02/07/1995 08:05 AM House STA

 HSTA - 02/07/95                                                               
 HB 44 - GAMING PROCEEDS/DEFINE CHARITABLE ORGNS                             
                                                                               
 Number 043                                                                    
                                                                               
 REPRESENTATIVE TERRY MARTIN brought forth to the committee HB 44              
 with his sponsor statement.   The sponsor statement reads:                    
                                                                               
 In August of 1994 before the Primary Election, the Anchorage                
 Daily News published an information article disclosing where                 
 candidates for the governorship were receiving their financial                
 support.  Lawyers became very prominent, as did construction                  
 and the oil industries, as well as the fishing industry who                   
 flapped its wings to get candidates' attention.  Five days                    
 later the Voice of the Times brought into focus two other                   
 major players who financed political campaigns - unions and                   
 state employee groups.                                                        
                                                                              
 Both articles missed the real Motherload.  The newest, most                  
 prolific motherload to fill Alaska's campaign coffer is                       
 Gam(bl)ing - or more specifically, pull-tab permits.  Alaska                  
 is the only state that allows political parties and local                     
 political districts to maintain gambling permits while also                   
 allowing a limitless contributory ability from political units                
 and pull-tab permitees to candidates.  The lack of restriction                
 on gambling dollars directed to political campaigns has given                 
 those in control over permits an incalculable influence and                   
 control over elected officials who are beholden to them for                   
 special voting and political generosity.  The process is one                  
 in which the operators and political district officers decide                 
 who will receive the largest gambling receipts, thus gaining                  
 the highest level of control.  The operators of the permits                   
 can and do use the political permits at the most profitable                   
 places and at the most prolific times, while the true                         
 charitable permitees suffer accordingly.                                      
                                                                              
 There should be an outcry of public disdain for this practice                
 in Alaska, but it will not be heard until the facts of                        
 gambling's influence are exposed.  The gurus of ethics who,                   
 for the last ten years have been shouting the virtues of                      
 reform of special interest in political campaigns, have                       
 developed a scam of the worst kind.  It involves political                    
 parties posing as charitable organizations in the name of                     
 reform.   What we have seen guised as a "charity," is nothing                 
 less than raw political abuse of influence peddling and powers                
 to corrupt the minds of the innocent for personal gains.  This                
 misuse of charity is no longer to be concealed.  Rather it                    
 should be brought to bear before the public, in its true form,                
 as an instrument of power that attracts the greed of elected                  
 officials.                                                                    
                                                                              
 Since the passage of legislation orchestrated through several                
 Spenard lawyer/legislators and gam(bl)ing operators that                      
 legalized pull-tabs and licensing (monopolizing) operators                    
 under the guise of "reform", we see the industry's growth                     
 escalate from an annual gross revenue of $60 million in 1988                  
 to over $227 million in 1993.                                                 
                                                                              
 When zeroing in on just political permits we see a phenomenal                
 growth of gross revenues in 1989 of $874,958 to $3,978,179 in                 
 1993.  There are 13 Democrat organizations, 5 Republican units                
 and the Alaska Independence Party that have pull-tab permits.                 
                                                                              
 Labor organizations also depend on gam(bl)ing activities,                    
 especially pull-tabs, to fuel their political machinery.                      
 During 1993, 21 labor unions received $4,269,972 in gross                     
 revenues through their permits.  By holding gaming permits,                   
 politicians, political parties and precincts strip millions of                
 dollars away from the true charities.                                         
                                                                              
 True charities have a purpose in that they assist those who                  
 require aid, whether by training to work, or by clothing and                  
 feeding.  The gaming process in-turn reduces state                            
 expenditures and services.  Those who own gaming permits for                  
 reasons other than charity control the distribution to                        
 political groups and candidates, and end up controlling the                   
 legislature in a more sinister way than true advocates of                     
 ideologies in a democratic-representative government.  This                   
 new motherload that fills political coffers must be                           
 eliminated.  As evident by the 1994 primary and general                       
 elections, the amount of political contributions and proceeds                 
 originating from charitable gaming (pull-tab) receipts                        
 distributed to Alaskan political candidates is overwhelming.                  
 House Bill 44 is the vehicle through which to change this                     
 problem.  I urge your support.                                                
                                                                               
 REPRESENTATIVE MARTIN believes that politics must be taken out of             
 gaming.  Political groups should not be considered charities.  He             
 would like to go back to the IRS to define "charity."                         
                                                                               
 Number 211                                                                    
                                                                               
 REPRESENTATIVE WILLIS asked Representative Martin who would be                
 eliminated under this bill.  He wanted to know what the                       
 ramifications would be?                                                       
 REPRESENTATIVE MARTIN said he couldn't tell him what the full                 
 ramifications would be, but his intent is simply to get political             
 groups out of gaming.  The labor groups are the main ones that                
 create the most problems.  Last year there were 19 political groups           
 that signed up for political pull tabs, and it is increasing.  In             
 Valdez there was $52,000 raised for payout to political groups.               
 True charities are those who do not use money for candidates.                 
 Twenty-one unions had permits for the year 1993.                              
                                                                               
 REPRESENTATIVE WILLIS asked just what groups would be eliminated.             
 He wondered if the Elks, Lions and American Legion were involved in           
 this.                                                                         
                                                                               
 CHAIR JAMES said, to clarify this issue, that by tying this into              
 the 501-C3 regulations, by who is entitled to get tax exempt status           
 as a nonprofit corporation with Internal Revenue Service for tax              
 purposes, the one prerequisite is that the corporation must not be            
 involved in affecting legislation or political issues.                        
                                                                               
 REPRESENTATIVE MARTIN said there is an expansion on that, Section             
 B, F, and G, that need to be put in the amendment, to cover                   
 organizations such as the American Legion and VFW.                            
                                                                               
 CHAIR JAMES said it would be necessary to carry HB 44 to the next             
 meeting.  She also wanted to hear HB 49 because it pertained to the           
 same thing, gambling proceeds.                                                
                                                                               
 REPRESENTATIVE GENE THERRIAULT said that his bill, HB 49, is                  
 identical to Representative Martin's except for certain nonprofits.           
 He supports Representative Martin's bill, which is intended to                
 tighten up the rules on using money from pull-tabs and other gaming           
 proceeds for political candidates.  Also, people play pull-tabs               
 without knowing what they are supporting.                                     
                                                                               
 REPRESENTATIVE ROBINSON said there was a bill passed to determine             
 where the money goes from pull-tabs, and she wondered if this bill            
 affects raffles at schools, clubs and other nonprofit                         
 organizations.  Political parties use raffles, both Republicans and           
 Democrats, and she sees nothing wrong with that.                              
                                                                               
 REPRESENTATIVE MARTIN said most people don't care where their money           
 comes from, but he is trying to take politics out of it.                      
                                                                               
 Number 469                                                                    
                                                                               
 REPRESENTATIVE THERRIAULT said that when people chose to play pull-           
 tabs, it is time driven.  It is okay to get scholarship funds with            
 raffles and pull-tabs.   His bill, HB 49, does not include raffles.           
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 CHAIR JAMES held HB 44 over to the next meeting and the meeting               
 adjourned at 10:10 a.m.