Legislature(1993 - 1994)
04/10/1993 10:15 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
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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