Legislature(2003 - 2004)
04/09/2003 05:20 PM House EDT
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT,
INTERNATIONAL TRADE AND TOURISM
April 9, 2003
5:20 p.m.
MEMBERS PRESENT
Representative Cheryll Heinze, Chair
Representative Lesil McGuire, Vice Chair
Representative Pete Kott
Representative Nancy Dahlstrom
Representative Sharon Cissna
Representative Harry Crawford
MEMBERS ABSENT
Representative Vic Kohring
COMMITTEE CALENDAR
HOUSE BILL NO. 240
"An Act establishing a state lottery."
- MOVED CSHB 240(EDT) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 240
SHORT TITLE:ESTABLISH STATE LOTTERY
SPONSOR(S): ECON DEV, INT'L. TRADE & TOURISM
Jrn-Date Jrn-Page Action
04/04/03 0769 (H) READ THE FIRST TIME -
REFERRALS
04/04/03 0769 (H) EDT, W&M, FIN
04/07/03 (H) EDT AT 5:00 PM CAPITOL 120
04/07/03 (H) Heard & Held
04/07/03 (H) MINUTE(EDT)
04/09/03 (H) EDT AT 5:00 PM CAPITOL 120
WITNESS REGISTER
DENNIS JACKSON, Vice President
GTECH Corporation
West Greenwich, Rhode Island
POSITION STATEMENT: During hearing on HB 240, explained how
lotteries and electronic gaming machines work in other states,
offered recommendations, and answered questions.
LARRY PERSILY, Deputy Commissioner
Office of the Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Explained the fiscal note for HB 240 and
answered questions with regard to both the lottery and
electronic gaming aspects of Version H.
REPRESENTATIVE TOM ANDERSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 240, Version H,
and explained the electronic gaming provisions.
ACTION NARRATIVE
TAPE 03-8, SIDE A
Number 0001
CHAIR CHERYLL HEINZE called the House Special Committee on
Economic Development, International Trade and Tourism meeting,
which had been recessed on 4/7/03, back to order at 5:20 p.m.
Representatives Heinze, McGuire, Kott, Cissna, and Crawford were
present at the call to order. Representative Dahlstrom arrived
soon after the meeting began.
HB 240-ESTABLISH STATE LOTTERY
CHAIR HEINZE announced that the committee would hear HOUSE BILL
NO. 240, "An Act establishing a state lottery." [HB 240 was
sponsored by the House Special Committee on Economic
Development, International Trade and Tourism; in packets was a
proposed committee substitute (CS), Version H.]
CHAIR HEINZE indicated that because Version H changed the bill
to include gaming, the hearing would be addressed in two parts:
the lottery and the electronic gaming. First addressing the
lottery portion, she paraphrased part of the written sponsor
statement as follows:
Lotteries have a long history in the world. The Bible
contains a reference to a lottery used by Moses to
award land west of the River Jordan. Through history
and throughout the world, lotteries have been used to
raise money for various purposes.
In North America, every Canadian province, 40 U.S.
states, the District of Columbia, Mexico, Puerto Rico,
and the U.S. Virgin Islands all offer government-
operated lotteries. During the fiscal year 2002, U.S.
lottery sales totaled $42.9 billion. Funds raised
from these lotteries have been used to fund education,
economic development, natural resources, public
health, corrections, transportation, and a variety of
other issues. Considering the fiscal issues that are
facing Alaska, ... lottery-generated revenue could
help provide a whole new source of revenue stream for
our state.
Number 0180
CHAIR HEINZE introduced Dennis Jackson as an expert who is vice
president of GTECH Corporation ("GTECH"), the world's largest
provider of lottery systems and services, which supplies systems
and services in 80 jurisdictions around the world. She
indicated Mr. Jackson's sales and governmental relations
responsibilities in the Western U.S. include California, Oregon,
Washington, Idaho, Arizona, New Mexico, and Nebraska. Prior to
that, he was employed by International Game Technology (IGT),
the world's largest manufacturer of slot machines and video
lottery terminals (VLTs); he was responsible for sales of VLTs,
[electronic gaming machines (EGMs)], and systems to [West
Virginia, Rhode Island, South Dakota, and Oregon]. His previous
experience includes serving as director of the Idaho state
lottery, serving on the board of directors of Powerball, being a
member of the executive committee of the National Association of
State and Provincial Lotteries (NASPL), and chairing the NASPL
security committee, Chair Heinze noted.
Number 0318
DENNIS JACKSON, Vice President, GTECH Corporation, informed
members that in Idaho the lottery contributes about $20 million
yearly to education from kindergarten through grade 12. He
explained that a lottery game is one in which a participant, for
a fee, obtains a ticket that provides a certain amount of
numbers from a field of numbers. Most in-state lottery games
are "pick five": a person picks five numbers from a series of
numbers, and how large the series of numbers is determines the
odds of matching all five. If those numbers are drawn, the
person wins a prize; if four out of five are drawn, the person
wins a smaller prize; and, in some instances, even if three
numbers are drawn the person wins something. Noting that
lotteries are in 40 states now, he reported that legislation has
been approved in Tennessee as well.
MR. JACKSON suggested Alaska perhaps should investigate joining
one of the two multi-state lotteries in the United States:
Powerball or Mega Millions. These games enable states with
small populations to amass the kinds of sales needed to provide
jackpots people want to play for; this generates more revenue.
Mr. Jackson said people play because of wanting to win and
because of the jackpot size. Powerball currently has 25 states
and the District of Columbia [participating]; because of this
banding together, a small [population] state like Idaho or South
Dakota can offer a jackpot starting at $10 million and going as
high as $295 million. He recalled that in his earlier days, a
jackpot of $8 million to $10 million was of considerable
interest, whereas now people seem to enter when the jackpot is
$60 million or $70 million.
Number 0544
MR. JACKSON turned attention to definitions. With regard to
vendors, he explained:
When I look at a lottery vendor, I think of someone
like GTECH who sells lottery computer systems. If you
go to a state where we have a lottery, such as
Washington, if you buy a lottery ticket, that terminal
that's [sitting] there on the counter is a GTECH
terminal, and it's connected to our central system
either by a phone line or by some wireless mechanism.
The central system is where the wagers are being
recorded; the sales are being recorded. So I would
call this a vendor.
MR. JACKSON offered, by contrast, that a lottery retailer sells
lottery tickets; typical examples are a Circle K or 7-Eleven
convenience store.
Number 0611
MR. JACKSON clarified that his purpose wasn't to advocate
gambling or gaming in Alaska, even though he represents a
company with a considerable interest in that business; that
decision clearly is to be made by the policymakers in Alaska -
the voters, the legislature, and the governor. He expressed
hope that his company could become a resource as the legislature
works its way through this sometimes difficult and often
controversial legislation, but acknowledged that his company
would compete aggressively for the business if the state
authorized a lottery through legislation.
Number 0645
MR. JACKSON concurred with the analysis in the six-page fiscal
note [from the Department of Revenue, prepared in part and
approved by Larry Persily, Deputy Commissioner, dated 4/7/03,
relating to the original bill] that the bill as it applies to
lotteries essentially is a raffle drawn twice a year. He
offered his opinion that what is proposed in the bill isn't a
lottery, which typically is drawn at least once a week or, more
often, twice a week. He questioned whether the twice-a-year
drawing will be successful and said people like to know how much
they are playing for. Mr. Jackson said he believes the concept
of a lottery, if the state chooses to raise revenue through that
mechanism, is a good one, but suggested that the approach within
the bill probably could use some improvement.
Number 0718
MR. JACKSON informed the committee that he didn't necessarily
agree with Mr. Persily's use [in the fiscal note analysis] of
South Dakota, Montana, and Nebraska as states for comparison.
He explained that South Dakota and Montana aren't strong on the
"lottery side" - scratch tickets and online lotteries - because
those states have the most emphasis on video lottery machines.
He also related his belief that Nebraska probably has the worst
legislation in the country for a lottery and thus is a model for
an unsuccessful lottery.
MR. JACKSON emphasized that good legislation is needed for a
lottery to be successful and to generate the maximum benefit.
Saying there are many successful lotteries out of the 40 in the
U.S., Mr. Jackson told members that every one has a good piece
of legislation behind it - well thought out and well crafted in
conjunction with people who have some experience. By contrast,
states that struggle, including Nebraska, don't have good
legislation in this regard.
MR. JACKSON suggested a better comparison would be Idaho, which
has about 1.2 million people: lottery sales are about $100
million a year, including $98 million last year and $101 million
the year before, to his recollection, and $18 million to $20
million is turned over every year to education, which is about
20 percent. New Mexico, with a population of 1.7 million, last
year did $130 million in sales and turned over a little more
than $30 million to education, he told members.
Number 0835
MR. JACKSON, answering questions from Representative Crawford,
explained that both Idaho and New Mexico are members of
Powerball and participate in the drawings with the 25 other
jurisdictions. In addition, they have instant-scratch-ticket
products and some in-state lotteries; typically, those lotteries
are about 60 percent "on the instant side" and 40 percent "on
the online side." For a state like Idaho that does $100 million
[in sales], about $40 million is from Powerball sales. He
offered his belief that in a state like Alaska the net return to
the state on a multi-state game such as Powerball would be
around $10 million a year, from $40 million in sales, which is
well within the capabilities of the state.
MR. JACKSON observed that the $300 million-plus a year now
wagered in Alaska on pull-tabs - which he called "break-opens"
or "pickle cards" because they are sold in his state in pickle
jars - is much more than he'd have expected from his experience
in other states. In Idaho, he reported, the amount is $3
million.
Number 1003
MR. JACKSON recommended Powerball for Alaska, since the other
multi-state game [Mega Millions] is played in [high-population]
states like Georgia, Michigan, Illinois, and New Jersey. He
said the cost to Alaska to join Powerball in a year would be
$30,000 to $50,000; it was $30,000 the last year he was in
Idaho. He explained that the [Powerball] group in Iowa simply
administers the game, collecting wagers from all 25
participating states through the computer system; it estimates
the jackpot, collects the money, "and when there's a winner they
send you the money in your state, and you write the check."
Number 1068
MR. JACKSON addressed whether a lottery in Alaska would be
successful, saying, "Yes, with good legislation, if success is
determined by returning a reasonable profit to the good causes
that you should choose to put it to in your state." He also
mentioned good, frugal management and good practices with regard
to those people who are appointed; he observed that the bill
appoints a lottery commission and director. Again recommending
a connection to a multi-state lottery game, he cautioned, "I
don't believe on your own that you'll be successful."
Number 1104
REPRESENTATIVE CRAWFORD inquired about expenses and income for
those who actually sell the tickets.
MR. JACKSON answered that most lottery tickets in established
lotteries are sold through convenience stores such as Circle K
or 7-Eleven; some are sold through large food chains. A lottery
retailer like that across the states generally receives 5 cents
to 7 cents for a $1 ticket. The last year when he was director
of Idaho's lottery, he said, $5 million was paid out to 1,200
retailers in Idaho. He added:
They have no cost because ... when you decide that
you're going to have a lottery, you will go out with a
request for proposals from companies like mine. And
the company will come in ... and they will make a
proposal, generally developed around how you make ...
your presentation and how you ask for it. But as a
general rule, for a percentage of sales, which
generally runs in a state this size about ... 8 or 9
percent, ... a company like mine's going to come in,
bring the terminals, install them in the retailers,
hook them up to the central system through some
communication link, and service them ... if there is a
problem.
MR. JACKSON pointed out that four to six years ago a lottery
system likely couldn't have been done in Alaska because of the
unique nature of some of the remote communities and the lack of
buried phone line in some locations. Now, however, an entirely
wireless solution is possible, and is being used in New Mexico;
it also will be used for the 19,000 retailers in California,
where his company just won the bid; calling it an efficient,
workable solution, he said it costs considerably less as well.
Number 1229
MR. JACKSON, in response to a question from Chair Heinze with
respect to non-lottery transactions using the lottery lines,
characterized this as a "giant transaction-processing network."
He said GTECH, because of its size, processes more transactions
back and forth across its lottery lines than Visa and
[MasterCard] combined. In Idaho, he noted, hunting and fishing
licenses are sold the same way that a lottery ticket would be
sold: the database recognizes a person by his or her social
security number or some other identification number in that
system, which calls up the person's "history" and prints out a
fishing or hunting license or deer tag or moose tag, for
instance. The retailer then receives a fee, which to his
recollection is $1 per transaction.
MR. JACKSON reported that in Brazil, people pay utility bills
across the lottery system; in Minnesota, people have a "smart
card" that registers lottery numbers and which the person swipes
through a machine for ease of play; and bus passes are sold
across the network in some places. He noted that in the past,
one issue with food stamps was the mailing cost; he said any
transaction like that can be conducted across a lottery network.
Number 1335
CHAIR HEINZE posed a scenario in which a person buys a moose
tag, buys a lottery ticket, and pays an electric bill all at
once. She asked whether it would be a company like [GTECH] that
would track where the money goes.
MR. JACKSON affirmed that, indicating it is similar to online
banking. If a person paid an electric bill, for example, there
would be an electronic transfer of funds: the lottery would
"sweep" the account of the retailer where the payment was made,
and would transfer it to the account of the power company.
Number 1381
MR. JACKSON, in response to a request from Chair Heinze, offered
the following explanation of Powerball. Started in about 1993
or 1994, it is a game in which a person pays $1 and picks
numbers from two sets of fields: a set of 5 numbers out of a
field of 39, to his recollection, and 1 number out of a field of
41. The odds of matching all 5 [of the first set] and the
additional 1 are about 1:120,000,000 under the current Powerball
scheme; that is why the jackpot can get to be $250 million. A
person who matches 5, but not the 1, wins $100,000. A person
who matches 4 plus the 1 wins $7,500, to his belief. There are
nine different ways to win a prize, and prizes go down to as
little as $3.
MR. JACKSON, in response to questions from Representative
Crawford, further explained that in the traditional lottery
games such as Powerball, about 50 percent goes toward prizes.
The retailer makes 5 to 7 percent, depending upon how the
legislation is structured; most make a base 5 percent, but
sometimes there is an additional 1 percent for selling a winning
ticket. A vendor such as GTECH or its competitors receives a
percentage that typically depends on the sales volume - as
little as about 2 percent in California to about 11 percent in
Nebraska. And the lottery administration, including salaries
for the [state's] lottery director and advertising, can be
expected to be another 10 to 12 percent. Thus the state will
receive around 20 to 25 percent. He offered his belief that the
only money leaving the state will be whatever fee is paid to a
company like GTECH or its competitors, around 8 to 12 percent.
Number 1571
REPRESENTATIVE CRAWFORD related a complaint he'd heard from
people in Louisiana, where he'd lived previously: unless there
is a big jackpot winner in the state, a huge amount of money
goes outside the state and the people don't get the benefit;
rather, it shrinks the economy. He asked whether Mr. Jackson's
testimony is that it will be won back in prizes and therefore
won't shrink the economy.
MR. JACKSON replied that he doesn't believe it would shrink the
economy, but that [the money retained in the state] wouldn't all
be in prizes. About $5 million would be paid in commissions to
local retailers, who would pay their employees and sales tax, if
applicable. From a study on the Idaho lottery he'd done at one
time, he reported that about 94 percent of the money stayed in
the state, including salaries for people who administered the
lottery and employees of whoever won the bid - GTECH or one of
its competitors. He indicated whatever company won the bid in
Alaska would have a cadre of Alaskan employees. He estimated 94
percent of the money would stay in the state, although only 50
percent would be paid in prizes.
Number 1640
REPRESENTATIVE KOTT posed a scenario in which Alaska joins the
Powerball game and GTECH wins the contract to set it up. He
asked whether there would be a permanent presence of GTECH in
Alaska in that instance.
MR. JACKSON answered that it depends a lot on how the RFP
[request for proposals] is written. He explained that [GTECH]
has a permanent presence in most states, but also has a remote
data center in Austin, Texas, since modern communications allow
these calculations to be done [almost anywhere]. He added:
There will be a presence here because somebody's going
to have to go to Nome if that terminal breaks down and
fix it. ... And the price that a company like mine
would quote would depend upon how many of those people
they thought they had to have. ... It's not really an
issue that's particularly unknown to us, because we
had lotteries across Latin America in areas that are
much more difficult to get through than they are in
Alaska. But, yes, there would be a permanent presence
here, at least for the length of the contract.
Number 1701
REPRESENTATIVE KOTT asked how long a contract is generally for.
MR. JACKSON replied that it depends. Typically, vendors want
contracts for five to seven years, with three to five options to
extend. He pointed out that these terminals aren't inexpensive;
for the price to be reasonable for a customer, a company needs
considerable time to take depreciation [for tax purposes].
Number 1730
MR. JACKSON, in response to questions from Representative Kott,
explained that typically the RFP specifies the number of
terminals, say, 1,000. He explained:
The way we would arrive at that price is that we would
sit down first and we would do the necessary
calculations based upon ... our history. ... The
modern-day lottery in the United States started in
1964 in New Hampshire, so we have a wealth of
information and history. So we'll be able to [sit]
down with our "numbers guys," I call them, and ...
we'll be able to calculate pretty well what we believe
the volume of sales will be in the state of Alaska.
And through our experience in doing business in places
like Brazil and South Africa, Turkey, and many [remote
places], ... we'll arrive at some price.
Number 1790
MR. JACKSON, in further response to Representative Kott,
addressed reliability of the terminals, saying it is pretty good
and is considerably better than eight to ten years ago, when
terminal malfunctions became a problem. He said the lottery
industry, including GTECH, has "up time" of about 99 percent.
He explained:
We're in business with you if we're being paid a
percentage of sales, and we certainly don't want that
terminal to be nonfunctioning. It's got to be running
for us to get paid. Also, typically, ... your
contract that you would negotiate with a company like
mine will specify some liquidated damages for failure
to perform, and one of the areas that is typically
addressed in liquidated damages is the length of time
it would take a company like mine to respond to a
terminal failure somewhere.
Now, obviously, if you say, "If a terminal goes down
in Nome, we expect you to be there in 30 minutes,"
we're going to probably have to talk about ... how we
get there. But it typically would assess a penalty if
we're not there within a certain amount of time to fix
that.
CHAIR HEINZE invited Mr. Persily to join Mr. Jackson at the
witness table.
Number 1862
LARRY PERSILY, Deputy Commissioner, Office of the Commissioner,
Department of Revenue, informed the committee that the fiscal
note was put together on relatively short notice with the idea
of raising some of the issues that the committee should
consider. He emphasized the desire, if the state has a lottery,
to do it well and make some money from it. Noting that the bill
creates a twice-a-year "50-50" raffle [with one winner per
drawing who receives 50 percent of the ticket sales less the
expenses of the lottery], he pointed out that a person buying a
ticket wouldn't even know the amount of the winnings until all
tickets were sold. He offered to work with legislators, if that
is the policy call, to put together a lottery commission and
system that raises revenue for the state. He added that the
governor looks at a lottery as one tool to consider along with
his other proposals for raising revenue.
MR. PERSILY suggested considering that Alaska has a lot of
charitable gaming, including pull-tabs, bingo, and raffles among
1,200 different charitable organizations in the state. As to
why Alaska has so much charitable gaming compared with other
states, he mentioned the lack of competition in the form of a
statewide lottery, Powerball, casinos, and so forth. In
addition, the percentage from charitable gaming that goes to
prizes is close to 80 percent, but it is closer to 50 percent
for a lottery. Noting that it is a policy call for the
legislature, he suggested considering how a lottery might affect
charitable organizations that depend on gaming for their
revenues, since with a well-marketed, well-run lottery - even
though the odds of cashing in big are 1:120,000,000 - someone
could win substantial money, a lot more than a $500 pull-tab
prize. He offered to answer questions about the fiscal note and
some of the estimates and discussion points, in order to come up
with a good bill.
Number 1991
CHAIR HEINZE asked whether joining Powerball would be a much
more profitable way for the state to proceed.
MR. PERSILY answered that people buy lottery tickets because of
the possibility of winning. Prizes in the tens of millions of
dollars are a lot more attractive than top prizes of $500,000,
for instance, which might be provided by the raffle [proposed in
the bill]. He concurred that if the state wants a lottery, the
way to go is with a multi-state lottery, weekly or twice-a-week
drawings, and multiple games, for example. He added, "We looked
at states: three or four different games is certainly more
common than just one, because you're marketing a product. You
want people to buy it so that you can make money off of it."
Number 2029
REPRESENTATIVE KOTT asked whether research suggests a nexus
between playing the lottery and potential loss of revenue to
charitable organizations that receive funding through pull-tabs.
Offering a personal example, he said he buys five or so lottery
tickets when he goes to Michigan, even though he knows the
chances of winning are slim; it doesn't detract from also going
to the harness-racing tracks there. The lottery is "distant
gratification," whereas the horse racing is immediate. He
suggested the same would be true for pull-tabs, which provide
instant gratification and a fairly good chance of winning
something. He mentioned per-capita spending in some communities
[in Alaska] of $5,000 or $10,000, and suggested those people are
winning and then cashing tickets in and continuing to [buy more
pull-tabs]. He questioned whether there would be a loss to
nonprofit organizations if people spent a few dollars on a
lottery.
MR. PERSILY answered that if the bill went through with the
requirement of waiting up to six months to find out who wins, he
doubted that there would be much affect on pull-tabs, bingo, or
local raffles. He agreed that people play pull-tabs for the
instant winning, but suggested there also is a social aspect to
it. If there were twice-a-week drawings or instant winners,
however, he asked whether that would affect pull-tabs or bingo,
and said it is a point to consider.
MR. PERSILY said there is no "science" to his knowledge as to
how much the effect would be in Alaska, but surmised that some
money might [be transferred to buying lottery tickets]; whether
it would be significant, he indicated he didn't know. He also
posed the possibility that people might [buy lottery tickets]
initially and then return to their former practice. He offered
his belief that much charitable gaming [participation] is tied
to supporting a local organization. For example, when people
buy raffle tickets for a soccer club, it isn't because of really
believing a prize will be won, but because of supporting that
club. He concluded that probably a strong segment of local
charitable gaming wouldn't be affected [by a lottery]. He said
the rest is probably speculation, but something to think about.
Number 2167
REPRESENTATIVE KOTT asked, for states that have successful
lotteries, whether their legislation gives specific direction to
the commission or has some latitude.
MR. JACKSON opined that the [unsuccessful] Nebraska legislation
might have been from a paternalistic attitude of wanting to
protect some people from gambling or perhaps to mollify non-
gambling opposition. Noting that Nebraska is required to return
35 cents out of every dollar to the state in the form of profit,
he explained:
The problem with that is, that severely restricts the
prizes they can play. And people play to win. The
most successful lotteries are those lotteries that
have no restriction on what percentage is returned to
the state, and it's left up to the good decisions of
the management of the lottery and the lottery
commission as to what is an acceptable [ratio].
Nebraska is prohibited by statute from having what we
call ITVMs - instant ticket vending machines - a
machine where you can go up, in a controlled
environment, put a dollar in, pull a tab, and your
scratch ticket comes out. And those areas where we
have those in the state of Idaho, sales are 25 percent
higher where we have a vending machine.
Nebraska is not permitted to have ... what they call
pickle cards - pull-tabs. Specifically, they're ...
given to three or four charities in the state. They
can't do interactive keno because ... there's keno
legislation. So, yes, it is very specific
legislation. And most often ... it has to do with the
mandated required return to the state that restricts
their ability to pay prizes.
Number 2264
MR. PERSILY responded that in Alaska currently, with pull-tabs,
there [are] in the law limits on expenses with respect to
operators, the return to the charities, and the vendors. He
also noted that Alaskan law is very specific, allowing bingo,
pull-tabs, and raffles. Drawings are actually listed in statute
by name, including the Nenana Ice Classic, the Iditarod Trail
Committee drawing, and so forth; there is no leeway, and their
inclusion requires legislation. He suggested looking at giving
a commission more leeway to run a truly successful lottery,
rather than requiring legislation whenever someone wants to add
a new game.
Number 2309
REPRESENTATIVE KOTT asked about the terminals that would be
placed around the state, and where that would occur. He noted
that in Michigan, for example, some lottery tickets can be
purchased in supermarkets. He asked how that is determined [in
states with successful legislation] when there are 20,000
possible locations but only 1,000 terminals allowed, for
example. As a business owner, he suggested that 7 percent is a
"pretty reasonable return for doing very little."
MR. JACKSON answered:
In the early days, like in the beginning of the Idaho
lottery, there really wasn't a system because so many
of us ... were so new that basically we put lottery
terminals wherever some vendor said, "I'll take one."
And that ended up being a little bit of an issue
because it is important ... not only to a company like
mine, as a vendor, but also to the lottery that that
terminal ... is in a position where it at least ...
carries its own weight.
MR. JACKSON reported finding that there were a lot of terminals
in locations that weren't generating enough money. Typically,
he indicated, now the lottery commission sits down, draws up
rules, and defines what makes a retailer and the number allowed.
[Not on tape, but reconstructed from the committee secretary's
log notes, was that one decision is where it is best to place
terminals in a community.]
TAPE 03-8, SIDE B
Number 2380
MR. JACKSON mentioned that one state restricts the distance a
lottery terminal must be from a church. Emphasizing that
terminals should be in high-traffic areas, he said the best
lottery retailers seem to be convenience stores; for example, 7-
Eleven does about 25 percent of the California lottery business.
He again cautioned that without rules [promulgated by the
commission] with regard to placement, there can be terminals
that don't carry their weight. However, many retailers believe
although a terminal might not make money [directly], it keeps
players from going to a nearby competitor and buying other
products there. Mr. Jackson added, "We would be happy, as any
of the competitors would, to provide you with some of the things
that other lottery commissions have done in their
determination."
MR. JACKSON emphasized the need to discuss security and law
enforcement, which aren't included in the bill. He urged the
committee to consider providing for a lottery security
department, which applies to gaming as well. Noting that every
lottery he knows of in the U.S. has a lottery security
department, he said usually it's a law enforcement group
consisting of employees of the lottery, but in some places it's
a division of the state police. This group does a number of
things including background checks on those who apply to be a
retailer, since a lottery retailer will need a reasonable credit
record and no felony convictions; background checks on companies
like GTECH; and addressing lottery crime such as when a person
attempts to manipulate a ticket or steals tickets, which are
like money.
Number 2278
MR. PERSILY suggested looking at Alaska's statute for the
Alcoholic Beverage Control Board, which regulates the number of
liquor licenses in a community, tied to the population: so many
per population, with some physical restrictions in terms of
proximity to schools, for example.
Number 2265
MR. JACKSON, in response to Representative Cissna, said the
price for a lottery ticket is $1 as a general rule, on line. He
noted that an international game coming out in January will
cost $2.
Number 2233
MR. JACKSON, in response to a question from Representative
McGuire, advised members that some states require that a
percentage of the profit to the state go to gambling-awareness
organizations; different states handle it differently. He
offered his recollection that in Nebraska the first $500,000 a
year goes to Gamblers Anonymous, but said when he was in Idaho
the only requirement was age-related. In most places, he
reported, the age is 18 in order to buy a lottery ticket,
although one state just raised it to 21. The "security people"
make sure that vendors aren't selling [to underage purchasers].
MR. JACKSON, acknowledging compulsive behavior and addiction,
reported seeing polls that indicate [problem gamblers] are from
0.1 percent to as high as 6 percent of the population; he
offered his own belief that it's closer to less than 1 percent,
but said he didn't know for sure. Mr. Jackson said every
lottery web site he knows of has a message to play responsibly;
typically, the phone number of the local Gamblers Anonymous is
provided as well. He conveyed his impression that lotteries and
lottery directors have taken their charge in that respect
seriously because this is a controversial business; for the most
part, lotteries have done a pretty good job of trying to get
that message out. He opined that people who vote for a lottery
recognize the problem, but feel that the money which goes to
good causes perhaps outweighs it.
Number 2103
REPRESENTATIVE McGUIRE interpreted Mr. Jackson's testimony to be
that some states mandate this by statute, whereas others handle
it through the commission and its directors. Indicating support
for [a lottery], she said she'd also like to have some "intent
language," for example, clarifying that one directive from the
legislature to the lottery commission is to address the social
problem of gambling addiction. She questioned the sufficiency
of a disclaimer on the lottery web site, but suggested perhaps
PSAs [public service announcements] run at certain times with a
phone number to call might help. She asked legislators to think
about the need for this, highlighting its importance to her.
MR. JACKSON replied that every piece of lottery legislation he
has seen has some statement of intent. In Idaho, for example,
the director had the responsibility to run the lottery
"consonant with the sensibilities of the citizens of the state"
and to be aware that this is a controversial business for which
the integrity must be primary. He remarked, "If we don't have
integrity in our lotteries, we don't have anything to sell." He
noted that Idaho - as he surmised other states do - spent a
fairly good-sized percentage of its advertising budget, which
was about 1.5 percent of sales, on what he called "beneficiary
advertising" to tell citizens how the state's lottery money was
being spent, along with a message to play responsibly. He
agreed with the need to include it in the legislation and
certainly include it in the charge to [the lottery] staff.
Number 2004
REPRESENTATIVE KOTT concurred with Representative McGuire about
including intent language, but asked Mr. Persily whether there
are provisions whereby pull-tab money is spent to help people
who have a gambling problem. Speaking of an unspecified
village, he said, "I would submit, then, in a population of 200
where every man, woman, and child is spending in excess of
$15,000, there are problems already there." He projected that
adding a lottery would increase the number of addicted gamblers
[in Alaska] by less than 0.5 percent. He highlighted the odds
against winning a lottery, surmising that people probably
wouldn't buy more than a few tickets a week because of the low
expectation of winning, whereas with pull-tabs a person expects
to win something.
MR. PERSILY replied that there is no requirement with respect to
pull-tabs now, although a chapter of Gamblers Anonymous might be
a licensed charitable organization [receiving money from pull-
tab sales], since he didn't know the exact nature of the 1,200
permittees. He noted that $2 million to $2.5 million from pull-
tabs goes into the state general fund; it cannot be traced with
regard to whether it goes back out in grants. He suggested that
either intent language could be added or, like the legislature
did with the alcohol-tax increase last year, a fund could be set
up from which [the legislature] may appropriate every year to
pay out grants to organizations such as [Gamblers Anonymous].
Number 1887
CHAIR HEINZE commended the North American Association of State
and Provincial Lotteries (NASPL) web site that talks about
gaming studies and so forth. She encouraged members to read
some of the figures provided there.
MR. JACKSON explained that [NASPL] is an association of all
lotteries in Canada and the United States. He estimated it has
been in existence since the late 1980s. In answer to
Representative McGuire's question, he said the vast majority of
work on [gambling addiction] has been done by the Minnesota
Lottery; he recommended looking at the "very definitive studies"
posted on that lottery's web site. He noted that the last time
he'd looked, the average transaction was less than $3 for a
Powerball jackpot of $284 million to $285 million.
Number 1826
CHAIR HEINZE turned attention to the electronic gaming portion
of the legislation.
Number 1808
REPRESENTATIVE McGUIRE moved to adopt the proposed CS, Version
23-LS0914\H, Luckhaupt, 4/7/03, as a work draft. There being no
objection, Version H was before the committee.
Number 1785
REPRESENTATIVE TOM ANDERSON, Alaska State Legislature, explained
the electronic gaming portion of Version H, noting that some
members had asked him to testify because of his interest in
alternative revenue sources for the state. He expressed hope
that the bill would be moved from committee expeditiously and
with "hearty analysis."
REPRESENTATIVE ANDERSON offered his belief that electronic
gaming machines are a great source of revenue under Version H
not only for charities, but also for the state and local
governments. He said this would be the first time in the U.S.
that such a "charitable gaming schematic" would be adopted, with
a significant amount of revenue going towards the state's
charities. He told members Version H wouldn't affect pull-tabs
whatsoever, and indicated the addition of electronic gaming
wouldn't affect the lottery portion.
REPRESENTATIVE ANDERSON noted that the first handout he'd
provided, an eight-page document titled "Proposed EGM Charitable
Gaming Legislation," lists frequently asked questions and
responses; reporting that he'd spoken with people from charities
and the hospitality industry, he suggested the questions and
answers would be "forever evolving." The second handout, a
sectional analysis of Version H that Representative Anderson
indicated he'd drafted with staff that day, notes [both changes
and] where changes didn't occur from the original bill; for
example, he indicated Version H doesn't change the lottery
sections.
Number 1683
REPRESENTATIVE ANDERSON told members he's not an expert on
electronic gaming. From his analysis, however, he said that
under Version H, 30 percent of the revenue from EGMs would go to
the State of Alaska, with 30 percent distributed to charities
and another 30 percent to vendors. He noted that EGM vendors
are limited to two entities under Version H: full-liquor-
license establishments that aren't restaurants or hotels,
meaning bars; or licensed clubs such as those run by the Elks
Club, Moose, VFW [Veterans of Foreign Wars], or American Legion.
He said that is unique because those clubs have a membership.
REPRESENTATIVE ANDERSON related a question about a "dry" village
where pull-tabs are played but there are no liquor-license
establishments. He said [Version H] prohibits EGM use in
establishments without a full liquor license, and surmised that
it resolves part of that question. If a dry village were to
create a club, he said, subsection 501(c)(3) [of the federal
Internal Revenue Code], which is "attached" to Alaska's statute,
says a club must exist three years before applying for a pull-
tab permit; since EGMs would be linked to that same requirement,
it would be three years [after creation] before such a club
could operate EGMs. He added, "Additionally, there would have
to be a membership, and there could be no ... liquor sold in
that respective dry village. ... If a question arises, ... I can
go on with that more, but that might counter the fear that in
dry villages we'd have EGMs."
Number 1581
REPRESENTATIVE ANDERSON told members the majority of changes in
Version H are technical; the legislative drafters were trying to
attach [EGMs] to pull-tabs for clarity, since both fall under
the umbrella of charitable gaming. He emphasized the difference
between charitable gaming and gambling such as occurs in Las
Vegas.
Number 1545
REPRESENTATIVE ANDERSON pointed out that the sixth page of his
eight-page handout shows information on the Oregon Lottery.
Suggesting the GTECH representative could speak more about the
video lottery terminals [owned and operated by the Oregon
Lottery], Representative Anderson reported that the maximum
number of VLTs per location [in Oregon] is five. He said the
majority of [Version H] mirrors the laws of South Dakota and
Oregon, and pointed out that [Version H] allows ten EGMs to be
in the "two allowable locations." Highlighting the amount of
revenue Oregon receives from VLTs - from approximately $480
million [in sales, with $278 million going to the state] - he
reported that Oregon has a different "percentage sequence"
whereby 58 percent goes to the state. By contrast, Version H
proposes that 30 percent go to the state, 30 percent to
charities, 30 percent to vendors, and 10 percent to a local
government or borough; for an unorganized [borough], that 10
percent also would go to the state.
REPRESENTATIVE ANDERSON said in Alaska a charity can only have
five pull-tab permits or "boxes" in total, whether in one bar or
several; that doesn't change with [Version H], since there can
only be five EGMs per charity. Noting that 1,200 charitable
organizations [now can get money from pull-tabs], he indicated
it would be quite a few EGMs if each used five machines. He
mentioned both 501(c)(3) and 501(c)(6) designations [under the
Internal Revenue Code], indicating there are some differences in
the code with regard to pull-tab use.
Number 1406
REPRESENTATIVE ANDERSON told members only people [21 or older]
could use the EGMs. From his own forecasts and talking with
people in Oregon, he predicted [sales of] $70 million to $100
million in the beginning, but acknowledged that it is
speculative. Noting that Alaska has a high tourist population
and a high migrant-worker population, he mentioned the North
Slope as an example. He said there is a presumption that
tourists and migrant workers would patronize a full-liquor-
license establishment or a club as described earlier; he
suggested Alaska would see a higher percentage who play these
machines than Oregon does, relative to its [population] size.
REPRESENTATIVE ANDERSON suggested that many questions were
answered in the earlier discussion about excessive gambling, for
example. He suggested that can be measured with pull-tabs now,
and that EGMs would be no different. He added, "I don't think
there is such an excessive amount that there is an alarm, other
than maybe in villages, and I think we've addressed the village
aspect with the limitations."
Number 1309
CHAIR HEINZE asked Mr. Jackson to address EGMs.
MR. JACKSON noted that he'd worked for International Game
Technology (IGT) - the world's largest manufacturer of slot
machines and VLTs, with about 78 percent of the world's market -
for a number of years. His responsibility was sales to states
where video lottery gaming is controlled by [state] lotteries:
West Virginia, Rhode Island, Delaware, South Dakota, Montana,
Oregon, and New Mexico, to his recollection. He reported that
he'd set up a very successful video lottery system in West
Virginia, for example, and spent a considerable amount of time
in this area.
MR. JACKSON told members that, early on, it was necessary to
differentiate between slot machines and EGMs or VLTs, for many
reasons. For one thing, slots were considered casino gaming,
but most states didn't want to have casino gambling or gaming in
the state. Second, an issue existed in many states between the
sovereign nations of the Native Americans and the [state's]
responsibilities; tribes in the Lower 48 were basically allowed
to have whatever gaming was legal within the state. So there
was a real question of trying to determine what a video lottery
terminal is.
Number 1198
MR. JACKSON advised the committee that basically a VLT is a
television monitor in which a game is simulated; it may even
simulate spinning reels [of the old slot machines]. He
indicated today the lottery applications include more card games
such as five-card stud or other poker games, rather than
"watermelons and lemons and oranges" and other [spinning objects
that the player tries to line up in order to win], which are
seen mostly in casinos.
MR. JACKSON highlighted another important aspect: with a VLT,
the "win/no win" decision is made by the host computer at the
central site, whereas in a casino that decision is made via
computer chip in that machine. Thus there is a need to hook up
terminals to a central system through a communication link,
which in Alaska would almost have to be wireless. The central
system not only makes the "win/no win" decision, but also
provides security over the system. He remarked, "If any door is
open on any video lottery terminal anywhere in the state, that
system immediately shuts that terminal down."
Number 1150
REPRESENTATIVE ANDERSON emphasized that the odds of being able
to tamper with such a machine are almost infinitesimal, whereas
with pull-tabs there have been many occurrences of graft or
theft.
MR. JACKSON concurred. He added that the central system also
provides a complete and accurate accounting of what took place
within that unit. As an example of a less secure system, he
noted that Montana has more VLTs than any other state in the
Union, with something like 19,000 video lottery terminals, none
hooked up to a central system. Calling it a "route system," he
explained, "Somebody went around every so often, opened up the
door, and took the money out, much like they would for the Coke
machine or one of those kind of things, which leaves itself open
for fraud, for theft."
MR. JACKSON pointed out that the central system also provides
the vehicle through which a state gets paid. He told members:
One of the issues that I have with this piece of
legislation is, it does not ... allow or call for the
state to sweep the accounts of these retailers. It
says the retailer ... has to go down to the bank and
make a deposit. If you do write this legislation,
please change that. ... You go in there and you sweep.
... But [the central system] allows you to do that,
and you do that on a predictable time, so that the
retailer knows when his bank account is going to be
swept. ...
In this business, we work on what we call "net win."
We don't work on sales. Net win is ... money in less
money out. And typically ... about 50 percent of that
net win ends up going to the state and the other 50
percent is split up among the operator of the machines
and the vendor.
MR. JACKSON, noting that machines can cost up to $12,000,
depending on the game, called Oregon an "interesting example"
because it is one of the few states that chooses to buy its
machines; he remarked, "This last procurement that they did was
a change for them." He said Oregon also is one of the few that
chooses to do its own maintenance. Mr. Jackson reported that
Rhode Island, "the shining star of video lottery" in terms of
success, has a GTECH central system controlling machines from
four different manufacturers; GTECH is paid a percentage of
sales for operation of that system, and each manufacturer is
paid a percentage of the net win from its machines.
Number 0980
MR. JACKSON stated his preference for such a system, making the
vendor responsible for maintenance of not only the system, but
also the machines. If a local bar in Alaska wanted to buy 10
machines, he pointed out, it would cost 10 times $8,000 or
$10,000. If it were done through a distributor, then a "middle
man" would require a cut. He therefore recommended that [the
state] go out for bid and "require a company like IGT or GTECH
or Williams Gaming (ph) or Spielo out of Canada to come in and
set up your system for a percentage of sales."
Number 0946
REPRESENTATIVE ANDERSON said he wasn't an expert on how
Version H is drafted in terms of the charities' ownership [of
the terminals]. Indicating the hospitality industry had
recommended that, he asked whether Mr. Jackson agreed.
MR. JACKSON replied:
I'm not sure. ... I believe that you are better off in
this business if you have the vendor as your partner.
If it is my responsibility to make sure that the thing
operates, and my responsibility to make sure that the
system functions, you're better off than if you have a
machine that is now owned by the charity. What
happens if it breaks down? Who fixes it? If it
breaks down and I'm being paid some percentage of
sales, I guarantee, I'm going to have somebody there
to get it fixed and get it running.
MR. JACKSON surmised that if this were put out for bid, there
probably would be two competitors that do central systems -
GTECH and IGT - and four "machine bidders" - IGT, Spielo out of
Canada, Williams Gaming, and Aristocrat. He indicated one
prerequisite for programming a central system, regardless of who
wins the bid, is that it accept machines from all suppliers. He
added, "That's a protocol issue that ... those people that
understand software know how to do."
Number 0834
REPRESENTATIVE ANDERSON, in response to a question from
Representative McGuire regarding establishments that sell beer
and wine, referred to the third question on the second page of
his handout. He offered his belief that the way the legislation
is drafted, EGMs can only be placed in an establishment
[restricted to those] age 21 or older. He suggested that Jerry
Luckhaupt, legislative drafter, could verify that it is only in
bars or clubs [that EGMs can be placed].
Number 0769
REPRESENTATIVE McGUIRE referred to Representative Anderson's
mention of migrant workers and the North Slope. She said that
if the goal is to get revenue from some of these people "that
come in and drive on our roads and do other things and don't pay
into our state coffers," she believes it is a good goal. She
asked, however, how to get at those people if [EGMs] will be
placed only in clubs or bars.
REPRESENTATIVE ANDERSON replied that he simply meant that people
who work in fishing, timber, tourism, or [oil-related jobs] on
the North Slope come through Anchorage and other city centers.
He related his belief that Alaska has more of those people than
other states have.
Number 0719
REPRESENTATIVE KOTT asked whether a liquor establishment that is
part of a hotel is eligible.
REPRESENTATIVE ANDERSON answered in the affirmative.
REPRESENTATIVE KOTT referred to page 19 of Version H and offered
his understanding that the eligibility would apply if the
establishment conducted the electronic gaming in the bar area
that is controlled. He then said:
One of the thoughts we had when we crafted up this
piece of legislation, especially in the lottery part
of it, is that there may be ... some potential for
offering the sale of those lottery tickets to our
visitor industry, which is seemingly growing, and ...
many of the visitors come in by way of cruise ships or
our state ferry system. [Are] there any restrictions
... that you know that would prohibit that, especially
when it got into our waters? Or can we sell it as
soon as it departs the port in Bellingham
[Washington], for instance, on our state ferry? ...
We've got some uniqueness up here in the sense that we
have a large number of visitors that are coming, and
they're basically a captive audience for three to
seven days on a ferry system; that may be an
attraction that we can take advantage of. Of course,
we have a disadvantage: we only have a small
population. But I think we can make up for that, at
least in three or four months out of the year, if
there's some way that we can tie those lottery efforts
onto the cruise ships.
REPRESENTATIVE KOTT concluded by asking whether Mr. Jackson had
any experience with other states that have cruise ship travel.
MR. JACKSON said he hadn't, but pointed out that the technology
exists, if the desire is to put a lottery terminal on a moving
vessel, to hook it up through a wireless communication link to a
central-system computer. He asked whether the cruise ship would
be the retailer and get paid 5 to 7 percent.
REPRESENTATIVE ANDERSON surmised that the liquor licenses are
owned by the state on its ferries.
Number 0561
MR. PERSILY questioned whether cruise ships would use their
floor space to put an Alaskan lottery terminal that would
generate 5 to 7 [percent], when their onboard casinos probably
take in a much higher percentage on craps, blackjack, and other
tables. He said he wasn't aware of any technical prohibition.
He noted that right now the casinos operate in international
waters but shut down when the ship hits state waters coming into
port, since Alaska doesn't allow gambling. He suggested a law
could be crafted to allow gambling in Alaska through VLTs on
cruise ships, if the ships wanted to do that and give [the
state] what they might see as a small percentage.
MR. PERSILY pointed out that ferries are different because there
is no competition. Acknowledging that he isn't a lawyer, he
surmised that once a ferry is in international waters after
leaving Bellingham and Puget Sound, VLTs possibly could be
operated because Washington State wouldn't have jurisdiction.
REPRESENTATIVE KOTT mentioned existing technology to put these
terminals on a moving vessel.
Number 0470
MR. JACKSON reported that there is a bill before the Nevada
legislature to create a state lottery, which he said he finds
amazing. However, Nevada has a [budget] deficit and is
considering inclusion of a lottery in the casinos there.
REPRESENTATIVE KOTT submitted that in lieu of a $100 head tax,
cruise ship companies might be willing to "dedicate a small
space for the Alaska lottery."
Number 0382
REPRESENTATIVE KOTT asked how quickly a system could be set up
after passage of a bill.
MR. JACKSON replied that if his company or one of its
competitors were given an order today by the State of Alaska to
put in a lottery system for perhaps 1,000 locations around the
state, it would require four to six months. From the time of an
RFP, it typically takes a year, including a period of time for
the RFP to be sent to interested parties, for them to ask
questions, for a response, for evaluation, and then for
implementation. For VLTs, however, it would take a little
longer. He recalled selling an order in West Virginia and going
to the manufacturing plant in Reno, Nevada; it was 14 weeks
before he could get an order in because of the number slot
machines being sold around the world.
Number 0259
MR. PERSILY added, "To be safe, you'd probably look for the
start of the next fiscal year, July 1, '04, because certainly
the bid process, the RFP, possible protest, ordering, installing
around the state - a year, I think, would be a conservative
estimate to do a good system."
Number 0247
REPRESENTATIVE CRAWFORD observed that no one had testified with
regard to what he considers the wreckage and ruin caused by this
in other states. He offered his personal experience from
Louisiana, saying it began innocently enough with horse racing,
for example, but then included casino gambling and the most
insidious, to his belief, which is electronic gaming machines -
video poker. He said people will sit there and lose their whole
paycheck again and again. He'd even had to evict tenants
because they wouldn't save enough money to pay the rent; after
several months, he couldn't afford to rent to them.
REPRESENTATIVE CRAWFORD suggested the need to talk to ministers
and those who have to pick up the pieces. Even with public-
service messages telling people to play responsibly, he
expressed concern about picking up the pieces after the damage
already has been done. He cautioned members to be certain
whether this is the road they want to go down to get revenues
for the state, and said there are other means without gambling,
which has been a scourge forever.
REPRESENTATIVE CRAWFORD reported that Louisiana, which has 64
parishes [equivalent to counties in other states], went to a
local option about a year and a half ago whereby a parish could
ban electronic gaming. All but five took the option. He
remarked:
They see the damage that it's doing. They see how
insidious it is. ... This is not a panacea. This is
not all wonderful. If we feel like a certain
percentage of the people are expendable, then go
ahead. But ... I'm very much opposed to video poker
or electronic gaming, that sort of thing. ... It's
insidious.
CHAIR HEINZE asked Representative Crawford whether he'd feel
more comfortable if the committee looked at the bill [further,
rather than moving it forward].
TAPE 03-9, SIDE A
Number 0001
REPRESENTATIVE CRAWFORD emphasized the need to hear testimony
about the other side of the story.
Number 0047
REPRESENTATIVE ANDERSON referred to Representative Crawford's
use of "insidious" and suggested it is a matter of perspective;
he opined that people in Rhode Island and Oregon wouldn't think
that. He said there was an EGM task force set up in Alaska, and
offered assurance that there would be "a conflagration of
letters from charities within the next week supporting this
legislation." He expressed hope that Representative Crawford
would keep an open mind. He also suggested that the newly
created House Special Committee on Ways and Means is a better
committee for analyzing this aspect, since the current committee
had talked about the economic aspects. He acknowledged that he
isn't a member of the House Special Committee on Economic
Development, International Trade and Tourism.
Number 0179
REPRESENTATIVE ANDERSON, in response to a remark by
Representative Kott, cited page 17, Section 22, of the bill,
saying any municipality or village can opt out.
REPRESENTATIVE KOTT pointed out that there was notice about the
hearing on the previous Monday, as well as when the bill was
held over until the current meeting at a time certain. He
surmised that interest [by testifiers] would be generated if the
legislation moved forward.
REPRESENTATIVE KOTT offered to work with Mr. Jackson to perhaps
look at the Idaho legislation [for a model], especially with
regard to some key issues mentioned, such as security and the
ability to [electronically sweep the state's share], as well as
maybe to more clearly define the responsibilities of the lottery
and how the commission interacts. For example, this legislation
has five members appointed by the governor and confirmed by the
legislature, but they only meet quarterly or as needed, and
aren't paid except for per diem for travel and related expenses.
Noting that Version H has a director that would be paid, he said
he or she could hire as many assistants as needed to facilitate
the success of the program.
REPRESENTATIVE KOTT, acknowledging that some issues need to be
fleshed out, announced that his staff would work full-time with
[Representative Anderson's] staff to ensure that the legislation
is right, if and when it passes the House. He expressed hope
that it would be gone over thoroughly before it is heard in the
House Special Committee on Ways and Means, and suggested that if
there is anyone whom members wish to invite to testify before
that committee, they should do so. He expressed appreciation to
Mr. Jackson and Mr. Persily for their comments, suggesting this
may lead to some success.
Number 0398
MR. PERSILY reminded members that the department's fiscal note
for the original bill was low because it applied to running two
raffles a year. As the lottery becomes more productive, though,
the program will be much more expensive to run. Hence the
fiscal note for the amended version will be much higher.
REPRESENTATIVE KOTT commented that it takes money to make money.
Number 0441
REPRESENTATIVE KOTT moved to report CSHB 240 [Version 23-
LS0914\H, Luckhaupt, 4/7/03] out of committee with individual
recommendations and the accompanying fiscal note.
REPRESENTATIVE KOTT offered his understanding that an updated
fiscal note will be provided [by the Department of Revenue]
before the bill is heard in the next committee of referral.
Number 0463
CHAIR HEINZE asked whether there was any objection. There being
no objection, CSHB 240(EDT) was reported from the House Special
Committee on Economic Development, International Trade and
Tourism.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 7:02 p.m.
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