Legislature(1993 - 1994)

04/10/1993 10:15 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
  CS FOR SENATE BILL NO. 76(JUD):                                              
                                                                               
       An Act  requiring  regulations  relating  to  pull-tabs                 
       adopted  by  the  Department of  Commerce  and Economic                 
       Development  to be consistent  with the  North American                 
       Gaming Regulators Association  standards on  pull-tabs;                 
       allowing permittees  to contract with  vendors to  sell                 
       pull-tabs on  behalf of the permittee;  restricting the                 
       purchase of pull-tabs by certain persons; requiring the                 
       sale of pull-tabs by vendors to be solely by a pull-tab                 
       ticket  dispensing  machine; requiring  receipts before                 
       certain prizes  may be  paid; prohibiting  distributors                 
       from  supplying  pull-tabs   to  vendors;  relating  to                 
       registration  of  vendors; requiring  the  licensing of                 
       out-of-state   manufacturers;   allowing    public   or                 
       nonprofit  broadcasting stations  to sell  pull-tabs at                 
       more than one location; preventing persons with certain                 
       convictions from  being involved  in charitable  gaming                 
       activities  as a  permittee,  licensee, vendor,  person                 
       responsible for an activity,  fund raiser or consultant                 
       of  a  licensee,   or  employee  in  a   managerial  or                 
       supervisory  capacity  and  providing   exceptions  for                 
                                                                               
                                                                               
       certain persons whose convictions are at least 10 years                 
       old; relating to multiple-beneficiary charitable gaming                 
       permits   and  door   prizes  for   charitable  gaming;                 
       requiring   Department   of   Commerce   and   Economic                 
       Development  approval  of contracts  between charitable                 
       gaming  permittees  and  operators  before  gaming  may                 
       occur; limiting the amount of  authorized expenses to a                 
       percentage of  adjusted gross  income for a  charitable                 
       gaming activity; relating to the reporting  and payment                 
       of  a  percentage  of  the  adjusted  gross  income  by                 
       operators  to  permittees;   requiring  Department   of                 
       Commerce and Economic Development approval of contracts                 
       between   permittees   and   operators;  allowing   the                 
       commissioner of  commerce and  economic development  to                 
       issue  orders prohibiting  violations  of state  gaming                 
       laws; relating to the authority  of the commissioner of                 
       commerce and economic development  to suspend or revoke                 
       a  permit, license,  or  registration; relating  to the                 
       uses to which  charitable gaming  proceeds may be  put;                 
       relating   to   `political    uses'   and    `political                 
       organizations'  as  those   terms  are   used  in   the                 
       charitable  gaming  statutes;  and   providing  for  an                 
       effective date.                                                         
                                                                               
  Co-chair Pearce announced  that CSSB 76(FIN) work  draft "M"                 
  was before the committee.  Senator Jacko MOVED  for adoption                 
  of the "M" version of CSSB  76(FIN).  Hearing no objections,                 
  IT WAS SO ORDERED.                                                           
                                                                               
  Co-chair Pearce, prime sponsor of SB  76, spoke to the bill.                 
  She said the original bill excluded some felons from  access                 
  to gaming in  Alaska in  terms of acting  as supervisory  or                 
  management personnel.  Secondly,  it prevented proceeds from                 
  gaming  to  be used  for  direct contributions  to political                 
  candidates.  She said the Department of Commerce  & Economic                 
  Development had requested some additions to the legislation.                 
  She explained that the finance version would still include a                 
  prohibition  against using  net proceeds  to pay  registered                 
  lobbyists.  It also added third party  vendor language which                 
  allows    charitable    organizations    direct   profitable                 
  alternatives by placing their permits with profit operators.                 
  Permittees who operate their own  permits often double their                 
  net proceeds.  It  allows these permittees to  contract with                 
  vendors to sell  pull tabs for them.  It  also adds multiple                 
  beneficiary permit  language which allows the  department to                 
  issue permits authorizing  two to six permittees  to jointly                 
  operate under  one permit.   This enables the  permittees to                 
  band together and allows  them to hire a management  team to                 
  run  their  games that  is  answerable  only to  them.   The                 
  permittees would have  the direct  hire and fire  authority.                 
  The Department of Commerce & Economic Development also asked                 
  to  approve  contracts  between  operators  and  permittees.                 
  Language has  been included  that allows  the department  to                 
  revoke a permit  license or  vendor registration upon  proof                 
                                                                               
                                                                               
  that insider information was given or  acted upon.  She said                 
  that  language  has  also  been   included  that  gives  the                 
  department  discretion  over  mandating the  use  of  ticket                 
  dispensing machines  for pull tabs.  There  is a requirement                 
  that the department would license out of state manufacturers                 
  of pull  tabs.   She also  stated that  Alaska Public  Radio                 
  Network  had  asked  for  a  statewide on-line  game.    The                 
  language in the bill  clarifies the type of game  APRN could                 
  run.    The  proceeds from  that  game  would  then fund  an                 
  endowment that would eliminate the need for APRN to continue                 
  receiving general funds from the state.                                      
                                                                               
  Co-chair Pearce said that a teleconference had been held  on                 
  SB 76 and two main concerns had been raised and addressed in                 
  this  legislation.     First,   because  of  problems   with                 
  dispensing  machines,  their  use  has   been  left  to  the                 
  discretion of  the department.   Secondly,  language in  the                 
  bill has been changed to say that direct payment from gaming                 
  cannot  be  made to  a  registered lobbyist  or  a political                 
  candidate.                                                                   
                                                                               
  Senator  Kelly voiced  his  opinion  that  SB 76  allowed  a                 
  statewide  lottery  for  public radio.    JOHN  HANSEN, JR.,                 
  Gaming   Manager,   Department   of  Commerce   &   Economic                 
  Development, said that this legislation  would allow APRN to                 
  sell a larger series pull tab game in more than one location                 
  on  a  given  day.   It  would  also provide  them  with the                 
  opportunity to have that game extended to include a drawing.                 
  The provisions  of the  drawing are  currently in  the state                 
  regulations.                                                                 
                                                                               
  Senator Kelly asked if this was  not the same as authorizing                 
  a  statewide  lottery.   Mr.  Hansen  said that  there  were                 
  significant  differences  between  this  legislation  and  a                 
  statewide  lottery,  but  confirmed that  there  had  been a                 
  similar game  without the  drawing that had  been shut  down                 
  some years back.                                                             
                                                                               
  PAUL FUHS, Commissioner, Department of Community &  Economic                 
  Development, said he wanted it to be clear that the Governor                 
  was not  in support of the section  of the bill that applied                 
  to the APRN gaming.   Co-chair Pearce said that  section had                 
  been  added  in the  Judiciary  Committee by  Senator Jacko.                 
  Senator Kelly asked  where the  provision was that  provided                 
  for an  endowment  with  the  proceeds  of  the  APRN  game.                 
  Senator Kelly voiced his concern that APRN would be the only                 
  organization that could  profit from such a  statewide game.                 
  Co-chair Pearce asked if Senator Kelly  would be in favor of                 
  APRN  paying a  portion of their  proceeds into  the general                 
  fund.  Discussion was had by  Senators Kelly, Pearce and Mr.                 
  Fuhs regarding the APRN game.                                                
                                                                               
  Commissioner Fuhs  also pointed  out that  CSSB 76(FIN)  was                 
  different than the Judiciary CS in  that it removes as third                 
                                                                               
                                                                               
  party vendor outlets, retail and  eating establishments.  He                 
  said that  the department  was strongly  in support  of that                 
  action because gaming is an adult activity.   Discussion was                 
  had by  Senator Kelly,  Mr.  Hansen and  Mr. Fuhs  regarding                 
  vendors, operators, and the percentage of profit outlined in                 
  the bill.                                                                    
                                                                               
  End SFC-93 #52, Side 2                                                       
  Begin SFC-93 #56, Side 1                                                     
                                                                               
  Senator Sharp asked for clarification regarding the adjusted                 
  gross income in regard  to gaming.  Mr. Fuhs  explained that                 
  the adjusted gross  income is the  total amount of  proceeds                 
  minus prizes and taxes.  After that, the overhead of running                 
  the  operation   is  subtracted,   and  according  to   this                 
  legislation, only 70  percent of that  can be subtracted  as                 
  overhead.   Mr. Hansen said  that there  are two  acceptable                 
  accounting methods  in  the statutes.    One method  is  the                 
  actual cash  method where  every night  sales are  reported.                 
  The other method is the ideal method, where a number of pull                 
  tabs are  considered  for sale  and the  accounting is  done                 
  around that  number.  The only difference  between the ideal                 
  net and the  adjusted gross are  the taxes  owed -- a  three                 
  percent pull tab tax and any federal income tax.                             
                                                                               
  Senator Kelly  MOVED  amendment  #1  that would  add  a  new                 
  section to read "Section  1. SHORT TITLE.   This act may  be                 
  known as  the Gaming Reform  Act 1993"  (copy on file).   No                 
  objections being raised, it was ADOPTED.                                     
                                                                               
  In answer to Senator Sharp, Mr. Hansen said that the percent                 
  required by  operators to  pay permittees  each quarter  was                 
  reduced from  15 to 10 percent  for non-pull tabs.   He said                 
  that about 80  percent of  the gaming activity  is pull  tab                 
  activity.  Of that remaining 20  percent about 17 percent is                 
  bingo.  In  the past, many  operations have used other  non-                 
  pull   tab  expenses  to  reduce   pull  tab  income.    The                 
  percentages in  this version of legislation  are significant                 
  because they no longer allow the losses  of other activities                 
  to offset the pull tab activity.   Mr. Fuhs said that in the                 
  some village operations 15 percent is too high.  If bingo is                 
  even one percent it helps a lot on the pull tab because they                 
  can't  write  the  losses  off.    He felt  10  percent  was                 
  reasonable.                                                                  
                                                                               
  Senator  Jacko  MOVED  for  passage  of  CSSB  76(FIN)  from                 
  committee with  individual recommendations.   Senator  Kelly                 
  OBJECTED.  Co-chair Pearce announced that CSSB 76(FIN) would                 
  be HELD in committee until April 12, 1993.                                   
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 12:12 a.m.                        
                                                                               
                                                                               

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