she had little disposable income.
Number 820
COMM. FUHS stated that the DCED had not conducted a study on
the demographics of those people who purchased pull-tabs.
However, he stated his belief that, in general, people who
could not afford to play pull-tabs were more likely to play
than those who could afford to gamble. For that reason, he
said, it was important that if gaming were to occur in
Alaska at all, the proceeds should go to charitable
organizations.
TAPE 93-69, SIDE B
Number 000
CHAIR JAMES asked if it were correct to assume that if pull-
tabs were banned, there would probably be no bingo parlors,
due to the small amount of money generated by bingo games.
Number 020
COMM. FUHS noted that there were bingo parlors before there
were pull-tabs. He stated that sometimes bingo was used as
a "loss leader" to draw patrons into a gaming establishment.
Once there, the patrons would also buy pull-tabs, he said.
He stated that bingo operations had higher overhead than did
pull-tab operations.
Number 035
REP. NORDLUND asked Comm. Fuhs if he thought it advisable to
allow pull-tabs to be sold in bars. He expressed his
opinion that if the legislature truly wanted to clean up
gaming, then pull-tabs should be banned from bars.
Number 050
COMM. FUHS commented that the DCED had had no reports of
differing behavior in bars and bingo parlors. He expressed
his opinion that it made some sense to confine gaming
activities to "adults only" locations.
Number 068
REP. NORDLUND asked if there were any provisions in SB 76
that would ensure that all permittees had equal
opportunities to place their pull-tabs with vendors.
COMM. FUHS noted that there were no such provisions in SB
76.
REP. NORDLUND expressed concern about the inequity of that
situation.
Number 095
COMM. FUHS said that he did not know how the legislature
could attempt to address that perceived problem. He noted
instances in which operators had cancelled the games
benefiting legitimate charitable organizations, while
continuing the games benefiting political parties and trade
associations. He said that SB 76 would stop that practice.
Number 111
MR. HANSEN stated that under both current law and SB 76's
provisions, there were prize limitations for organizations
on a calendar-year basis. When permittees used operators,
he said, that prize limitation was $500,000. That
limitation gave more permittees opportunities to utilize the
services of operators, he said. Self-directed permittees
had a prize limitation of $1 million, he noted.
Number 131
REP. DAVIDSON asked if Alaska Lotto, once it reached the $1
million prize limitation, ceased to operate games.
Number 140
MR. HANSEN stated that Lottery Alaska was a for-profit
licensed operator which conducted gaming for various
permittees. At the point when Lottery Alaska had paid out
$500,000, he said, it was required to operate games on
behalf of other permittees. He noted that Lottery Alaska
had been involved in some unauthorized activities, which the
state had stopped.
Number 157
REP. DAVIDSON indicated his support for certain elements of
SB 76, particularly the increased amounts of money directed
to charities and the prohibition against certain convicted
criminals becoming involved in charitable gaming. But, he
said that he was concerned that SB 76 would increase the
amount of gambling in the state.
Number 174
COMM. FUHS said that he could only speculate, but noted his
belief that SB 76 would not increase the amount of gambling.
What it did increase was the amount of money that went to
the charities. He said that the reforms contained in SB 76
were desperately needed, but represented only a fraction of
what needed to be done in this area.
Number 205
REP. DAVIDSON stated that it appeared that SB 76 expanded
the number of locations at which gambling could occur. He
asked Comm. Fuhs how the legislature could monitor gaming
activity.
COMM. FUHS noted that the DCED was required to report to the
legislature on a yearly basis regarding gaming activity.
REP. DAVIDSON expressed his opinion that the legislature
should look into the demographics of charitable gaming
activity. He asked about the cost of SB 76 to the DCED.
Number 238
COMM. FUHS responded that the gaming division did need more
money for auditing and enforcement. He said that the fiscal
year 94 budget would include increased amounts of money for
that purpose. He noted that under an Executive Order issued
by the Governor, the Division of Gaming would be moving from
the DCED to the Department of Revenue (DOR). He expressed
his opinion that SB 76 would not substantially increase the
Gaming Division's workload.
Number 257
REP. DAVIDSON asked if one additional auditor would be
sufficient.
Number 258
COMM. FUHS replied that more than one additional auditor
would probably be useful, but recognized that attempts had
to be made to reduce the operating budget. He predicted
that the additional auditor would generate more revenue than
it cost to employ him or her. He stated that auditors were
in an enforcement role.
Number 268
REP. KOTT asked if a $381,000 increase for the division
adopted by the House Finance Committee would buy more than a
single auditor.
COMM. FUHS replied that the Senate Finance Committee had
only put in money for one auditor, but that the House
Finance Committee had included even more money for
enforcement.
Number 278
REP. GREEN noted that there was a big difference between the
House Finance Committee's $381,000 addition and the Senate
Finance Committee's $87,000.
Number 288
COMM. FUHS mentioned the Governor's support for the
additional $381,000 added by the House Finance Committee for
auditing and enforcement of gaming.
Number 301
REP. GREEN questioned why a permittee would choose to
operate its own game, instead of selling pull-tabs directly
to a vendor. He said that it seemed to him that a permittee
would receive more income by selling pull-tabs directly to a
vendor.
Number 322
COMM. FUHS stated that permittees who ran their own gaming
activities received all of the profits, whereas permittees
who used the services of operators received only
approximately 50% of the profits. He noted that many
permittees did not have the administration or personnel to
run games, and chose to have operators run the games
instead, even though the charities would receive less money.
Number 336
REP. GREEN asked if there was any requirement about posting
odds information at pull-tab locations.
Number 353
MR. HANSEN replied that each pull-tab game contained odds
information. He showed the committee a box of pull-tabs and
explained that each box contained a bar-coded state
identification stamp, which was used by the state for
tracking purposes. He said that this resulted in easier
auditing procedures.
(Rep. Porter arrived at 2:20 p.m.)
Number 393
REP. GREEN questioned how the increased percentages of
proceeds which went to the permittees in SB 76 had been
chosen.
Number 413
COMM. FUHS stated that the Governor's regulations requiring
a 40% return to charities had been in place for one quarter
of a calendar year. During that time, he said, some
inefficient locations had gone out of business. He
expressed the DCED's position that 30% for pull-tabs and 10%
for bingo were fair numbers which should not force any
operators to go out of business. He said that further
adjustments to the percentages could be made at a later
date, if the need arose.
Number 432
REP. NORDLUND asked if the gaming regulation was completely
paid for by program receipts.
COMM. FUHS replied that Rep. Nordlund was correct, and that,
in addition, charitable gaming provided the state with an
extra $1 million annually in revenue.
Number 450
REP. NORDLUND asked if the revenue was generated by the 3%
tax on pull-tabs.
MR. HANSEN noted that the majority of revenue came from that
tax. But, he said, the state also collected a 1% tax on net
proceeds.
REP. NORDLUND asked if the DCED had considered increasing
those taxes.
MR. HANSEN noted that the charitable gaming program was not
designed to raise revenue for the state.
COMM. FUHS noted that increasing taxes would take money away
from the charities.
Number 464
REP. PORTER noted that the House's version of the operating
budget would allow three more auditors to be hired for the
Gaming Division. He added that the extra auditors were
expected to generate an additional $1 million in revenue to
the charities.
COMM. FUHS mentioned that the extra auditors would probably
bring in more gaming tax revenues to the state as well.
Number 479
REP. DAVIDSON asked about the pull-tab manufacturers.
Number 480
MR. HANSEN stated that there were ten pull-tab manufacturers
in the nation. He said that there were no federal
guidelines regarding the manufacture of pull-tabs. Current
state law required that pull-tabs have a NAFTM (National
Association of Fund-Raising Ticket Manufacturers) seal. He
said SB 76 would change that by requiring that pull-tabs
must meet certain standards, but would not have to have the
NAFTM seal. He expressed his opinion that it was not right
that Alaska statutes currently gave NAFTM, a trade
association, exclusive rights to market pull-tabs in the
state.
REP. DAVIDSON asked who would order pull-tabs from a
manufacturer in the event that a permittee worked with a
vendor.
MR. HANSEN said that a permittee was required to purchase
pull-tabs from an Alaska pull-tab distributor and deliver
them to a vendor. He noted that there were approximately 30
distributors in the state.
Number 529
Regarding new restrictions imposed by SB 76, REP. DAVIDSON
questioned why the state should care what a non-profit
organization did with its net gaming proceeds.
Number 533
COMM. FUHS replied that when those proceeds were used for
campaign contributions and to pay registered lobbyists, it
was very difficult to enact gaming reforms.
Number 561
REP. DAVIDSON asked why it would be wrong for a charitable
organization to use gaming proceeds for campaign
contributions.
Number 571
COMM. FUHS reiterated his statement regarding the difficulty
that such a situation created in efforts to reform
charitable gaming activities.
MR. HANSEN said that, under current law, the use of gaming
proceeds was regulated. He said SB 76 would eliminate
campaign contributions, which was now an allowed use.
Contributions could still be made to political parties under
SB 76, he noted.
REP. DAVIDSON asked about the effect of removing SB 76's
provisions regarding how charitable organizations could
spend their gaming proceeds.
COMM. FUHS stated that that would eliminate one of SB 76's
major reforms. He expressed his opinion that politicians
and lobbyists were not charities and that most Alaskans
believed that combining gambling and government was wrong.
Number 622
CHAIR JAMES indicated her preference that no organizations
except those charities with section 501(c)(3) status should
be allowed to be permittees.
Number 635
COMM. FUHS expressed his opinion that restricting charitable
gaming to 501(c)(3) organizations would have the unintended
consequence of preventing many worthy groups from
participating in charitable gaming.
Number 654
CHAIR JAMES expressed her opinion that there must be some
way to include legitimate charitable organizations while
excluding non-legitimate charitable organizations. She said
it would be better to prohibit organizations which would
spend their money on political campaigns and lobbyists from
being involved in gaming in the first place than to allow
them to be involved, but prohibit them from using the gaming
proceeds for certain purposes. She stated that it was not
right to allow gaming proceeds to "free up" other funds for
campaign and lobbyist contributions.
Number 663
REP. GREEN asked if SB 76 would have any adverse effects on
reporting requirements.
Number 677
COMM. FUHS replied that existing reporting requirements
would remain in effect. He also clarified that the bill
would not prohibit raffles.
REP. GREEN asked about the number of pull-tab games which
permittees could operate at any given time.
MR. HANSEN stated that under one permit, a permittee could
operate as many pull-tab games as he or she wished. He
noted that the bill's requirement that vendors pay
permittees up front would limit the number of games which a
vendor could purchase at one time.
Number 705
REP. DAVIDSON asked if it were correct to say that SB 76 did
not expand gambling.
Number 709
COMM. FUHS replied that Rep. Davidson was correct. He added
that the bill brought existing gaming activities under
stricter regulation. He said that he could only speculate
what might happen upon enactment of SB 76; however, he said
the DCED did not expect to see an increase in the extent of
gambling in the state.
REP. DAVIDSON asked what Comm. Fuhs' recommendation to the
legislature would be in the event that SB 76 resulted in a
huge increase in gambling.
COMM. FUHS responded that the legislature and the
administration would have to consider the effects of SB 76's
enactment.
REP. DAVIDSON commented that there was something basically
hypocritical about the desire to not have a great deal of
gambling, but allowing gambling to ensure that charitable
organizations continued to exist.
Number 729
CHAIR JAMES noted that charities protested vociferously when
there was talk of banning charitable gaming.
Number 735
COMM. FUHS discussed a document which the committee had just
received from Higgins Corporation. He mentioned that a
"mystery" group called Alaskans for Less Gaming had started
running radio advertisements. Those advertisements were
paid for by Higgins Corporation, he noted, which was run by
the head lobbyist fighting gaming reform in Alaska. He said
that it was still unclear as to who was involved in Alaskans
for Less Gaming, but he suspected that it was made up of
interests trying to prevent passage of SB 76. He noted that
the group was spending a lot of money and making
contradictory claims.
Number 762
REP. DAVIDSON mentioned Attachment A of the Higgins
Corporation document, which alleged that SB 76 would not
"take Higgins out." In that context, he asked why there
might be an alleged interest in taking Higgins out.
COMM. FUHS noted that in the Senate Judiciary Committee
hearing on SB 76, Mr. Chip Thoma had testified that the bill
was intended to take out one gaming operator, Mr. Higgins.
In response, Comm. Fuhs said that he wrote Mr. Thoma a note
(Attachment A) which said that, as structured, SB 76 would
not take Mr. Higgins out (meaning out of the gaming
industry).
TAPE 93-70, SIDE A
Number 000
REP. DAVIDSON stated that he would be interested in knowing
who was behind Alaskans for Less Gaming, but asked if the
group had a right to remain anonymous, if it so desired.
COMM. FUHS expressed his opinion that Mr. Higgins believed
that the group had the right to remain anonymous. He stated
that Mr. Higgins' letter was a reflection of why SB 76 was
needed.
Number 023
RUSSELL HEATH, EXECUTIVE DIRECTOR OF THE ALASKA
ENVIRONMENTAL LOBBY (AEL), a non-profit, public interest
organization, testified that he was a registered lobbyist.
He said that 25% of AEL's tiny annual budget was earned by a
raffle. He commented that it appeared that SB 76 would
prohibit AEL from conducting its raffle. He called the
members' attention to language on page 3, lines 3-4, which
stated, "prohibiting the payment of any portion of the net
proceeds of a charitable gaming activity to a registered
lobbyist." He stated his belief that he was not the only
public interest lobbyist working in the Capitol.
Number 079
COMM. FUHS stated that Mr. Heath's testimony was correct:
proceeds from raffles could not be used to pay lobbyists.
Number 084
MR. HEATH expressed his objection to that provision of SB
76. He stated that that particular provision would
disembowel AEL and other public interest organizations. He
urged the committee to amend the bill.
Number 115
REP. NORDLUND commented that the provision which Mr. Heath
had discussed would affect not only AEL, but also the Alaska
Women's Lobby, the Alaska Outdoor Council, and other
organizations. He suggested amending the bill so as to
prohibit bingo and pull-tab proceeds from going to
lobbyists, but allowing raffle proceeds to pay for
lobbyists.
Number 124
REP. PORTER stated that the idea behind charitable gaming
was to provide revenues to charities at a time of declining
state revenues. He said that there was an attempt to
separate gaming from politics. Allowing gaming proceeds to
go to lobbyists ran counter to that attempt, he noted. He
expressed his opinion that any worthwhile group could find
support from means other than gambling.
Number 152
MR. HEATH commented that he considered the environmental
movement to be a charity.
Number 175
REP. PORTER noted that Mr. Heath's "charity" involved
influencing legislation.
Number 189
CHAIR JAMES mentioned that in order to be considered
"charitable contributions" for federal tax purposes, money
could not go to organizations which influenced legislation.
Number 215
REP. DAVIDSON asked Chair James if she agreed with Rep.
Porter that raffle proceeds should not be allowed to go
toward a lobbyist's salary.
Number 221
CHAIR JAMES replied that she had not said that. She
commented that she was only making a distinction between
"charitable" and "political" organizations. She noted that
she put raffles into a different category than pull-tabs and
bingo, and said that up until now she had not considered SB
76's effects on raffles.
Number 242
REP. PORTER mentioned that he would make the same policy
argument against raffle proceeds paying the salary of a
registered oil or timber lobbyist.
Number 249
REP. DAVIDSON commented that the issue was that some
individuals, organizations, and interest groups had greater
resources upon which to draw in order to influence
legislation. He questioned why the state should have a
right to tell organizations how to spend their own money, no
matter what the source. He expressed his belief that the
committee needed to work on the bill.
Number 275
REP. NORDLUND noted that when a person bought a raffle
ticket, he or she was fully aware of the organization
conducting the raffle, to which proceeds of ticket sales
would go. That, he said, was different from a person buying
a pull-tab, with no idea which organization would receive
the proceeds. He added that it was entirely possible that a
bill would be before the legislature which would affect a
Little League organization, for example, requiring them to
lobby. He noted that he did not consider raffles to be
gaming. He expressed his support for amending the bill so
as to allow organizations to pay lobbyists with raffle
proceeds.
Number 298
REP. PORTER commented that he did not support gambling.
However, he said that it was not realistic to put an
immediate end to charitable gaming. In that light, he
added, he was seeking a balance. He noted that SB 76 would
not preclude any organization from engaging in lobbying; it
would merely preclude those organizations from using gaming
proceeds for that purpose.
Number 324
MR. HEATH stated that a critical issue before the nation's
democracy was the influence of money in politics. Many
people and organizations, he noted, had sufficient financial
resources to influence politics. He asked the committee if
a raffle represented as great a threat to society as did the
influence of wealthy organizations and individuals. He
questioned how dangerous AEL's raffle was.
ADJOURNMENT
CHAIR JAMES declared the work session adjourned at 3:03 p.m.
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