Legislature(2021 - 2022)BELTZ 105 (TSBldg)

05/03/2021 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HJR 14 RESOLUTION: FED SAFE BANKING ACT/CANNABIS TELECONFERENCED
Moved HJR 14 Out of Committee
-- Invited & Public Testimony --
*+ SB 130 ELECTRONIC PULL-TAB GAMES TELECONFERENCED
Moved SB 130 Out of Committee
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                          May 3, 2021                                                                                           
                           1:30 p.m.                                                                                            
                                                                                                                                
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mia Costello, Chair                                                                                                     
Senator Joshua Revak, Vice Chair                                                                                                
Senator Peter Micciche                                                                                                          
Senator Gary Stevens                                                                                                            
Senator Elvi Gray-Jackson                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 14                                                                                                   
Supporting the passage by the  United States Congress of the SAFE                                                               
Banking Act  of 2019, sec. 110606  of the Heroes Act,  or similar                                                               
legislation relating  to cannabis-related  legitimate businesses'                                                               
access to financial services.                                                                                                   
                                                                                                                                
     - MOVED HJR 14 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 130                                                                                                             
"An Act relating to electronic pull-tabs."                                                                                      
                                                                                                                                
     - MOVED SB 130 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HJR 14                                                                                                                  
SHORT TITLE: RESOLUTION: FED SAFE BANKING ACT/CANNABIS                                                                          
SPONSOR(s): REPRESENTATIVE(s) RASMUSSEN                                                                                         
                                                                                                                                
03/05/21       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/05/21       (H)       CRA                                                                                                    
04/01/21       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/01/21       (H)       Heard & Held                                                                                           
04/01/21       (H)       MINUTE(CRA)                                                                                            
04/06/21       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/06/21       (H)       Moved HJR 14 Out of Committee                                                                          
04/06/21       (H)       MINUTE(CRA)                                                                                            
04/07/21       (H)       CRA RPT 7DP                                                                                            
04/07/21       (H)       DP: MCCABE, PRAX, PATKOTAK, DRUMMOND,                                                                  
                         MCCARTY, SCHRAGE, HANNAN                                                                               
04/22/21       (H)       TRANSMITTED TO (S)                                                                                     
04/22/21       (H)       VERSION: HJR 14                                                                                        
04/23/21       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/23/21       (S)       L&C                                                                                                    
05/03/21       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 130                                                                                                                  
SHORT TITLE: ELECTRONIC PULL-TAB GAMES                                                                                          
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
04/23/21       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/23/21       (S)       L&C                                                                                                    
05/03/21       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE SARA RASMUSSEN                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of HJR 14.                                                                                        
                                                                                                                                
SCOTT BERGMANN, Staff                                                                                                           
Representative Sara Rasmussen                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced HJR 14 on behalf of the sponsor.                                                               
                                                                                                                                
LACY WILCOX, President                                                                                                          
Alaska Marijuana Industry Association (AMIA)                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided supporting testimony on HJR 14.                                                                  
                                                                                                                                
RYAN TUNSETH, representing self                                                                                                 
Owner, East Rip                                                                                                                 
Kenai, Alaska                                                                                                                   
POSITION STATEMENT: Testified in support of HJR 14.                                                                           
                                                                                                                                
MICHAEL MARTIN, President                                                                                                       
Alaska Bankers Association (ABA);                                                                                               
CEO and General Counsel                                                                                                         
Northrim Bank                                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HJR 14.                                                                           
                                                                                                                                
MELODIE WILTERDINK, Staff                                                                                                       
Senator Mia Costello                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced SB 130 on behalf of the Senate                                                                 
Labor and Commerce Committee.                                                                                                   
                                                                                                                                
ANGIE FRAIZE, Communications Officer                                                                                            
Anchorage Police Department Employee Association (APDEA)                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified on SB 130 by invitation.                                                                        
                                                                                                                                
JOHN POWERS                                                                                                                     
Tudor Bingo Center                                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Stated opposition to SB 130 without more                                                                  
input from people like himself.                                                                                                 
                                                                                                                                
JACK TRIPP, former owner                                                                                                        
The Viking                                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified on SB 130 by invitation.                                                                        
                                                                                                                                
SANDY POWERS                                                                                                                    
Big Valley Bingo                                                                                                                
Willow, Alaska                                                                                                                  
POSITION STATEMENT: Expressed concern with SB 130.                                                                            
                                                                                                                                
SCOTT HENNEMAN, Vice President                                                                                                  
Business Development and Governmental Affairs                                                                                   
Grover Gaming                                                                                                                   
Omaha, Nebraska                                                                                                                 
POSITION STATEMENT: Testified in support of SB 130.                                                                           
                                                                                                                                
NANCY DECHERNEY, Executive Director                                                                                             
Alaska Council on the Arts                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 130.                                                                           
                                                                                                                                
MACK MEINERS, representing self                                                                                                 
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of SB 130.                                                                           
                                                                                                                                
JOHNATHON GREEN, Attorney                                                                                                       
Kempell, Huffman, and Elise                                                                                                     
Wasilla, Alaska                                                                                                                 
POSITION  STATEMENT:  Testified  that  SB 130  would  not  expand                                                             
requirements for the state to  negotiate with tribal entities for                                                               
class III gaming.                                                                                                               
                                                                                                                                
DAVID LAMBERT, representing self                                                                                                
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 130.                                                                           
                                                                                                                                
KATRINA MITCHELL, Gaming Manager                                                                                                
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the  hearing on SB
130.                                                                                                                            
                                                                                                                                
COLLEEN GLOVER, Director                                                                                                        
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during the  hearing on SB
130.                                                                                                                            
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:30:22 PM                                                                                                                    
CHAIR MIA COSTELLO called the  Senate Labor and Commerce Standing                                                             
Committee meeting  to order at 1:30  p.m. Present at the  call to                                                               
order  were Senators  Gray-Jackson,  Revak,  and Chair  Costello.                                                               
Senators Micciche  and Stevens arrived  during the course  of the                                                               
meeting.                                                                                                                        
                                                                                                                                
        HJR 14-RESOLUTION: FED SAFE BANKING ACT/CANNABIS                                                                    
                                                                                                                                
1:31:00 PM                                                                                                                    
SENATOR  COSTELLO  announced  the consideration  of  HOUSE  JOINT                                                               
RESOLUTION NO.  14, Supporting the  passage by the  United States                                                               
Congress of  the SAFE  Banking Act  of 2019,  sec. 110606  of the                                                               
Heroes Act,  or similar legislation relating  to cannabis-related                                                               
legitimate businesses' access to financial services.                                                                            
                                                                                                                                
1:31:37 PM                                                                                                                    
REPRESENTATIVE SARA RASMUSSEN,  Alaska State Legislature, Juneau,                                                               
Alaska,  sponsor of  HJR 14,  related  that the  bill came  about                                                               
after her husband,  who is a mortgage  originator, mentioned that                                                               
somebody had  applied for a  home mortgage and could  not qualify                                                               
because  they worked  in  the legal  cannabis  industry. This  is                                                               
despite  the  2014  initiative  in which  53  percent  of  voters                                                               
approved cannabis  use. She reached  out to industry  leaders and                                                               
learned  that   these  businesses  have  difficulty   renting  or                                                               
purchasing property  and they  have to  pay their  taxes, utility                                                               
expenses,  rent,  and employees  in  cash.  Believing that  there                                                               
should  be  a  better  way, she  worked  with  the  congressional                                                               
delegation  to produce  HJR 14.  It  seeks to  level the  playing                                                               
field for  all Alaskan businesses  and increase  transparency and                                                               
safety measures.                                                                                                                
                                                                                                                                
1:33:56 PM                                                                                                                    
CHAIR COSTELLO summarized  that because cannabis is  not legal at                                                               
the  federal  level,  these  businesses do  not  have  access  to                                                               
banking so all transactions are  in cash. The resolution asks the                                                               
federal  government to  allow these  businesses to  operate under                                                               
the federal Secure And Fair Enforcement (SAFE) Banking Act.                                                                     
                                                                                                                                
REPRESENTATIVE RASMUSSEN agreed with the summary.                                                                               
                                                                                                                                
1:35:00 PM                                                                                                                    
SCOTT  BERGMANN,  Staff,  Representative Sara  Rasmussen,  Alaska                                                               
State Legislature,  Juneau, Alaska, stated  that HJR 14  calls on                                                               
Congress to pass  the Secure And Fair  Enforcement (SAFE) Banking                                                               
Act  or  similar  legislation  to   provide  a  safe  harbor  for                                                               
financial institutions that provide services to legal cannabis-                                                                 
related businesses. Under current federal  law it is a Schedule I                                                               
felony  to accept  deposits and  conduct  other banking  business                                                               
with the legal cannabis industry.                                                                                               
                                                                                                                                
He reported that  since 1996, 33 states comprising  68 percent of                                                               
the nation's  population have legalized  cannabis for  medical or                                                               
adult use. He highlighted that  the U.S. House of Representatives                                                               
passed  a SAFE  Banking  Act and  Senator  Murkowski and  Senator                                                               
Sullivan are co-sponsors of the U.S. Senate version of the bill.                                                                
                                                                                                                                
SENATOR GRAY-JACKSON  asked if legal marijuana  businesses accept                                                               
credit   card  transactions.   She  acknowledged   the  nonverbal                                                               
negative response and expressed  support for changing the federal                                                               
law.                                                                                                                            
                                                                                                                                
SENATOR REVAK commented  that this is a state's  rights issue and                                                               
he appreciates  the legislation.  The people  of Alaska  voted to                                                               
legalize cannabis;  forcing the industry to  transact business in                                                               
cash is dangerous and it impedes commerce.                                                                                      
                                                                                                                                
1:37:50 PM                                                                                                                    
LACY  WILCOX, President,  Alaska  Marijuana Industry  Association                                                               
(AMIA), Juneau,  Alaska, stated that  on behalf of  the industry,                                                               
she was  offering support  for HJR 14.  She said  this resolution                                                               
would  send a  message that  the Alaska  Legislature cares  about                                                               
health and safety.  Access to financial services  is paramount in                                                               
protecting Alaskans from the public  safety risks associated with                                                               
transacting business  entirely in cash. She  described banking as                                                               
a  tool  for law  enforcement,  tax  collectors, regulators,  and                                                               
auditors to  identify less than honorable  industry participants.                                                               
Passing the resolution  in support of the SAFE  Banking Act would                                                               
make Alaska a leader and other states would be likely to follow.                                                                
                                                                                                                                
MS. WILCOX highlighted the effect of  the federal law on the more                                                               
than  400 cannabis  business  entities, shareholders,  investors,                                                               
and  employees.  She  said  the  10,000  or  more  employees  are                                                               
probably  the most  affected by  the  lack of  access to  banking                                                               
services. They  are unable to  qualify to buy  a house or  car or                                                               
take out a  student loan to further their education.  The lack of                                                               
access to  financial services  also prevents  cannabis businesses                                                               
from offering health and retirement  benefits to their employees.                                                               
She mentioned  the ancillary support  businesses that  have found                                                               
it difficult to conduct business  with the industry because large                                                               
payments for supplies and services must  be paid in cash or money                                                               
orders.  General  contractors,  plumbers,  electricians,  utility                                                               
companies,  and supply  vendors  may  jeopardize their  financial                                                               
standing by  doing business with cannabis  businesses. She shared                                                               
the message she  has heard from people in  the financial services                                                               
sector, which is  that they would like to  offer banking services                                                               
to the industry but they  need assurance through the SAFE Banking                                                               
Act or similar legislation that doing so would not be a crime.                                                                  
                                                                                                                                
1:42:37 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on HJR 14.                                                                               
                                                                                                                                
1:42:51 PM                                                                                                                    
RYAN TUNSETH,  representing self, Kenai, Alaska,  advised that he                                                               
is the owner of the retail  cannabis business, East Rip. He urged                                                               
the  committee  to  support  HJR 14  or  similar  legislation  to                                                               
support passage of  the SAFE Banking Act  or similar legislation.                                                               
He  said this  is a  nonpartisan issue  about protecting  working                                                               
Alaskans. It  sends a  clear message  that legislators  from both                                                               
sides of the  aisle will look out for the  safety of Alaskans and                                                               
protect the  rights of workers  and Alaska businesses.  He agreed                                                               
with previous  testimony that moving  and handling  large amounts                                                               
of cash  is problematic.  He pointed  out that  there is  also an                                                               
efficiency  element related  to the  state's finances.  Currently                                                               
there is  nearly $2  million in unpaid  marijuana taxes  and this                                                               
would add  a tool for the  state to audit against  that. It would                                                               
also  make  it easier  for  businesses  to make  those  payments.                                                               
Finally,  there is  an equity  piece that  people have  mentioned                                                               
about not  being able to secure  a loan because the  payments may                                                               
come from the cannabis industry.  Deeper than that, being able to                                                               
secure  any  type of  financing  to  secure  a  loan to  start  a                                                               
business is very  difficult. Because of that, most  of the people                                                               
who entered  the industry  were able  to do  it because  they had                                                               
cash by robbing 401 K plans  or something similar. He said others                                                               
who  may not  have that  ability  are blocked  from entering  the                                                               
industry. There  are no  other mechanisms  for funding.  He urged                                                               
the committee to support HJR 14.                                                                                                
                                                                                                                                
1:45:10 PM                                                                                                                    
MICHAEL MARTIN, President, Alaska  Bankers Association (ABA); CEO                                                               
and General Counsel, Northrim  Bank, Anchorage, Alaska, testified                                                               
in support  of HJR 14.  He stated  that ABA represents  the seven                                                               
banks  that  have operations  in  Alaska,  including four  state-                                                               
chartered  banks and  three  national banks,  all  of which  have                                                               
substantial  operations in  Alaska. He  said ABA  and its  member                                                               
banks support HJR 14, urging  the federal government to adopt the                                                               
SAFE  Banking  Act  to  provide   a  safe  harbor  to  depository                                                               
institutions  that provide  financial  products  and services  to                                                               
legal  cannabis-related  businesses.  He   noted  that  the  SAFE                                                               
Banking  Act is  a  bank-specific solution  that  creates a  safe                                                               
harbor and  enables banks  to serve  cannabis-related businesses.                                                               
The  U.S.  House of  Representatives  most  recently passed  this                                                               
legislation and it is awaiting action in the Senate.                                                                            
                                                                                                                                
MR. MARTIN highlighted  that ABA and the member  banks have never                                                               
taken a position  on the legalization of cannabis,  but the banks                                                               
are committed to  serve the financial needs  of Alaska consumers,                                                               
businesses, and  communities. He said  all bankers in  Alaska are                                                               
subject  to federal  law and  cannabis remains  illegal so  banks                                                               
currently  face substantial  risks by  offering banking  products                                                               
and services  to cannabis-related  businesses. Most  notably, the                                                               
issue is the  potential loss of the bank's  charter and therefore                                                               
the ability  to do business  in general.  He said the  reality is                                                               
that  cannabis-related  businesses   currently  cannot  open  and                                                               
maintain deposit  accounts with Alaska banks.  They cannot engage                                                               
in  electronic transactions,  which includes  tax payments.  They                                                               
have  a difficult  if not  impossible time  obtaining loans  from                                                               
banks. This  causes these legitimate and  substantially regulated                                                               
businesses  to  operate  in  cash   and  money  orders  and  find                                                               
alternative means  of financing  and funds management  outside of                                                               
the  banking system.  He  also noted  that  the American  Banking                                                               
Association  submitted  a  letter   to  Congress  in  March  2021                                                               
supporting  the SAFE  Banking  Act. He  thanked  the sponsor  and                                                               
urged the committee to support HJR 14.                                                                                          
                                                                                                                                
1:48:52 PM                                                                                                                    
CHAIR COSTELLO closed  public testimony on HJR 14.  She asked the                                                               
sponsor if there was another committee of referral.                                                                             
                                                                                                                                
REPRESENTATIVE  RASMUSSEN answered  no;  the resolution  received                                                               
just one referral in each body.                                                                                                 
                                                                                                                                
1:49:20 PM                                                                                                                    
SENATOR REVAK  moved to  report HJR  14, work  order 32-LS0617\A,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR COSTELLO  found no objection  and HJR 14 was  reported from                                                               
the Senate Labor and Commerce Standing Committee.                                                                               
                                                                                                                                
                SB 130-ELECTRONIC PULL-TAB GAMES                                                                            
                                                                                                                                
1:49:53 PM                                                                                                                    
CHAIR  COSTELLO announced  the consideration  of SENATE  BILL NO.                                                               
130, "An Act relating to electronic pull-tabs."                                                                                 
                                                                                                                                
1:50:19 PM                                                                                                                    
MELODIE  WILTERDINK, Staff,  Senator Mia  Costello, Alaska  State                                                               
Legislature, Juneau, Alaska,  introduced SB 130 on  behalf of the                                                               
Senate  Labor  and Commerce  Committee.  She  read the  following                                                               
sponsor statement into the record:                                                                                              
                                                                                                                                
     Traditional  paper pull-tabs  are multilayered  tickets                                                                    
     with perforated sections that  when "pulled" by tearing                                                                    
     the perforation, reveal  symbols which indicate whether                                                                    
     the  player  has  won.   Pull-tab  gaming  permits  are                                                                    
     exclusively  available  to   charities  in  Alaska  for                                                                    
     fundraising,  and Alaska  charities have  benefitted by                                                                    
     receiving donations through pull-tab games.                                                                                
                                                                                                                                
     Senate  Bill 130  would  allow  pull-tab operators  the                                                                    
     choice   of  providing   paper   pull-tab  tickets   or                                                                    
     electronic pull-tab tickets,  which are accessed onsite                                                                    
     through a kiosk or  tablet device. Electronic pull-tabs                                                                    
     are played in  the same manner as  paper pull-tabs, but                                                                    
     there are  no physical tickets for  operators to count,                                                                    
     deface,  or  store.  Benefits of  electronic  pull-tabs                                                                    
     include   increased  security,   easier  tracking   and                                                                    
     reporting,  and  reduced fraud.  Modernizing  pull-tabs                                                                    
     makes it  less onerous  for small businesses  to become                                                                    
     pull-tab operators in support of local charities.                                                                          
                                                                                                                                
MS. WILTERDINK showed the committee  the number of used pull-tabs                                                               
from  one bartender  in a  single shift  and the  number of  used                                                               
pull-tabs created  from a single  bar in six weeks  to illustrate                                                               
the  paper waste  that  SB 130  has the  potential  to reduce  or                                                               
eliminate by giving operators the  option to switch to electronic                                                               
pull-tabs.                                                                                                                      
                                                                                                                                
CHAIR  COSTELLO asked  her  to talk  about  eliminating both  the                                                               
potential  for fraud  and the  administrative  burden of  parsing                                                               
through used pull-tabs.                                                                                                         
                                                                                                                                
1:53:28 PM                                                                                                                    
MS.  WILTERDINK  explained that  the  bar  puts up  the  up-front                                                               
payment and the  charity is responsible for  delivering the pull-                                                               
tabs  to the  bar. She  noted that  many charities  hire a  third                                                               
party to do  deliveries, which reduces the profit  to the charity                                                               
by tens  of thousands of  dollars per  year. Inside the  bar, the                                                               
profit on individual  pull-tabs is small but the  volume is high.                                                               
The bartender  counts out individual  pull-tabs to  customers and                                                               
they  may  accidentally  give  extras.  This is  a  loss  to  the                                                               
charities  but it  is  difficult to  count  and track  individual                                                               
pull-tabs. She relayed  stories of people taking  a winning pull-                                                               
tab from  one bar and  slipping it in  at another bar  to receive                                                               
payment  twice.  She  said  the  fraud can  be  onerous  and  the                                                               
responsibility falls  on the  bar owners who  are putting  up the                                                               
up-front cash to support the charities.                                                                                         
                                                                                                                                
1:54:43 PM                                                                                                                    
SENATOR GRAY-JACKSON asked how a winning tab is paid.                                                                           
                                                                                                                                
MS. WILTERDINK  replied that winnings  are paid in cash  and that                                                               
would not change with electronic pull-tabs.                                                                                     
                                                                                                                                
SENATOR GRAY-JACKSON offered her  understanding that other states                                                               
pay winnings  from electronic pull-tabs  with a check.  She asked                                                               
whether  winners, particularly  large  winners,  would receive  a                                                               
check in the mail.                                                                                                              
                                                                                                                                
MS. WILTERDINK deferred the question  to representatives from the                                                               
Department of Revenue.                                                                                                          
                                                                                                                                
1:56:25 PM                                                                                                                    
CHAIR COSTELLO clarified that the  pull-tab kiosks would still be                                                               
on  the  premises, not  offsite.  She  noted  that this  bill  is                                                               
different  from   the  charitable   gaming  bill   the  committee                                                               
considered  where individuals  were able  to donate  to charities                                                               
from their home using their own electronic device.                                                                              
                                                                                                                                
1:57:07 PM                                                                                                                    
SENATOR MICCICHE joined the committee.                                                                                          
                                                                                                                                
SENATOR   GRAY-JACKSON   said   the  explanation   answered   her                                                               
questions.                                                                                                                      
                                                                                                                                
CHAIR COSTELLO opened invited testimony on SB 130.                                                                              
                                                                                                                                
1:57:50 PM                                                                                                                    
ANGIE   FRAIZE,   Communications    Officer,   Anchorage   Police                                                               
Department  Employee  Association   (APDEA),  Anchorage,  Alaska,                                                               
testified  in support  of SB  130. She  advised that  since 2017,                                                               
APDEA  has  had  a  nonprofit   arm  called  Anchorage  Cops  for                                                               
Community  that works  to connect  to the  community in  non-law-                                                               
enforcement ways. In  the first three years,  they received close                                                               
to $100,000  in gaming money to  help meet the mission  to foster                                                               
and  inspire community  wellbeing  through collaboration  between                                                               
the  community  and  law  enforcement. She  listed  some  of  the                                                               
programs  and projects  and noted  that  they give  to five  main                                                               
charities every year if the funds are available.                                                                                
                                                                                                                                
MS. FRAIZE  said SB  130 offers  a way  for community  members to                                                               
responsibly engage  in gaming and help  nonprofits. Transitioning                                                               
to  electronic  pull-tabs brings  this  aspect  of gaming  up  to                                                               
modern times and makes it easier for everyone.                                                                                  
                                                                                                                                
2:01:04 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on SB 130.                                                                               
                                                                                                                                
2:01:17 PM                                                                                                                    
JOHN  POWERS,  Tudor Bingo  Center,  Anchorage,  Alaska, said  he                                                               
opposes SB 130 right now  because the gaming industry is evolving                                                               
so  rapidly.  He  noted  that   there  are  several  versions  of                                                               
electronic  pull-tabs  and  one  looks  and  plays  like  a  slot                                                               
machine. The play  is very rapid and he believes  this could lead                                                               
to  overspending.  He  said  he  also  supports  maintaining  the                                                               
existing  payout  limits.  He  said   states  that  have  adopted                                                               
electronic   pull-tabs   generally   have  specific   rules   and                                                               
guidelines and he would request  the committee table this bill at                                                               
least  this session  and  get input  from  industry leaders  like                                                               
himself. He  referenced previous  testimony and said  his company                                                               
also supports charities and they  recycle all the used pull-tabs.                                                               
He also suggested  imposing limits on the number  of terminals or                                                               
machines  in each  facility to  prevent a  casino atmosphere.  He                                                               
reiterated his  opposition to SB  130 without further  input from                                                               
people like himself.                                                                                                            
                                                                                                                                
CHAIR COSTELLO clarified  that SB 130 provides the  option, not a                                                               
mandate, for  electronic pull-tabs.  The regulation  process will                                                               
address the fine  details to ensure compliance  with the existing                                                               
charitable gaming laws.                                                                                                         
                                                                                                                                
2:05:56 PM                                                                                                                    
SENATOR GRAY-JACKSON asked Mr. Powers  if he had pull-tabs at his                                                               
bingo hall.                                                                                                                     
                                                                                                                                
MR. POWERS answered yes.                                                                                                        
                                                                                                                                
SENATOR GRAY-JACKSON asked  if he was aware that SB  130 offers a                                                               
choice of transitioning to electronic  pull-tabs or continuing to                                                               
use paper.                                                                                                                      
                                                                                                                                
MR.  POWERS answered  yes but  he is  concerned that  this change                                                               
could  lead to  additional bad  actors entering  the industry  in                                                               
Anchorage and  throughout Alaska. He  said the big issue  is that                                                               
the charities suffer.                                                                                                           
                                                                                                                                
SENATOR GRAY-JACKSON thanked him for his email.                                                                                 
                                                                                                                                
CHAIR COSTELLO returned to invited  testimony and recognized Jack                                                               
Tripp.                                                                                                                          
                                                                                                                                
2:08:31 PM                                                                                                                    
JACK  TRIPP, former  owner, The  Viking, Juneau,  Alaska, advised                                                               
that in the 32  years he owned the bar he ran  a lot of pull-tabs                                                               
and helped many  charities. He referenced the  suggestion to wait                                                               
to ensure  against bad actors and  pointed out that the  issue of                                                               
fraud in gaming  has been discussed for 20 years.  He mentioned a                                                               
catastrophic theft by  bartenders that he once  suffered and said                                                               
it almost put  him out of business but the  charity absorbed none                                                               
of the loss.                                                                                                                    
                                                                                                                                
He said electronic  pull-tabs are a way to  safeguard against bad                                                               
actors. The play is encapsulated  and there is no opportunity for                                                               
theft. He said it makes sense  and it removes the human error. He                                                               
said  people think  pull-tabs generate  a  lot of  money for  the                                                               
vender but  venders receives just  30 percent. The  profit margin                                                               
on a  game might be $300  so the vender would  sell 3,000 tickets                                                               
to  make $90  before  paying the  bartender.  He reiterated  that                                                               
removing the  human time makes  sense and  will help clean  up an                                                               
industry that probably could use a little clean up.                                                                             
                                                                                                                                
CHAIR  COSTELLO  asked  if there  were  any  unresolved  concerns                                                               
related to  pull-tabs or  if this  is the right  time to  move in                                                               
this direction.                                                                                                                 
                                                                                                                                
MR. TRIPP replied he thinks it  is the right time. He thinks that                                                               
people  will  like  electronic pull-tabs  and  it  will  increase                                                               
gaming, which will  help the charities. The only  people who will                                                               
be hurt are the  ones who opt to continue to  use the paper pull-                                                               
tabs. He added  that it is difficult to steal  from a machine but                                                               
easy to steal from a pull-tab bin.                                                                                              
                                                                                                                                
2:12:15 PM                                                                                                                    
CHAIR COSTELLO continue with public testimony.                                                                                  
                                                                                                                                
2:12:26 PM                                                                                                                    
SANDY  POWERS, representing  self, said  she operates  Big Valley                                                               
Bingo  in Willow,  Alaska.  She has  been  looking at  electronic                                                               
pull-tabs for some time and her  biggest concern is that the play                                                               
is very  fast and people may  have a tendency to  overspend. This                                                               
has the  potential to increase  financial and  societal problems.                                                               
Additionally,  it might  bring in  the tourism  industry and  she                                                               
does not typically market to  that industry. She acknowledged the                                                               
reduced  potential  for  theft   with  electronic  pull-tabs  but                                                               
pointed  out that  businesses would  still need  to keep  lots of                                                               
cash on  hand because faster play  means the vender will  pay out                                                               
more money.                                                                                                                     
                                                                                                                                
CHAIR COSTELLO  asked Scott  Henneman to  respond to  the concern                                                               
about  the speed  of play.  She specifically  asked whether  play                                                               
speeds up with electronic pull-tabs  and if that can be programed                                                               
into the device.                                                                                                                
                                                                                                                                
2:15:43 PM                                                                                                                    
SCOTT   HENNEMAN,  Vice   President,  Business   Development  and                                                               
Governmental Affairs,  Grover Gaming, Omaha,  Nebraska, testified                                                               
in  support  of  SB  130.  He advised  that  speed  of  play  for                                                               
electronic  pull-tabs can  be regulated  and  programed into  the                                                               
device. Speed  of play has not  been an issue in  the business he                                                               
does in  numerous states manufacturing both  paper and electronic                                                               
pull-tab  products.  He  noted  that  he  has  been  involved  in                                                               
charitable gaming  for more than  30 years as a  gaming regulator                                                               
and  working  in  the  private  sector  manufacturing  paper  and                                                               
electronic pull-tab products.                                                                                                   
                                                                                                                                
MR HENNEMAN said e-tabs have  modernized pull-tab gaming but they                                                               
have the  same fundamental  characteristics. The  only difference                                                               
is that  e-tab play is on  a touch screen monitor  with a digital                                                               
display.  He said  the characteristics  are like  the paper  game                                                               
where  there are  finite and  predetermined winners  in a  box of                                                               
pull-tabs.  Each  game has  a  predetermined  payout and  profit,                                                               
which  is completely  different and  can be  easily distinguished                                                               
from  a slot  machine  that  uses a  random  number generator  to                                                               
determine its outcome. E-tabs  are player-versus-player, which is                                                               
unlike  a slot  machine  where  it is  player  versus a  machine.                                                               
Regarding what  an electronic pull-tab  might look like,  he said                                                               
it could  be a standalone kiosk,  a handheld tablet, or  a device                                                               
that allows players  to play an electronic  representation of the                                                               
paper  pull-tabs.  All  hardware  and  software  are  tested  and                                                               
approved by an independent laboratory  to ensure that the games a                                                               
charity   offers   meet   the  state's   particular   rules   and                                                               
regulations. He noted  that the Department of  Revenue would make                                                               
those determinations.                                                                                                           
                                                                                                                                
MR. HENNEMAN  summarized that  speed of play  for e-tabs  has not                                                               
been an issue  in his experience. A number of  states already use                                                               
them in  fundraising activities. If approved,  venders would have                                                               
the  option of  switching to  the electronic  product. It  is not                                                               
mandatory but  new players are  familiar with and prefer  to play                                                               
games  with  a  visual  digital   play  accompanied  by  a  sound                                                               
stimulus. Charities do not have  to store or manually add tickets                                                               
to  machines  in the  electronic  format,  there is  no  physical                                                               
inventory  to   count,  and  monitoring   is  from   an  internet                                                               
connection.  The electronic  format  makes scheduling,  ordering,                                                               
and   reporting  to   the  regulatory   agency  more   efficient.                                                               
Furthermore,  all communication  with  the  regulatory agency  is                                                               
encrypted to maintain security and integrity.                                                                                   
                                                                                                                                
SENATOR GRAY-JACKSON asked if he  currently uses electronic pull-                                                               
tabs in his business.                                                                                                           
                                                                                                                                
MR.  HENNEMAN  answered  yes;  Grover  Gaming  manufacturers  the                                                               
electronic devices  and the tickets  that are loaded  through the                                                               
internet to  a controlled site  at a  bingo hall or  a charitable                                                               
gaming  site   that  sells   pull-tabs.  Responding   to  another                                                               
question, he clarified that he is  a manufacturer as opposed to a                                                               
vender.                                                                                                                         
                                                                                                                                
SENATOR GRAY-JACKSON  asked if venders have  said that electronic                                                               
play  has resulted  in players  spending more  money, potentially                                                               
more than they can afford.                                                                                                      
                                                                                                                                
MR. HENNEMAN  replied it has  not been  an issue that  people are                                                               
spending more with pull-tabs in  the electronic format as opposed                                                               
to  the  paper  format.  He  cited the  sales  in  the  state  of                                                               
Minnesota  as  an example.  Paper  pull-tabs  accounted for  $1.4                                                               
billion  in sales  compared  to $600  million  in the  electronic                                                               
format.                                                                                                                         
                                                                                                                                
2:23:29 PM                                                                                                                    
SENATOR STEVENS joined the committee.                                                                                           
                                                                                                                                
CHAIR COSTELLO  asked if any  states that offer both  options saw                                                               
electronic sales  become a higher  percentage of sales.  She also                                                               
asked if his  experience is that less revenue is  coming from the                                                               
electronic format than the paper format.                                                                                        
                                                                                                                                
MR. HENNEMAN  replied it depends  on the state but  Grover Gaming                                                               
has   worked  to   ensure  that   electronic  pull-tabs   do  not                                                               
cannibalize  existing products  like paper  pull-tabs and  bingo.                                                               
There is a social aspect to  the paper products but that does not                                                               
disappear  with  the  electronic  format. Players  can  take  the                                                               
tablet to  their table or  sit at a booth  or stool and  play. He                                                               
said Alaska is  in the top six markets of  paper pull-tabs in the                                                               
country but  the player base  in aging.  He said he  believes the                                                               
state will  see more  incremental sales  if it  offers electronic                                                               
pull-tabs  as an  option. He  reiterated that  it depends  on the                                                               
state  but some  states  that  offer both  options  have seen  an                                                               
increase in paper pull-tab sales.                                                                                               
                                                                                                                                
2:26:39 PM                                                                                                                    
NANCY DECHERNEY,  Executive Director, Juneau Arts  and Humanities                                                               
Council, Juneau, Alaska,  stated that she was  calling to support                                                               
SB  130.  Nonprofits  benefit  from  pull-tab  gaming  but  small                                                               
businesses find it cumbersome to  run these gaming operations. SB
130  offers the  option to  use electronic  pull-tabs, which  she                                                               
believes   will   alleviate   the  administrative   burden.   The                                                               
electronic format will be easier  to manage, easier to track, and                                                               
perhaps make more money for nonprofits in the state.                                                                            
                                                                                                                                
2:27:59 PM                                                                                                                    
MACK MEINERS,  representing self, Juneau, Alaska,  stated that he                                                               
has  been involved  in charitable  gaming  for over  20 years  in                                                               
various locations throughout the state.  He agreed that there has                                                               
been some  trouble in  bars with misplaced  and lost  tickets but                                                               
Mr.  Tripp clarified  that the  vender  pays for  any losses.  He                                                               
emphasized the need for strict quality control.                                                                                 
                                                                                                                                
MR.  MEINERS  said  he  believes  Grover  Gaming  offers  a  good                                                               
opportunity  to  clean  up  the  game and  provide  a  choice  of                                                               
electronic  or paper  play. He  said  he supports  the option  of                                                               
using electronic pull-tabs  and he believes it  will increase the                                                               
opportunity to raise money for charities. That is the point.                                                                    
                                                                                                                                
2:33:12 PM                                                                                                                    
JOHNATHON GREEN, Attorney, Kempell,  Huffman, and Elise, Wasilla,                                                               
Alaska, advised  that his  firm was hired  to analyze  whether SB
130 would  expand requirements  for the  state to  negotiate with                                                               
tribal entities  for class III  gaming. He said the  short answer                                                               
is no. He offered to elaborate if there were questions.                                                                         
                                                                                                                                
CHAIR  COSTELLO polled  the members  and determined  that further                                                               
elaboration was not necessary.                                                                                                  
                                                                                                                                
2:34:39 PM                                                                                                                    
DAVID LAMBERT, representing self,  Fairbanks, Alaska, stated that                                                               
he is a charitable gaming operator  who has raised funds for over                                                               
30  nonprofits. He  pointed  out  that over  the  last 30  years,                                                               
everything associated  with charitable gaming  has gone up  but a                                                               
$1  pull-tab still  costs just  $1. He  said it  is important  to                                                               
offer  options to  attract a  new player  base and  that includes                                                               
electronic pull-tabs.  He suggested addressing the  concern about                                                               
casinos by limiting the number  of machines per location. He said                                                               
modernizing  the  game by  offering  electronic  pull-tabs as  an                                                               
option for  players would  resolve the  problem with  backlogs on                                                               
paper pull-tabs.                                                                                                                
                                                                                                                                
SENATOR STEVENS  asked what  number of  machines per  location he                                                               
would recommend.                                                                                                                
                                                                                                                                
MR. LAMBERT said  he believes six machines per  location would be                                                               
reasonable because each machine can hold 20-30 games.                                                                           
                                                                                                                                
CHAIR COSTELLO asked Ms. Mitchell  with the Department of Revenue                                                               
whether SB 130 would expand  the application process for somebody                                                               
to sell electronic pull-tabs.                                                                                                   
                                                                                                                                
2:38:05 PM                                                                                                                    
KATRINA  MITCHELL, Gaming  Manager, Tax  Division, Department  of                                                               
Revenue,  Juneau,  Alaska,  asked  if the  question  was  whether                                                               
adding  a  new  game  type such  as  electronic  pull-tabs  would                                                               
require a change in the application process.                                                                                    
                                                                                                                                
CHAIR  COSTELLO clarified  that  she was  relaying Mr.  Lambert's                                                               
concern about too many devices  in one location creating a casino                                                               
atmosphere.                                                                                                                     
                                                                                                                                
MS.  MITCHELL answered  that a  licensee  is not  limited in  the                                                               
number of paper  pull-tab games he or she may  offer at one time.                                                               
She  supposed that  limiting the  number  of electronic  pull-tab                                                               
games would require a change in the statute or regulations.                                                                     
                                                                                                                                
CHAIR COSTELLO  said she  did not believe  there was  interest in                                                               
any limitations because the free  market is providing the limits.                                                               
She  asked   if  the  administration   had  a  position   on  the                                                               
legislation.                                                                                                                    
                                                                                                                                
2:39:56 PM                                                                                                                    
COLLEEN GLOVER,  Director, Tax  Division, Department  of Revenue,                                                               
Anchorage,  Alaska,  said  the administration  does  not  have  a                                                               
position on SB 130.                                                                                                             
                                                                                                                                
CHAIR COSTELLO  asked if she  believes that  electronic pull-tabs                                                               
would reduce record keeping errors.                                                                                             
                                                                                                                                
MS. GLOVER answered that DOR  does not have enough information to                                                               
make a  determination, but  they are have  reached out  to Grover                                                               
Gaming and other  states that have passed  similar legislation to                                                               
understand  how  this   would  work  and  to   confirm  that  the                                                               
electronic format would be more secure.                                                                                         
                                                                                                                                
2:40:51 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:43:01 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.                                                                                          
                                                                                                                                
2:43:10 PM                                                                                                                    
CHAIR COSTELLO closed public testimony on SB 130.                                                                               
                                                                                                                                
2:43:18 PM                                                                                                                    
SENATOR REVAK  moved to  report SB  130, work  order 32-LS0811\A,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR COSTELLO  found no objection  and SB 130 was  reported from                                                               
the Senate Labor and Commerce Standing Committee.                                                                               
                                                                                                                                
2:44:06 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Costello adjourned the Senate Labor and Commerce Standing                                                                 
Committee meeting at 2:44 p.m.                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB 130 Sponsor Statement.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Sectional Analysis Version A.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Fiscal Note 2476.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Supporting Document - AK Electronic Pulltabs Overview.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Supporting Document - Legal Opinion on Class III Gaming.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Scott Henneman, Grover Gaming.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Jeremy Conkling.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Darwin Biwer.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Ray Hout.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Joshua Lewis.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Ken Koelsch.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Opposition - John and Sandy Powers.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter Opposition - Lisa Ally.pdf SL&C 5/3/2021 1:30:00 PM
SB 130