Legislature(1993 - 1994)
04/23/1993 01:00 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 76 CHARITABLE GAMING RESTRICTIONS Number 675 REP. PHILLIPS made a motion to move SB 76 out of committee, with individual recommendations. REP. NORDLUND objected. REP. PHILLIPS withdrew her motion so that testimony could be heard from witnesses. Number 708 MR. CHIP THOMA commented that he had followed the issue of charitable gaming for the past several years, and had testified on SB 76 when it was in the Senate. He spoke in support of an amendment offered by Senator Jay Kerttula, which would eliminate pull-tab gambling in the state. He expressed his opinion that promoting charities through nearly-exclusive use of pull-tabs was not good or prudent state policy. He stated that the concept of and intent behind SB 76 were fatally flawed, because charitable organizations were being forced to rely very heavily on gaming as a revenue source. MR. THOMA said that 80% of the money raised by charitable gaming was from pull-tab sales. He noted that charitable gaming raised a lot of money for charities, but with questionable consequences. He stated that the purpose of SB 76 was supposedly to crack down on questionable activities by those involved in charitable gaming. He expressed his opinion that the amount of money said to go to political candidates was greatly exaggerated. TAPE 93-72, SIDE A Number 000 MR. THOMA asserted that SB 76 was an attempt by Mr. Mitch Gravo, a lobbyist representing the Charitable Gambling Association of Alaska, to quash competition. He said that he resented the use of legislation for such purposes. He commented that an important issue which was not addressed by SB 76 was the sale of pull-tabs in establishments which sold alcohol. He expressed his opinion that linking liquor establishments with charitable gaming was bad state policy. MR. THOMA commented that most charities operating in Alaska served clients who had been affected by alcohol. The state, he said, was forever linking the sale of pull-tabs to alcohol establishments. He noted that he did not consider the relatively small amount of charitable gaming proceeds which went to political candidates to be a problem. He said that he had recently learned that the Alaska Environmental Lobby (AEL) would, under SB 76's provisions, no longer be allowed to use its raffle proceeds to pay the salary of its lobbyist. He called that "outrageous." He expressed his opinion that SB 76 attempted to eliminate a fund raising source for Democrats. He noted that the Democrats did not rely on $1,000 contributors, as did the Republicans. MR. THOMA stated that the bill gave short shrift to the concept of multiple beneficiaries. He said that SB 76 contained many loopholes, and had received little scrutiny from legislative committees. He predicted that SB 76 would expand gambling in the state, and reiterated his concern that linking gambling and alcohol was wrong. Number 137 COMM. FUHS noted that he had distributed to the committee additional information which had been requested by Rep. Davidson at the previous work session on SB 76. He said that charitable gaming was not a partisan issue, as both Republicans and Democrats received proceeds from charitable gaming. He added that some operators ran pull-tab games almost solely for the benefit of political candidates. In response to Mr. Thoma's allegation that SB 76 was a war between two operators, he said that the bill would not affect either operator. He said that, in addition to bringing operations currently in bars under state regulation, SB 76 would give municipalities the option to prohibit vendors from operating in their communities. Number 203 REP. DAVIDSON noted that Kodiak had already outlawed operators. He asked Comm. Fuhs if SB 76 would increase economic opportunities for the liquor industry. He asked if the bill would increase the value of a bar license. Number 225 COMM. FUHS replied that he did not know if the bill would increase the value of a bar license. Number 230 REP. DAVIDSON asked if SB 76's allowance that a bar owner could become a pull-tab vendor would not increase the revenue taken in by the bar. COMM. FUHS responded that it would depend on the bar owner's operating expenses, and whether or not a bar owner chose to sell pull-tabs in the first place. He noted that some bar owners did not feel that pull-tabs fit in with the bar's image. Number 243 REP. DAVIDSON asked if "upscale" bars generally did not sell pull-tabs. COMM. FUHS said, in general, that was true. REP. DAVIDSON asked if DCED had conducted a zip code analysis of where pull-tab revenues came from. COMM. FUHS replied that no such analysis had been done. REP. DAVIDSON asked what result the commissioner would predict from such an analysis. COMM. FUHS expressed his opinion that such an analysis would indicate that gambling revenues were received from areas throughout the state. Number 258 REP. DAVIDSON stated his belief that SB 76 would increase the mixing of alcohol and gambling. He said that if upscale bars, in general, would not sell pull-tabs, that led him to believe that people who could afford to buy pull-tabs would not do so. Therefore, the funding of non-profit organizations would primarily be done by the poor. He said that, despite the commissioner's opinion that SB 76 would not expand gambling, there was a real possibility that the bill would expand the availability of pull-tabs. Number 296 REP. PHILLIPS asked if a bar owner, when selling his or her bar, could sell a pull-tab license along with it. COMM. FUHS replied that the pull-tab permit would not be transferred along with the facility. CHAIRMAN PORTER asked Comm. Fuhs to compare the proliferation of gambling, in the event that SB 76 passed and in the event that the bill failed. Number 331 COMM. FUHS said that it was difficult to speculate. He predicted that passage of SB 76 would result in the "redistribution" of gaming revenues, but not necessarily an expansion of gaming activities. Number 347 REP. PHILLIPS noted that there was nothing in current law that would prohibit the expansion of pull-tab activity in the state. COMM. FUHS stated that Rep. Phillips was correct. He added that any bar in Alaska could sell pull-tabs under current law if it so desired. Number 358 CHAIRMAN PORTER noted that SB 76 would make it more difficult for bar owners to sell pull-tabs, as they would have to give more of the proceeds to the permittee. Number 362 REP. PHILLIPS expressed her opinion that SB 76 did not make the selling of pull-tabs easier or more difficult for bar owners. What the bill did, she said, was to change the percentage of proceeds which the permittees received. COMM. FUHS stated that bar owners would be required to pay 50% of the "ideal net" from each pull-tab game series, up- front, to the permittee. Number 387 REP. PHILLIPS asked Mr. John Hansen to address why some pull-tab sellers gave 30% of proceeds to permittees, while others were required to give 50% of proceeds to the permittees. Number 396 JOHN HANSEN, GAMING MANAGER FROM THE DCED, stated that licensed operators would be required to give permittees 30% of proceeds from pull-tab sales. That person would not be required to pay for the pull-tabs upon delivery, he said, and would perform services for permittees which the permittees did not choose to do themselves. Under SB 76, permittees would still receive monthly checks from operators, but the amount of the checks would double. MR. HANSEN explained that if a permittee chose to do business with a vendor, the permittee would purchase pull- tabs and deliver them to the vendor. Unlike doing business with an operator, permittees contracting with vendors would be required to do their own accounting and financial reporting. Although permittees contracting with vendors received a higher rate of return, he noted, the permittee still bore the burden of doing the paperwork. REP. DAVIDSON commented that he had spoken with the director of a non-profit organization in his district and was told that in the last eight years a state regulator had only come by once to check on the organization's gaming permit. He asked Mr. Hansen how his office would increase oversight of charitable gaming. Number 435 MR. HANSEN noted that the percentages built into SB 76 did not exist in current law. He said that currently organizations which did not choose to use the services of an operator had no expense limitations. Therefore, many groups did millions of dollars worth of gaming, yet ended up with no net proceeds. The fixed percentages in SB 76 would help the state to ensure compliance simply by performing desk audits. He noted that field inspections would still be conducted. He expressed his opinion that, under current law, the state enjoyed substantial compliance with its licensing requirements. REP. DAVIDSON asked Mr. Hansen why he believed this to be true. MR. HANSEN cited the number of inspections conducted. He said that the state lacked auditing powers. He said that SB 76 would enable the state to more easily accomplish audits, due to the built-in percentages. Number 473 MR. HANSEN stated that in 1992, the state issued permits to 1,003 permittees. Some permittees, he noted, held more than one permit. He said 1,320 permits were issued exclusively for pull-tab activity. He noted that the state had only four gaming investigators. Number 491 REP. DAVIDSON asked if, under SB 76, a permittee could still conduct a raffle and donate proceeds from that raffle to a political candidate. Number 498 MR. HANSEN said that Rep. Davidson was correct, as long as the candidate was affiliated with a political organization. REP. DAVIDSON asked if a permittee could hold a raffle and donate proceeds directly to a candidate, instead of to the candidate through his or her political party, under SB 76's provisions. MR. HANSEN stated that the permittee could contribute raffle proceeds either to the party or to the candidate's organization, if that organization was affiliated with a political party. Number 510 REP. DAVIDSON asked if similar contributions to lobbyists would be illegal. MR. HANSEN said that was correct. Number 518 REP. DAVIDSON expressed his opinion that it was ironic that a permittee could contribute to a person who was to be lobbied, but not to a person who did the lobbying. Number 525 MR. HANSEN noted that federal law and SB 76 both made distinctions between different types of gaming activities. He added that the DCED was currently conducting an analysis of gaming revenues by zip code. Number 544 REP. PHILLIPS asked why SB 76 contained such an onerous title. Number 548 COMM. FUHS indicated that the title was written by the Senate. He suggested that Rep. Phillips ask the bill's sponsor what her intentions were in writing such a restrictive title. He stated that he had heard that the reason was not to tie the House's hands, but instead to attempt to "put some kind of sideboards on the thing," to try to keep it from coming apart. Number 564 MARK HIGGINS, representing the ALASKA CHARITABLE GAMES ASSOCIATION, said that SB 76 would undoubtedly expand gambling. He said that Comm. Fuhs' figures regarding how many bars in Alaska already sold pull-tabs were grossly exaggerated. He commented that SB 76 provided a tremendous economic incentive for bars to get into the pull-tab business. He expressed his opinion that the sale of pull- tabs in a bar would increase the value of that bar, if the owner decided to sell. MR. HIGGINS noted that SB 76 would delete an existing bond requirement. He predicted that the bill would expand gaming by at least 100%. He commented that, when the 1988 Gaming Reform Act was enacted, no one involved envisioned that stand-alone pull-tab stores would be established. He noted that when permittees contracted with vendors, it was true that the permittee would receive 50% of the "ideal net" up- front. What was not being stated, he added, was that the permittee had to pay for the cost of the pull-tabs, plus taxes. That meant that the permittee actually only received about 35% of the ideal net. MR. HIGGINS expressed his opinion that bar owners serving as vendors ought to pay permittees more than 50% of the ideal net, as the vendor's expenses were essentially nothing. He distributed a series of graphs to the committee, which he said were based on state figures. He said the DCED contended that, out of the $200 million annually involved in the charitable gaming industry, only about 8% was going to charitable organizations. His graphs demonstrated that charities actually received about 40% of the "bottom-line net." He said that SB 76 would increase, but not double, the amount of money which went to charities. Number 688 REP. JAMES questioned Mr. Higgins' figures. She said that when the state was talking about 15%, that was 15% of the ideal gross, which was after prizes had been taken out. It appeared to her that Mr. Higgins' figures compared total pull-tab sales to proceeds going to the non-profit organizations. Number 695 MR. HIGGINS stated that the state's method of portraying figures created a false impression that there was rampant abuse in the charitable gaming industry. In fact, he said, charitable organizations were currently receiving a return from 30-40%, which was better than most businesses in Alaska could report. Number 701 REP. JAMES indicated that Mr. Higgins had missed her point. She called attention to Mr. Higgins' second graph. MR. HIGGINS stated that the second graph represented all of the money left over after prizes had been awarded. The percentage of that amount that actually went to the charities was approximately 40%, he added. He alleged that the DCED was misinforming legislators. Number 718 CHAIRMAN PORTER asked Mr. Higgins if he believed that SB 76 would provide more money to charities than did existing law. MR. HIGGINS replied that the Chairman was correct. REP. DAVIDSON asked Mr. Higgins to explain what, in the bill, would ensure that charitable organizations received more money. Number 727 MR. HIGGINS replied that that would occur in situations in which operators or self-directed charitable organizations were not currently realizing a 30% return. He mentioned that an operator in Anchorage had recently switched from being an operator to being a multiple-beneficiary operation. That person was now sub-leasing in the same space which he had used as an operator, and was charging $176,000 more per year to permittees in his new role. The state had determined that it had no authority to sanction that activity. He expressed concerns over placing multiple- beneficiary permits in statute. MR. HIGGINS cited another example, Catholic Bingo in Fairbanks, an organization that did not meet the 30% requirement and would therefore be put out of business by SB 76. Number 756 REP. DAVIDSON asked Mr. Higgins what percentage of the gaming abuse he attributed to pull-tab activity. He asked him what the legislature should do to discourage the proliferation of gambling combined with alcohol. MR. HIGGINS responded that pull-tab sales made up about 80% of the charitable gaming revenue in the state. Regarding the combination of gambling and alcohol, he expressed his opinion that it was a judgment call for the legislature. He added that there needed to be protections for the players and the charities. He stated that two years ago bars were willing to accept 25% of the ideal net. In that light, he questioned why SB 76 was offering the bars 50% of the ideal net. MR. HIGGINS stated that control was a key issue. He stated that he had complained several weeks ago that SB 76, as then drafted, would have allowed pull-tab machines to be located virtually anywhere. They could have been owned by anyone, he added, and there would be no human interaction in that situation. That situation cried out for abuse, he said. The bill was eventually changed, he noted. He said that many people would attempt to skirt regulation. He expressed his opinion that the bill as drafted would expand the opportunities for abuse. He predicted that the abuse would be seen immediately. Number 792 REP. DAVIDSON asked how players could be better protected. Number 795 MR. HIGGINS said that there were tracking mechanisms in existing law. He suggested that bars be required to put up a real property bond, or do something else to make the bars accountable -- even requiring them to put their liquor licenses on the line. (Chairman Porter acknowledged the arrival of Rep. Carl Moses.) Number 809 REP. DAVIDSON asked that a representative of the DCED respond to the statements made by Mr. Higgins. TAPE 93-72, SIDE B Number 000 COMM. FUHS responded to Mr. Higgins' comment regarding the number of bars in the state which sold pull-tabs by stating that out of 1,320 permit locations, 527 of those locations sold alcohol. He said the DCED had never claimed that 80- 90% of the state's bars sold pull-tabs. The department had said that an inventory of bars in Juneau showed that 80-90% sold pull-tabs. He defended the DCED's figures. COMM. FUHS said that, regarding figures of overall net return, the DCED had been very careful to review them in detail with the committee during the work session the day before. He said that he had explained that when a permittee ran a game him or herself, the return was 45%, but when a permittee used an operator, the return was 31%. The reason for that, he added, was that some operators voluntarily paid more than 30%. He commented that one Juneau operator voluntarily paid 40%. He also mentioned that SB 76's prohibition against proceeds going toward campaign contributions and lobbyists would result in increased proceeds to true charities. He estimated that SB 76 would result in an additional $10 million per year going to charities. Number 050 REP. NORDLUND mentioned a statement included in Sen. Pearce's written sponsor statement which said, "all non- profits, including political parties and labor organizations, would still be allowed to . . . use raffles and other permitted games to earn money which could then be used for direct contributions to candidates." COMM. FUHS commented that the sponsor's statement was correct. Number 071 CHAIRMAN PORTER said that the name of the sponsoring organization appeared on raffle tickets, so there was no confusion regarding where the contribution went. COMM. FUHS said that was true. Number 076 REP. NORDLUND stated that Rep. Davidson had an amendment which would address the issue. He said that he saw no difference between organizations contributing to candidates and lobbyists. Number 085 REP. PHILLIPS mentioned that political parties had used raffles to raise money long before pull-tabs came on the scene in Alaska. She expressed her opinion that raffles should be treated differently than pull-tabs. Number 094 REP. JAMES agreed that raffles were different than other types of gambling. She said that her understanding of SB 76 was that raffles could still be held, but the proceeds could not be donated to political candidates. Other members of the committee corrected her by saying that the proceeds could not be used for lobbyists. REP. DAVIDSON asked if the Homer Ski Club could hold a raffle and use the proceeds to make a direct contribution to Rep. Phillips. COMM. FUHS said that was correct. REP. DAVIDSON asked Comm. Fuhs to discuss bonding requirements for bar owners who sold pull-tabs, as well as revocation of liquor licenses for gaming abuses. Number 133 MR. HANSEN discussed the sanctions included in SB 76. He said that no bond requirement was necessary, as vendors gave permittees 50% of the ideal net up-front, upon delivery of the pull-tabs. Additionally, he said, SB 76 gave the DCED much greater regulatory authority over charitable gaming. It gave the commissioner the right to issue an emergency order to "cease and desist." It also gave the department the authority to suspend, revoke, or deny permits for up to five years. The sanctions, he added, were linked both to the permittee and to the vendor or operator. REP. DAVIDSON asked who could initiate those sanctions. He asked if a bar patron who felt that he or she had been "had" could initiate those sanctions. Number 164 MR. HANSEN stated that under current law, if a complaint was filed, the department investigated it, and action might be taken. REP. DAVIDSON expressed concern that, because the present gaming investigators were spread so thin, the only investigations would center around complaints. He asked Mr. Hansen to comment on the 50/50 split if the cost of the pull-tabs and the tax were to be paid by the bar owner. Number 182 MR. HANSEN stated that it would be logistically difficult, as the cost of each game varied; thus the ideal net and the taxes owed would vary also. REP. DAVIDSON asked why the permittee could not collect those amounts at the same time that he or she collected the 50% of the ideal net. MR. HANSEN responded that it would be difficult to compute those figures on the spot. COMM. FUHS mentioned that the cost of the game was about 10%. He expressed the department's desire that the permittee be physically involved in the delivery of the pull-tabs and the receipt of the check up-front. He noted that if anyone was paid to "broker" vendor-permittee interactions, that would be an illegal expense under SB 76. Number 212 MR. HANSEN commented that current law alluded to certain prohibitions for persons with criminal records, but did not specifically define them. He said SB 76, in contrast, set out specifically who was prohibited from doing what. Number 228 REP. DAVIDSON noted that that had nothing to do with a person who saw an opportunity to broker a situation. He asked how the brokerage situation could be controlled. Number 243 COMM. FUHS said that when a pull-tab game was delivered to a vendor, the game was registered with the DCED. The vendor and the permittee were required to show the DCED what each did with their 50%. Number 250 MR. HANSEN stated that SB 76 would require that a permittee receive 50% of the ideal net and deposit the check in the permittee's checking account. Once the money was in the checking account, he added, the DCED had a "hook" to monitor compliance. Number 255 COMM. FUHS commented that, although there were some "sensational" aspects of SB 76, the most important parts of it from the regulators' standpoint were the "nuts and bolts" requirements which were being placed on the charitable gaming industry. He said that the bill gave the DCED very clear methods for tracking gaming activity, which would save personnel time. Number 264 REP. PHILLIPS asked why SB 76 did not include a requirement that pull-tabs be manufactured in Alaska. She said that it could spawn a new industry in the state. Number 275 MR. HANSEN replied that there were only ten pull-tab manufacturers in the country. He noted that the manufacture of pull-tabs required a tremendous printing press, and was often done during the daytime by companies which printed newspapers at night. In order for a pull-tab manufacturing operation to be economically feasible, he said, a huge volume was required. He said SB 76 licensed out-of-state manufacturers which were currently not licensed in Alaska. REP. PHILLIPS asked if a licensing fee was charged. MR. HANSEN stated that the fee was $500 per license per year. Number 296 REP. NORDLUND indicated his understanding that the $500 licensing fee was very low, compared to fees charged by other states. Number 300 MR. HANSEN responded that the highest fee he had ever heard of was $2,500. He said that none of the pull-tab manufacturers wanted to pay the $500 fee, but did not object to it. Number 319 COMM. FUHS asked that the committee, if it opted to amend SB 76, submit a resolution allowing the title to be amended so as to specifically pertain to the amendments made. Number 338 REP. JAMES asked if the only way in which to change the title of SB 76 was to have a concurrent resolution passed by both the House and the Senate. Additionally, she asked, if the committee made an amendment, then would that amendment be tied to a concurrent resolution that would have to be passed by both bodies in order to give the committee permission to change the title? COMM. FUHS stated that the committee could either make very specific title amendments or a blanket title amendment. Number 352 REP. JAMES commented that the committee needed to determine whether or not SB 76 should pass this year. CHAIRMAN PORTER stated that he would like to see SB 76 pass this year. Number 368 REP. JAMES agreed with the Chairman, but cautioned that amending the bill might not allow for its passage this year. REP. PHILLIPS echoed Rep. James' comments. Number 372 REP. CARL MOSES, PRIME SPONSOR OF HB 168, CHARITABLE GAMING AMENDMENTS, a companion bill to SB 76, expressed the opinion that any attempt to amend SB 76 was equivalent to an attempt to kill it. Number 378 REP. NORDLUND mentioned that the legislature could choose to ignore the Uniform Rules. If SB 76 passed, there was nothing that the courts could say that would invalidate the bill on legislative procedural grounds. Number 384 CHAIRMAN PORTER stated that the House had elected not to violate the Uniform Rules. Number 387 REP. DAVIDSON said that the legislature was not a unicameral body. As such, he said, it did not behoove the House to follow the lead of the Senate in this matter. He said that the House was not doing its public duty if it did not do what it thought was right in creating a good law. Number 400 CHAIRMAN PORTER commented that he would consider any proposed amendments, and that all committee members should do what they felt was right regarding the amendments. He noted that it was important to consider the political ramifications of amending SB 76. He expressed his opinion that SB 76 contained a number of good provisions, and said that more could probably be added. But, he said, "at some point in time, you have to make a decision to stop." He said that he felt it was time to stop. Number 425 REP. NORDLUND stated that, in terms of the House of Representatives, the review process was starting, not stopping. He noted that this was the first public hearing on SB 76 in the House, and that it was proper for the House to consider amendments to the bill. He said that both he and Rep. Davidson were going to offer amendments, starting with the most expansive amendments and working toward the least expansive amendments. REP. NORDLUND moved Amendment 1, which he said would prohibit the sale of pull-tabs in the state. REP. PHILLIPS objected. REP. NORDLUND expressed his opinion that a lot of gaming activity that occurred in the state had some value. There was social activity involved in bingo and raffles, he noted. But, he said that he could not see any redeeming value in playing pull-tabs. It was a mindless and non-social activity, he stated. Pull-tabs had not existed in Alaska until quite recently, he added, and charities had been able to survive quite well before they appeared on the scene. A roll call vote was taken on Amendment 1. Reps. Davidson and Nordlund voted "yea." Reps. Phillips, Kott, James, and Porter voted "nay." Rep. Green passed. And so, Amendment 1 failed. Number 462 REP. DAVIDSON offered Amendment 2, which would allow local communities to prohibit pull-tabs. He said that the effect of the amendment would be to save what little cash was left in rural areas of the state. He expressed his belief that rural areas supported a disproportionate share of gaming in Alaska. He moved the amendment. REP. PHILLIPS objected. CHAIRMAN PORTER asked Comm. Fuhs to discuss how Amendment 2 related to local option provisions already in the bill. Number 480 COMM. FUHS stated that local option provisions in SB 76 would allow local communities to eliminate operators or vendors. But, he said, permittees would still be able to run pull-tab games on their own. Amendment 2 would allow local communities to also prevent permittees from running their own pull-tab games, he said. Number 489 REP. DAVIDSON asked Comm. Fuhs to offer his opinion of the amendment. Number 503 COMM. FUHS stated that there were potential legal problems with the amendment's definition of "community." He said that the bill's current local option provisions pertained to "municipalities." Number 512 REP. DAVIDSON requested a legal opinion on that issue. Number 517 JERRY LUCKHAUPT, an ATTORNEY from the LEGISLATIVE AFFAIRS AGENCY'S DIVISION OF LEGAL SERVICES, stated that Amendment 2 tracked local option language in the Alcoholic Beverage Control (ABC) statutes, which the Supreme Court had recently found to be constitutional. The amendment, he said, allowed municipalities and unincorporated communities to vote to ban pull-tabs within their boundaries. He said that it did not give IRA Councils or village corporations the authority to make a decision to ban pull-tabs. Number 542 REP. PHILLIPS asked Mr. Luckhaupt if he had drafted the Senate Finance Committee's substitute for SB 76. MR. LUCKHAUPT replied that he had done so. REP. PHILLIPS asked if language on page 7, Section 11, of the bill already accomplished what Amendment 2 was seeking to do. Number 548 MR. LUCKHAUPT responded that the language to which Rep. Phillips was referring was part of what the amendment sought to accomplish. The amendment, he said, went further to include unincorporated communities. Number 554 REP. DAVIDSON urged the members to give serious consideration to the amendment. He noted that the amendment would help to ensure that what little disposable cash was in rural areas remained there to help the residents of the communities. Number 565 CHAIRMAN PORTER indicated that he did not object to the amendment, but expressed concern that adopting it would effectively kill SB 76 for this session. Number 572 REP. DAVIDSON urged the committee to remember that it had plenty of time to do its job right. A roll call vote was taken on Amendment 2. Reps. Davidson and Nordlund voted "yea." Reps. Phillips, James and Porter voted "nay." Reps. Green and Kott passed. And so, Amendment 2 failed. Number 592 REP. GREEN said that he would like to offer an amendment. An "at ease" was taken at 4:31 p.m. The meeting reconvened at 4:49 p.m. REP. GREEN then stated that he had decided not to offer his amendment. Number 614 REP. DAVIDSON offered Amendment 3, which would allow local communities to prohibit all charitable gaming. He expressed his opinion that SB 76 would expand gaming in the state. Amendment 3 would allow local residents to protect themselves to some extent from that expansion. He moved the amendment. CHAIRMAN PORTER objected. He stated that he did not object to the content of the amendment, but merely to making any amendments at all to SB 76 at this point. Number 653 REP. NORDLUND mentioned that the Chairman's desire to make additional reforms to charitable gaming next year might not come to pass, due to a lack of momentum behind reforms. In that light, he recommended that SB 76 be amended now. Number 658 CHAIRMAN PORTER expressed his opinion that if Amendment 3 were introduced as a bill next year, it would enjoy a great deal of support. Number 664 REP. JAMES added that she would support a bill containing Amendment 3's provisions next year. Number 666 REP. DAVIDSON noted that SB 76 would give purveyors of alcohol added income and the ability to put as many jars of pull-tabs on their bar counters as the counters could hold. He said that pull-tab income could pay the expenses of bar owners to come to Juneau to lobby against a bill containing Amendment 3's provisions. He said that the state would never be able to effectively track pull-tab income, which was in fact used for lobbying expenses. He expressed hope that the committee would "see the light" on this important public policy issue. Number 689 CHAIRMAN PORTER noted that pull-tabs could be sold in bars under current law, and that would continue upon enactment of SB 76. He recognized that most of the committee members wished that the issue of charitable gaming would simply go away. He commented that a person might enter a bar with $30 in his or her pocket. If pull-tabs were not there, he said, that person might "drink away" the $30. If pull-tabs were there, they might lead to her or him drinking less and diverting some of that $30 to charities. Number 707 REP. DAVIDSON said that the Chairman had made an excellent point. He stated that the committee had the power to make the issue of charitable gaming go away. Number 712 CHAIRMAN PORTER stated that SB 76 did not preclude gambling. He called for a roll call vote on Amendment 3. Reps. Nordlund and Davidson voted "yea." Reps. Kott, Phillips, James, and Porter voted "nay." Rep. Green passed. And so, Amendment 3 failed. Number 721 REP. DAVIDSON raised a procedural question regarding the vote on Amendment 2. The Chairman, he said, had allowed two members to pass. The amendment failed by a vote of 3 nays and 2 yeas. He noted that when members passed, the vote should come back to them. REP. PHILLIPS called for a re-vote on Amendment 2. TAPE 93-73, SIDE A Number 000 There was a motion to rescind the committee's action on Amendment 2. Hearing no objection, the action was rescinded. REP. DAVIDSON explained that Amendment 2 would allow local communities to prohibit pull-tab activity. A roll call vote was taken on Amendment 2. Reps. Nordlund and Davidson voted "yea." Reps. Kott, Phillips, Green, James, and Porter voted "nay." And so, Amendment 2 failed. REP. NORDLUND offered Amendment 4, which would prohibit gaming activities from taking place in bars and liquor stores. He moved the amendment. REP. PHILLIPS objected. Number 025 REP. NORDLUND noted earlier concerns that charitable gaming proceeds might go toward lobbying or candidates. He said that he could guarantee that proceeds received by bar owners would be used to lobby the legislature on legislation which favored the liquor industry, as well as legislation which allowed the liquor industry to continue to sell pull-tabs. He expressed his opinion that it was bad business to combine gambling and alcohol. Number 049 CHAIRMAN PORTER noted that one advantage of selling pull- tabs in bars was that children would not be exposed to that gambling activity. Number 065 REP. NORDLUND stated that people who purchased pull-tabs in bars could be easily preyed upon by unethical bartenders and bar owners, who could ask customers if, instead of getting cash as change, they wanted pull-tabs. Number 084 REP. PHILLIPS noted that Rep. Nordlund's concern could apply to the sale of anything in bars, including jewelry and ivory. REP. NORDLUND responded that he was not aware that bartenders were licensed by the state to sell ivory and jewelry in bars. REP. PHILLIPS commented that it did occur, however. A roll call vote was taken on Amendment 4. Reps. Davidson and Nordlund voted "yea." Reps. Phillips, Green, Kott, James, and Porter voted "nay." And so, the amendment failed. Number 112 REP. DAVIDSON offered Amendment 5, which would delete SB 76's prohibition against raffle proceeds being used for lobbying purposes. He noted that Comm. Fuhs and others had testified that, under SB 76, raffle proceeds could be used to contribute to those who were lobbied, but not to those doing the lobbying. He expressed his opinion that SB 76 went too far in penalizing those with the least ability to raise money in order to promote their interests in the legislature. He said that Amendment 5 would preserve a right which had been in existence since statehood. He noted his belief that it was not a terrible thing that the Alaska Environmental Lobby, various women's and children's groups, and even chambers of commerce held raffles in order to fund their lobbying efforts. He moved the amendment. REP. PHILLIPS objected. Number 158 CHAIRMAN PORTER said that, although he did not completely agree with SB 76's provision, he felt that Amendment 5 was a step in the wrong direction. Number 166 REP. NORDLUND indicated his understanding that the DCED did not oppose the amendment. He asked Comm. Fuhs to comment. Number 170 COMM. FUHS responded that the DCED had not taken a position on the amendment, but did not oppose it. He expressed concern that if the amendment would necessitate a title change, it could jeopardize the bill's chance to be enacted. A roll call vote was taken on Amendment 5. Reps. Davidson and Nordlund voted "yea." Reps. Phillips, Green, Kott, James, and Porter voted "nay." And so, Amendment 5 failed. Number 193 REP. NORDLUND offered amendment 6, which would limit charitable gaming activities to 501(c)(3) organizations, those recognized as non-profit entities under federal tax codes. He moved the amendment. REP. PHILLIPS objected. A roll call vote was taken on Amendment 6. Reps. Davidson and Nordlund voted "yea." Reps. Green, Kott, Phillips, James, and Porter voted "nay." And so, Amendment 6 failed. Number 230 REP. DAVIDSON offered Amendment 7, which would increase payments to permittees from 30% to 40% for pull-tab games, and from 10% to 15% for bingo, and also limit operator expenses to 60% for pull-tabs and to 85% for bingo. He said that the effect of the amendment would be to increase the amount of money going to the permittees. He moved the amendment. REP. PHILLIPS objected. Number 277 CHAIRMAN PORTER stated that he would support Amendment 7, but for the fear that its adoption would effectively kill SB 76. He suggested that it be brought back before the legislature after the DCED had determined how SB 76's percentages worked. REP. DAVIDSON noted that instead of raising the percentages in the future, they could be raised now and adjusted downward in the future if need be. CHAIRMAN PORTER responded that, either way, the legislature was attempting to strike a balance between maximizing profits to charities while still allowing vendors and operators to meet their expenses. Number 309 REP. DAVIDSON expressed his opinion that it was sad that worthwhile charities were being given to the "gambling lion" to fund. He commented that it was a sad commentary on our state and our society. CHAIRMAN PORTER said that he would like to identify himself with those remarks. Number 322 REP. JAMES noted that Rep. Davidson was "preaching to the choir" and said that charities were the ones that supported gaming activities. A roll call vote was taken on Amendment 7. Reps. Nordlund and Davidson voted "yea." Reps. Kott, Green, Phillips, James, and Porter voted "nay." And so, Amendment 7 failed. Number 338 REP. NORDLUND offered Amendment 8, which would increase the percentage of the ideal net paid to the permittee at the time when pull-tabs were delivered to the vendor, from 50% to 75%. He noted that, under SB 76's provisions, the permittee's 50% had to pay for the cost of the pull-tabs as well as taxes. He moved the amendment. REP. PHILLIPS objected. Number 376 CHAIRMAN PORTER noted that Amendment 8 would be worthy of consideration in the future, after the DCED had had an opportunity to review the effect of the 50/50 split contained in SB 76. A roll call vote was taken on Amendment 8. Reps. Nordlund and Davidson voted "yea." Reps. Green, Kott, Phillips, James, and Porter voted "nay." And so, Amendment 8 failed. Number 402 REP. NORDLUND commented that he had no more amendments to offer. Number 409 REP. PHILLIPS made a motion to move the Senate Finance Committee substitute for SB 76 out of committee, with individual recommendations. REP. NORDLUND objected. Number 416 REP. DAVIDSON said that he had grave misgivings about how the bill was sent over to the House. The Alaska Legislature was not a unicameral body, he stated, and the Senate had effectively tied the House's hands by sending over a bill with such a restrictive title. He asserted that the House majority had assisted the Senate in that regard. He noted that there was sometimes a need for hurried legislation, but expressed his opinion that there was still plenty of time remaining in the 1993 session. He commented that many of the committee members were obviously uncomfortable with the "forced vote" on the amendments. He expressed his opinion that SB 76 was harming the wrong people. Number 441 REP. KOTT noted that he agreed to some extent with Rep. Davidson. But, he said, SB 76 represented a great improvement over current law. He commented that the bill could be made even better, but tampering with it too much might mean that the legislature would end up with nothing. He said SB 76 brought about some reforms, which could be built upon in future years. He stated that he would support moving the bill out of committee. Number 456 REP. JAMES said that if she had the opportunity, she would vote against all gambling, all bars, and gambling in bars. But, she said, those were not options at this time. And, she said, she could not impose her beliefs on others to that extent. She stated that there were currently grave concerns over charitable gaming activity. She expressed her opinion that it was imperative that reforms happen this year. She noted her distress over SB 76's restrictive title, but said that the Senate had visited every area and every concern that the Judiciary Committee had just considered, and had produced the version of SB 76 now before them. She indicated her support for the bill. Number 480 REP. DAVIDSON stated that all legislators were individuals, hopefully with their democratic faculties intact. The House did not have to dance to the Senate drum, he added, nor to the drum beats of the lobbyists. He said that the members of the House danced to the tune of their constituents. He expressed his disappointment that, on the issue of charitable gaming, the system of checks and balances of the bicameral legislature had been undermined. He said that there was nothing in the constitution which said that the House had to or should permit the Senate's activity. He expressed his hope that, in the future, when the legislature was in a hurry not to do the public's business well, it at least took the time to do it as well as it possibly could. A roll call vote was taken on moving SB 76 out of committee. Reps. Nordlund and Davidson voted "nay." Reps. Green, Kott, Phillips, James, and Porter voted "yea." And so, the Senate Finance Committee substitute for SB 76 passed out of committee. Number 512 CHAIRMAN PORTER noted that this would likely be the Judiciary Committee's last meeting of the year. He expressed his pleasure in working with each member on the committee, and said that he looked forward to the following year. ADJOURNMENT CHAIRMAN PORTER adjourned the meeting at 5:25 p.m.
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