Legislature(2023 - 2024)BARNES 124
02/12/2024 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB273 | |
| HB289 | |
| HB200 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 179 | TELECONFERENCED | |
| += | HB 289 | TELECONFERENCED | |
| += | HB 147 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| *+ | HB 200 | TELECONFERENCED | |
| += | HB 273 | TELECONFERENCED | |
HB 200-GAMING; ELECTRONIC PULL-TABS
3:28:02 PM
CHAIR SUMNER announced that the final order of business would be
HOUSE BILL NO. 200, "An Act relating to pull-tabs; relating to
persons prohibited from involvement in gaming; and relating to
the duties of the Department of Revenue."
3:28:15 PM
REPRESENTATIVE RUFFRIDGE moved to adopt the proposed committee
substitute (CS) for HB 200, Version 33-GH1054\S, Wallace,
2/8/24, as a working document. There being no objection, Version
S was before the committee.
3:29:07 PM
ADAM CRUM, Commissioner, Department of Revenue, gave an
introduction to HB 200 on behalf of House Rules, by request of
the governor. He explained that the goal of HB 200 is to set
parameters on pull tabs and introduce electronic pull tabs to
Alaska.
3:29:42 PM
BRANDON SPANOS, Acting Director, Division of Tax, Department of
Revenue, gave a PowerPoint presentation on HB 200 on behalf of
House Rules, by request of the governor. Before beginning the
presentation, he clarified that the presentation is based on the
original version of HB 200 and not HB 200, Version S. He began
on slide 2, which explained how charitable gaming works within
the Division of Tax of the Department of Revenue, and how they
function within the broader regulatory structure surrounding
gaming in Alaska.
3:31:42 PM
MR. SPANOS moved to slide 3, which clarified the current
regulatory structure of pull tabs under the Department of
Revenue, and what role the department serves in enforcing those
regulations. He explained how the permits relating to pull tabs
were issued, and what the associated cost and taxes collected on
each permit is as it would relate to electronic pull tabs.
3:33:33 PM
REPRESENTATIVE SADDLER asked what the annual pay for permits is
in a dollar amount.
MR. SPANOS said he believes that number is found within license
and permit fees.
3:34:09 PM
REPRESENTATIVE PRAX asked where the total of the gross taxes
figure comes from.
MR. SPANOS responded that it comes from a 3 percent pull tab
tax.
3:35:42 PM
REPRESENTATIVE SADDLER asked why there was a gap in pull tab tax
collection between 2020 and 2021.
CHAIR SUMNER suggested that it might've been due to the COVID-19
pandemic.
3:36:02 PM
MR. SPANOS clarified that the COVID-19 pandemic is the reason
why there was a gap in pull tab tax collection from 2020-2021.
3:36:17 PM
MR. SPANOS resumed his presentation on slide 4, which displayed
the types of and current number of licensees in Alaska.
3:36:49 PM
MR. SPANOS moved to slide 5, which provided a history of
charitable gaming in Alaska from 1960 to the most recent change
surrounding charitable gaming in 1993, with House Bill 168. He
expounded on House Bill 168's effect on the charitable gaming
industry in Alaska and the changes it made to various aspects of
charitable gaming statutes.
3:38:26 PM
REPRESENTATIVE FIELDS asked if there was any discernable effect
on pull tab consumption when the payments increased from 15
percent to 30 percent.
MR. SPANOS said he would have to follow up on that question
later.
3:38:51 PM
MR. SPANOS proceeded to slide 6, which gave an overview of the
statutes that would be changed by HB 200. He explained the
difference between traditional pull tabs and electronic pull
tabs, and touched on the prize limit increase.
3:40:27 PM
MR. SPANOS moved to slide 7, which showed the impact HB 200
would have on the Department of Revenue's Income using data from
five other states that have already implemented electronic pull
tabs. He explained how the fiscal note was created using this
data and said the impact on fiscal year 2025 would be low.
3:41:27 PM
MR. SPANOS continued to slide 8, which explained the costs to
the Department of Revenue from the implementation of HB 200 and
added that the department would need two more staff in order to
carry out the provisions of bill at a cost of $225,000 a year.
3:42:23 PM
REPRESENTATIVE SADDLER asked a question about the total revenue
graphic on slide 7.
MR. SPANOS responded that he did not know if there would be more
license applications. He said there would be an increase in
revenue if there were more electronic pull tab operators.
REPRESENTATIVE SADDLER said he needs a breakdown of the new
revenue that would be generated.
MR. SPANOS said he would need to follow up.
3:44:04 PM
REPRESENTATIVE FIELDS asked why there was certain language in
Section 5 of HB 200, Version S, pertaining to the authority of
approving other gaming sites.
MR. SPANOS responded that Section 5 amends the current statute,
and said he would have to follow up on the question of language
in HB 200 Version S.
3:45:18 PM
MR. SPANOS moved to slide 9 to give the sectional analysis for
HB 200, Version S, which read as follows [original punctuation
provided]:
Sectional Analysis
House Bill 200 Gaming; Electronic Pull-Tabs
Section 1: Amends the examination of books and records
in AS 05.15.070 to include electronic pull-tab
systems.
Section 2: Amends AS 05.15.180(a) to clarify the
authority of the Department of Revenue to authorize
and regulate the use of electronic pull-tabs in the
state.
Section 3: Amends AS 05.15.180(b) to include
electronic pull-tab systems as an allowable activity
under this chapter.
Section 4: Amends AS 05.15.180(g) for the prize limits
for permittees that contract with an operator to a
maximum of $2,000,000 in prizes each year for
electronic pull-tab activities and a maximum of
$1,000,000 in prizes each year for other gaming
activities.
Section 5: Amends AS 05.15.181(a) to include
electronic pull-tab systems as required to be licensed
by the Department.
Section 6: Amends AS 05.15.181(c) to include an
encryption requirement for pull-tabs and remove the
required to for a serial number issued by the National
Association of Fundraising Ticket Manufacturers or
other label.
Section 7: Amends AS 05.15.181(d) to allow pull-tab
manufacturers the ability to distribute electronic
pull-tab systems.
Section 8: Adds AS 05.15.181(f)-(j) to require a
specific electronic pull-tab endorsement for
manufacturers and distributors; provisions for the
security and encryption of electronic pull-tabs; and
requiring the submission of electronic pull-tabs and
pull-tab systems for independent testing and
certification.
Section 9: Amends AS 05.15.183(a) to require a pull-
tab distributor license in order distribute electronic
pull-tab systems.
SB 146 Sectional Analysis 1.17.2024 Page 2
Section 10: Amends AS 05.15.183(c) to require
electronic pull-tab systems to be distributed from a
location in the state.
Section 11: Amends AS 05.15.181(e) to allow pull-tab
distributors to deliver the electronic pull-tabs
series information to a vendor's location.
Section 12: Adds AS 05.15.181(f)-(g) to require an
electronic pull-tab endorsement for a licensed
distributor.
Section 13: Amends AS 05.15.185 to include an
encryption requirement for electronic pull-tabs and
remove the required to for a serial number issued by
the National Association of Fundraising Ticket
Manufacturers or other label.
Section 14: Adds AS 05.15.185(b)-(c) to include
specific requirements for electronic pull-tabs series:
• Have a predetermined and finite number of winning
and non-winning tickets.
• Have a predetermined prize amount and structure.
• Have a unique serial number that is not regenerated.
• A series may not exceed 15,000 tickets.
Section 15: Amends AS 05.15.187(e) to include language
so that a person under the age of 21 cannot access or
redeem a pull-tab.
Section 16: Adds AS 05.15.187(j)-(m) to include
restrictions on the electronic pull-tab devices:
• A Vendor may not have more than five electronic pull
tab devices on premises.
• An Operator may not have more than ten electronic
pull tab devices on premises.
• May only accept U.S. currency in paper form,
purchased credits, or a credit voucher.
• May not mimic a slot machine.
• May not dispense anything of value other than a
credit voucher.
Section 17: Amends AS 05.15.188(i) to include
electronic fund transfer as an option to pay vendors
the ideal net less compensation owed to the vendor.
Section 18: Adds AS 05.15.188(l) to prohibit the
Department from registering a vendor who is otherwise
barred under AS 05.15.105
Section 19: Amends AS 05.15.690(38) to include
language in the definition of a "pull-tab" electronic
representation of a card.
Section 20: Amends AS 05.15.690(45) to include
language in the definition of a "series" electronic
pull-tabs that have a unique serial number.
Section 21: Adds AS 05.15.690(50) to define
"electronic pull-tab system".
3:49:59 PM
REPRESENTATIVE SADDLER asked about Section 17 and what the term
"ideal net" means.
MR. SPANOS said that he would follow up on that question later.
3:50:36 PM
REPRESENTATIVE FIELDS asked about the impact Version S would
have on charitable gaming beneficiaries, as well as how many
there currently are.
MR. SPANOS, in response to Representative Fields, cited slide 4
with the total number of charitable organizations and said that
nothing changes regarding the revenue travelling out-of-state.
3:52:52 PM
MR. SPANOS concluded the presentation.
COMMISSIONER CRUM reiterated his previous point that charitable
gaming beneficiaries will have increased revenue from HB 200,
Version S.
3:54:06 PM
The committee took an at-ease from 3:54 p.m. to 3:58 p.m.
[During the at-ease, Chair Sumner handed the gavel to Vice Chair
Ruffridge.]
3:58:00 PM
MARY MAGNUSON, Arrow International, Gave a PowerPoint
presentation on HB 200[hardcopy included in committee packet].
She began on slide 2, giving context to who Arrow International
is and what it does as a company.
3:59:52 PM
MS. MAGNUSON moved to slide 3, which displayed a pie chart of
all the current charitable licensees in the state.
4:00:28 PM
MS. MAGNUSON continued to slide 4, which explained how
electronic pull tabs work. She detailed that one device is a
cabinet, the other is a tablet, and directed attention to
example images on the slide.
4:02:06 PM
MS. MAGNUSON moved forward to slide 5, which further explained
electronic pull tabs and how they work. She touched on how the
manufacturer controls the winning tabs, the similarities and
differences between paper and electronic tabs, and added that
the devices do not need Internet to function, though some need a
private server in the state.
4:06:21 PM
REPRESENTATIVE FIELDS asked about the rate of play with
electronic tabs versus paper tabs, and if electronic tab's pulls
are logged somewhere.
MS. MAGNUSON answered that the only way to track the rate of
play is to look at how many tickets were sold to determine what
the prizes were and what the profit is to the charity. She said
in the case of an electronic game, the device would log every
play and prize automatically.
REPRESENTATIVE FIELDS asked what the average duration of play is
in the five other states that have electronic tabs cited in the
previously mentioned study.
MS. MAGNUSON answered that she doesn't think that data is
available, and that she would have to follow up.
4:08:19 PM
REPRESENTATIVE SADDLER asked what rate of play is possible in
electronic tabs compared to slot machines and paper tabs.
MS. MAGNUSON said that she does not have that information
available currently, but in electronic tabs everything is pre-
determined and there is no algorithm that alters the rate of
play, unlike slot machines. She added explanation of the
differences between paper and electronic tabs, saying that some
people can do paper pulls quickly, and that electronic tabs give
the option to open them all at once or one by one. She also
explained that paper pull tabs have seals to open to a bigger
prize. In electronic tabs there is an extended play game akin to
a bonus round.
4:13:16 PM
REPRESENTATIVE WRIGHT asked for an explanation of how electronic
pull tab games are played, and asked if there is always a chance
to win.
MS. MAGNUSON answered there is an opportunity to win, but the
player might not always win. She said that on a paper pull tab
game played in Alaska, about 80 percent of the money wagered
goes back to the players in the form of prizes and that the
spending limit is a total of $500, with a maximum bet of $2. She
added that with electronic pull tabs, the game is played by
pushing a button. She emphasized that there is a robust record
keeping system that records every single play on the associated
device, which saves time on reports and filing time for the
regulatory bodies overseeing the device.
4:16:44 PM
REPRESENTATIVE SADDLER asked about the tablets used in
electronic pull tabs.
MS. MAGNUSON explained that the tablet is a Microsoft surface
tablet that is loaded with software specifically for electronic
pull tabs. She emphasized that the tablets only work on site.
REPRESENTATIVE SADDLER asked for reassurance that the tablet is
not vulnerable to hacking.
MS. MAGNUSON responded that the tablets are encrypted, and the
manufacturers have installed various types of security software.
She said the devices are designed so that hacking is difficult,
and audits are performed on a regular basis to ensure security
parameters are being met.
REPRESENTATIVE SADDLER asked who is liable for the tablet if it
breaks.
MS. MAGNUSON said that the distributor would simply replace the
device. She pointed out that the devices go to the charities
with no up-front costs, as well as online/onsite troubleshooting
services and Internet for the devices. She said the business
buys the games, not the tablets.
4:21:08 PM
MS. MAGNUSON moved to slide 6 to further explain the
similarities between paper pull tabs and electronic pull tabs.
She touched on what the concept of "ideal net" is, explaining
that it is when all tickets are sold, and all prizes are won.
4:21:56 PM
MS. MAGNUSON moved to slide 7, regarding the benefits of
electronic pull tabs. She said in veteran and fraternal clubs,
there is a clear increase in membership after the introduction
of electronic pull tabs. She cited a survey of veteran and
fraternal clubs in Ohio that found that after one year of
electronic pull tabs being introduced, there was an increase in
membership.
4:23:40 PM
MS. MAGNUSON continued to slide 8, which explained what Alaska
can expect from electronic pull tabs and touched on how there
would be virtually no change in the regulatory structure
surrounding gaming in Alaska.
4:23:55 PM
MS. MAGNUSON moved through slides 9-13, each of which displayed
a graph of pull-tab net receipts from the previously cited
studies. She explained the correlation between electronic pull
tabs and increase in revenue.
4:26:05 PM
MS. MAGNUSON moved to slide 14, which compared the net profit of
each state that began to utilize electronic pull tabs. She said
there was an average of a 74 percent increase in ideal net.
4:26:52 PM
MS. MAGNUSON continued to slide 15, which explained how the
adoption of electronic pull tabs has a positive effect on
charities. She added that the average profit increase is about
40 percent.
4:27:30 PM
REPRESENTATIVE FIELDS asked about the demographics of the people
in the states that have recently expanded the use of electronic
pull tabs.
MS. MAGNUSON answered that demographic data is tracked
anecdotally. She gave Ohio as an example where she said younger
people participate in electronic pull tabs while in Minnesota
the prevailing demographic is more middle-aged people. She said
that it is mostly the same demographic participating in paper
pull tabs, except that it is slightly younger across the board.
4:29:02 PM
VICE CHAIR RUFFRIDGE asked for a breakdown of the estimated
revenue or charitable gaming impacts in Alaska.
MS. MAGNUSON said that Arrowhead International is working on
getting specific data to the committee members. She said while
there is a slight increase in cost associated with the operation
of electronic pull tabs, the average revenue impact across the
country has been between 30 and 35 percent. She predicted that
if electronic pull tabs were to be allowed in Alaska, four
different manufacturers would be in competition with each other.
VICE CHAIR RUFFRIDGE asked how much of money spent on electronic
pull tabs goes towards the charity and how much goes to run the
operation. He asked a follow up question clarifying how much of
the sales goes towards a lease arrangement.
MS. MAGNUSON responded that the sales have to go through a
distributor who works with the manufacturer, and the distributor
acts as a liaison between the manufacturer and the
permittee/operator.
4:34:47 PM
REPRESENTATIVE FIELDS raised his concern that increasing prize
money could cause a decrease in the number of charitable
organizations that receive the benefits.
MR. SPANOS handed the question to Martha Abel.
4:36:19 PM
MARTHA ABEL, Gaming Manager, Department of Revenue, answered
committee member's questions on HB 200, Version S. She said the
expenses have increased, but not prize amounts. She emphasized
that in Alaska, there are prize limits in place.
4:37:10 PM
MR. SPANOS, in response to Representative Fields, said that the
estimated revenue is increasing but the percentage that goes to
the charities would remain the same.
MS. ABEL added that increasing the prize limits allows for the
organization to increase the amount of gaming proportionally.
4:38:23 PM
COMMISSIONER CRUM gave his understanding that the volume of the
gaming increases when there are increased prize limits. He
touched on a previous question from Vice Chair Ruffridge and
said the department will provide a visual cost breakdown for the
committee members.
4:39:00 PM
REPRESENTATIVE SADDLER asked how the supply chain and system of
running an electronic pull tab operation works.
MS. ABEL responded that manufacturers make pull tabs who sell
them to distributors who then sell them to permittees, like a
city or municipality, any of whom can come together and form a
conglomerate to also apply for a multi-beneficiary permit. She
added that each permittee can elect how their machines give out
prizes as well.
4:41:07 PM
REPRESENTATIVE SADDLER asked for the names of the manufacturers,
distributors, multi-beneficiaries, et cetera.
MS. ABEL answered that Arrow International is the manufacturer
of electronic pull tab machines and said that distributor's
names could be found online. She added that operators usually
own the gaming facility and are for-profit sole-proprietor
businesses that game on behalf of the permittees.
REPRESENTATIVE SADDLER asked who the operators were.
MS. ABEL further explained that operators are a person, a sole-
proprietor, and clarified how they differ from the non-profit
permittees.
4:44:19 PM
REPRESENTATIVE FIELDS asked about the discrepancy between the
increase in prizes from the Department of Revenue and the
projected increase in revenue from the associated charities
involved.
COMMISSIONER CRUM answered that there would be a breakdown done
on paper versus electronic pull tabs, and the bill analysis
contains simple revenue analysis.
4:46:07 PM
VICE CHAIR RUFFRIDGE added that a committee response would help,
as would a terminology breakdown.
4:46:53 PM
COMMISSIONER CRUM added that the Charitable Gaming Unit of the
Department of Revenue is a small, closed unit that regulates
large dollar amounts for the state. He said he looks forward to
more conversations on the topic and getting public illustrations
out. He said that the Department of Revenue would ask if names
of organizations could be disclosed for a future presentation.
4:47:49 PM
VICE CHAIR RUFFRIDGE bill announced that HB 200, Version S, was
held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 179 Sectional Analysis.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 179 |
| HB 179 Sponsor Statement.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 179 |
| HB 179 ver A.PDF |
HL&C 2/12/2024 3:15:00 PM |
HB 179 |
| HB 147 Sponsor Statement Version A.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 147 |
| HB147 Fiscal Note.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 147 |
| HB0147A.PDF |
HL&C 2/12/2024 3:15:00 PM |
HB 147 |
| Letters of Support for HB 147.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 147 |
| HB 147 Sectional Analysis Version A.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 147 |
| HB 289 ver A.PDF |
HL&C 2/12/2024 3:15:00 PM |
HB 289 |
| HB 289 Transmittal Letter 1.22.24.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 289 |
| HB 289 Presentation for HL&C (Version A).pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 289 |
| HB 289 Sectional Analysis ver A.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 289 |
| HB179 Fiscal Note A.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 179 |
| HB179 Fiscal Note B.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 179 |
| HB200 Fiscal Note A.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 200 |
| HB 200 Sectional Analysis 02.12.24.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 200 |
| HB 200 Transmittal Letter 05.09.23.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 200 |
| HB200-DOR-TAX-02-09-24.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 200 |
| A.1 Amendment HB273.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 273 |
| HB200 Presentation to H.L&C 02.12.24.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 200 |
| charitable_gaming_support_letter_hb200.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 200 |
| EO 130 Opposition Continued.pdf |
HL&C 2/12/2024 3:15:00 PM |
EO 130 |
| HB200 Presentation - Mary Magnuson.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 200 |
| S.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 200 |
| HB289 Amendment Packet.pdf |
HL&C 2/12/2024 3:15:00 PM |
HB 289 |