Legislature(2023 - 2024)BELTZ 105 (TSBldg)
03/13/2024 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB234 | |
| SB146 | |
| SB219 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 234 | TELECONFERENCED | |
| *+ | SB 146 | TELECONFERENCED | |
| *+ | SB 219 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 13, 2024
1:32 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Elvi Gray-Jackson
Senator Kelly Merrick
Senator Forrest Dunbar
MEMBERS ABSENT
Senator Click Bishop, Vice Chair
COMMITTEE CALENDAR
SENATE BILL NO. 234
"An Act relating to the Marijuana Control Board; and providing
for an effective date."
- MOVED SB 234 OUT OF COMMITTEE
SENATE BILL NO. 146
"An Act relating to pull-tabs; relating to persons prohibited
from involvement in gaming; and relating to the duties of the
Department of Revenue."
- HEARD & HELD
SENATE BILL NO. 219
"An Act relating to utilization review entities; exempting
certain health care providers from making preauthorization
requests for certain services; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 234
SHORT TITLE: EXTEND MARIJUANA CONTROL BOARD
SPONSOR(s): LABOR & COMMERCE
02/15/24 (S) READ THE FIRST TIME - REFERRALS
02/15/24 (S) L&C, FIN
03/08/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/08/24 (S) Heard & Held
03/08/24 (S) MINUTE(L&C)
03/13/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 146
SHORT TITLE: GAMING; ELECTRONIC PULL-TABS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
05/10/23 (S) READ THE FIRST TIME - REFERRALS
05/10/23 (S) L&C, FIN
03/13/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 219
SHORT TITLE: PRIOR AUTH EXEMPT FOR HEALTH PROVIDERS
SPONSOR(s): WILSON
02/07/24 (S) READ THE FIRST TIME - REFERRALS
02/07/24 (S) L&C, HSS
03/13/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
KONRAD JACKSON, Staff
Senator Jesse Bjorkman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of SB 234.
JOAN WILSON, Director
Alaska Alcohol and Marijuana Control Office (AMCO)
Department of Commerce, Community and Economic Development
(DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 234.
BAILEY STUART, Owner
Stuart Consulting
Palmer, Alaska
POSITION STATEMENT: Testified in support of SB 234.
ADAM CRUM, Commissioner
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Introduced SB 146 on behalf of the sponsor.
BRANDON SPANOS, Acting Director of the Tax Division
Department of Revenue (DOR)
POSITION STATEMENT: Gave a presentation on SB 146.
MARTHA ABEL, Gaming Manager
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 146.
MARY MAGNUSON, Vice President of Governmental Affairs
Arrow International
St. Paul, Minnesota
POSITION STATEMENT: Gave a presentation on SB 146.
MAC MEINERS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified with concerns on SB 146.
CHRISTA FOLI, Commander
American Veterans (AMVETS), Department of Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 146.
DAVID SANDEN, Manager
Hidden Treasures Multi Beneficiary Permit
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to SB 146.
TIM NAVARE, representing self
Kenai, Alaska
POSITION STATEMENT: Testified in opposition to SB 146.
STEVE NERLAND, President
American Legion Baseball
Anchorage, Alaska
POSITION STATEMENT: Testified with concerns on SB 146
MICHELLE SAS, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 146.
ANGEL WHITNEY, Unity Secretary
American Legion Post 29
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 146.
SANDY POWERS, President
Alaska Charitable Gaming Alliance
Anchorage, Alaska
POSITION STATEMENT: Testified with concerns on SB 146.
SENATOR DAVID WILSON, District N
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 219.
PAM VENTGEN, Executive Director
Alaska State Medical Association (ASMA)
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation on SB 219.
JEANNIE MONK, Senior Vice President
Alaska Hospital and Healthcare Association
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 219.
ACTION NARRATIVE
1:32:10 PM
CHAIR JESSE BJORKMAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Gray-Jackson, Dunbar, and Chair
Bjorkman. Senator Merrick joined the meeting thereafter.
SB 234-EXTEND MARIJUANA CONTROL BOARD
1:33:26 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO.
234, "An Act relating to the Marijuana Control Board; and
providing for an effective date."
1:33:51 PM
KONRAD JACKSON, Staff, Senator Jesse Bjorkman, Alaska State
Legislature, Juneau, Alaska, explained that SB 234 proposes to
extend the Marijuana Control Board (MCB) by three years. He
reminded the committee that concerns put forth by the Division
of Legislative Audit were discussed at a previous hearing and
added that representatives from Legislative Audit, the Alaska
Alcohol and Marijuana Control Office (AMCO) and MCB were
available for questions.
1:34:46 PM
CHAIR BJORKMAN noted that, in response to questions at the
previous hearing, Director Wilson would be discussing the issue
of board vacancies.
1:35:10 PM
JOAN WILSON, Director, Alaska Alcohol and Marijuana Control
Office (AMCO), Department of Commerce, Community and Economic
Development (DCCED), Anchorage, Alaska, said that she would be
discussing vacancies for the public health seat and the rules
seat and shared her understanding that the other positions are
fully staffed. She explained that the public health seat was
vacant between February 28, 2021, and August 19, 2021. The rules
seat was vacant from May 2021 until January 2022.
1:36:23 PM
CHAIR BJORKMAN opened public testimony on SB 234.
1:36:52 PM
BAILEY STUART, Owner, Stuart Consulting, Palmer, Alaska,
testified in support of SB 234. She gave a brief background on
her experience in the cannabis industry. She stated that her
work in the industry allows her to understand the regulatory
work that needs to be done. She noted that there is a new state
licensing system under development that would streamline license
applications and renewals. She pointed out that this is
currently done with paper and excel spreadsheets and added that
it will take time to implement the new system. She stated her
support for extending MCB. The three-year extension would put
MCB in line with the Alcoholic Beverage Control Board (ABC)
which would further streamline the work done by the Department
of Commerce, Community and Economic Development (DCCED). She
emphasized that, should MCB sunset, the AMCO office would no
longer be authorized to operate the marijuana licensing program.
She acknowledged that more work needs to be done in the area of
licensing and pointed out concerns that arose when marijuana was
first legalized ten years ago. While unfounded, these concerns
resulted in overregulation of the industry - which MCB has been
working to remedy. She briefly discussed hemp and its
relationship to marijuana and expressed concerns about the sale
of intoxicating hemp products and emphasized the need for
regulation. She noted that there are also issues related to the
import of products and underscored the importance of MCB in
addressing these issues.
1:40:34 PM
CHAIR BJORKMAN closed public testimony on SB 234.
1:40:46 PM
CHAIR BJORKMAN solicited the will of the committee.
1:40:49 PM
SENATOR GRAY-JACKSON moved to report SB 234, work order 33-
LS1358\A, from committee with individual recommendations and
attached fiscal note(s).
1:41:10 PM
CHAIR BJORKMAN found no objection and SB 234 was reported from
the Senate Labor and Commerce Standing Committee.
1:41:20 PM
At ease
SB 146-GAMING; ELECTRONIC PULL-TABS
1:42:37 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 146, "An Act relating to pull-
tabs; relating to persons prohibited from involvement in gaming;
and relating to the duties of the Department of Revenue."
1:43:15 PM
ADAM CRUM, Commissioner, Department of Revenue (DOR), Juneau,
Alaska, introduced SB 146 on behalf of the sponsor and explained
that this legislation would help charities by removing caps and
allowing access to a new form of gaming. He said the new form of
gaming would increase revenue to all parties (as has been shown
in other states).
1:44:10 PM
BRANDON SPANOS, Acting Director of the Tax Division, Department
of Revenue (DOR), advanced to slide 2 of a presentation on SB
146:
[Original punctuation provided.]
SB 146 Current Pull-Tab Gaming Structure
Tax Division mission: To collect taxes, inform
stakeholders, and regulate charitable gaming.
Who can conduct gaming activities in Alaska?
• Municipalities
• Qualified nonprofit organizations
What are examples of a qualified nonprofit
organization?
• Civic or Service Organizations
• Religious
• Charitable
• Fraternal
• Veterans
• Labor
• Political
• Educational
• Police Or Fire Departments and Companies
• Dog Mushers' Associations
• Outboard Motor Associations
• Fishing Derby
• Nonprofit Trade Associations
MR. SPANOS explained that the purpose of gaming activities is to
provide public benefit in the form of money that supports non-
profit organizations. He noted that, in addition to pull-tabs,
the division also regulates bingo and raffles.
1:45:59 PM
MR. SPANOS advanced to slide 3:
[Original punctuation provided.]
SB 146 Current Pull-Tab Gaming Structure
Overview
• Annual permits range from $20 to $100
• 1 percent fee on net proceeds annually from
permittees with gross receipts of $20,000 or more
• Annual licenses range from $500 to $2,500
• 3 percent tax on pull-tabs sold by distributor
due monthly
MR. SPANOS explained that the program issues permits and
licenses to conduct gaming activities, collect fees and taxes,
conduct audits, and investigates complaints from the public and
other permittees. Permittees and licensees file monthly,
quarterly, and annual returns (depending on the amount of gross
receipts and the type of permit or license held). Manufacturers
and distributers file monthly reports. Operators file monthly
reports to permittees but not to the tax division. He noted that
permit and license fees, pull-tab taxes, and net proceeds fees
are deposited into the general fund. He directed attention to a
chart on slide 3 detailing the amount for each category for the
last three years.
1:47:21 PM
MR. SPANOS advanced to slide 4, displaying the number of
permittees, operators, multi-beneficiary permittees,
distributors, and manufacturers that report to the division as
well as the number of reports received. He noted that the number
of permittees in 2023 was 1,045 and 3,344 reports were received
from those permittees.
1:47:56 PM
MR. SPANOS advanced to slide 5:
[Original punctuation provided.]
SB 146 Pull-Tab Gaming History
1960 - The Alaska Legislature legalized gaming and
gave oversight for all gaming activities to the
Department of Revenue (DOR).
1984 - The DOR authorized pull-tabs by regulation.
1988 - The Legislature legalized operators, authorized
pull-tabs, and increased prize limits.
1989 - Under administrative order, gaming functions
transferred to the Department of Commerce, Community
and Economic Development.
1993 - Under administrative order, gaming functions
transferred back to the DOR and the Legislature
significantly changed various aspects of the gaming
statutes to include:
• Permittees allowed to contract with 3rd-party
vendors to sell pull-tabs
• Multiple-Beneficiary Permits (MBPs) created
• Minimum payments by operators to the permittees,
increased from 15 percent to 30 percent of
adjusted gross income for pull-tab games
1:48:45 PM
MR. SPANOS advanced to slide 6:
[Original punctuation provided.]
SB 146 Bill Overview
Allows pull-tab games to be expanded from traditional
paper pull-tabs to include electronic pull-tabs or e-
tabs.
• Current statute defines a "pull-tab game" as a
game of chance where a card, the face of which is
covered to conceal a number, symbol, or set of
symbols, is purchased by the participant and
where a prize is awarded for a card containing
certain numbers or symbols designated in advance
and at random.
Increases the prize limits for permittees who contract
with an operator from a maximum of $500,000 in prizes
each year to a maximum of $2,000,000 in prizes each
year for electronic pull-tab activities and a maximum
of $1,000,000 in prizes each year for other gaming
activities.
Provides unique limitations for electronic pull tab
systems that the paper pull-tab games do not have:
• A series may not exceed 15,000 tickets
• A Vendor may not have more than five electronic
pull tab devices on premises
• An Operator may not have more than ten electronic
pull tab devices on premises
Note: There is no limit for the number of electronic
pull tab devices for permittees.
1:49:59 PM
MR. SPANOS advanced to slide 7:
[Original punctuation provided.]
SB 146 - Estimated Revenue Impact
Data from five other states that have implemented e-
tabs was used to prepare the fiscal analysis.
• Minnesota
• New Hampshire
• Kentucky
• Virginia
• North Dakota
The average of the other five states was used for the
fiscal note.
This estimated revenue is one option in a wide range
of uncertainty. We have provided the high and low
cases of our analysis below to demonstrate the
possible range of outcomes.
MR. SPANOS said that the DOR analysis indicates that expanding
gaming to electronic pull-tabs ("e-tabs") would generate
additional positive revenue. He directed attention to a chart on
slide 7 titled, "Possible Alaska Additional Revenue from Adding
E-Tabs ($ millions)" and said that there would be an estimated
$1 million in additional state revenue in the first full year of
implementation (FY 2026). This would increase to $3 million in
FY 2030. He explained that there is no expected impact in FY
2025 due to a year-long implementation process.
1:51:16 PM
MR. SPANOS reviewed points on slide 8:
[Original punctuation provided.]
SB 146 - Implementation Cost
• The Charitable Gaming group has been reduced due
to budget cuts over recent years
• Currently very small group within the Tax
Division
• SB 146 creates an added burden on the group that
necessitates adding positions to provide adequate
service to permittees, operators and others as
well as enforcement
• Two positions at a cost of $225,300 per year as
part of fiscal note
• Other costs for software and forms updates will
be absorbed by the Division
MR. SPANOS explained that the charitable gaming group currently
consists of three positions - two of which are currently vacant.
He indicated that it is a large job for three individuals -
larger still for a single person.
1:52:35 PM
SENATOR GRAY-JACKSON asked if the increase in prize limits is
expected to increase state revenue.
1:52:56 PM
MR. SPANOS answered that increased prize limits could increase
state revenue through increased gaming activity. He explained
that each operator could potentially have increased gaming
activity as a result of higher prizes.
1:53:14 PM
SENATOR GRAY-JACKSON asked how e-tabs would increase state
revenue.
1:53:29 PM
MR. SPANOS answered that the DOR analysis indicates that other
states that utilize e-tabs saw an associated increase in state
revenue. The analysis concluded that this is likely because e-
tabs appeal to some individuals who are not interested in paper
pull-tabs. He referred to a presentation by Arrow International
which showed that a younger generation of players are engaging
with e-tabs (though this younger generation is still adult age).
1:54:11 PM
CHAIR BJORKMAN asked for confirmation that SB 146 is forecasted
to raise state revenue by $1 million.
1:54:32 PM
MR. SPANOS replied that this is correct.
1:54:40 PM
CHAIR BJORKMAN asked how many additional dollars Alaskans would
have to gamble to create the additional $1 million in revenue.
1:54:55 PM
MR. SPANOS answered that he could supply the exact number at a
later time. He shared his understanding that pull-tabs have a 3
percent return; however, there may be other fees involved. He
agreed that it would require an increase in gaming activity to
create the additional revenue.
1:55:20 PM
CHAIR BJORKMAN asked if charities would see a proportional
increase in revenue.
1:55:34 PM
MR. SPANOS replied yes, the charities would have an increase in
revenue.
1:55:40 PM
CHAIR BJORKMAN asked if the revenue increase to charities would
be proportionate.
1:55:43 PM
MR. SPANOS replied that because the state's take is a percentage
- except for the flat permits and fees - it would be very
proportionate.
1:55:54 PM
CHAIR BJORKMAN asked for clarification that if gameplay
increased 4x, the department would receive a 4x increase in
revenue and charities would also receive a 4x increase.
1:56:23 PM
MR. SPANOS clarified that it may not be exactly the same 4x
increase, but it would be very close.
1:56:39 PM
SENATOR GRAY-JACKSON asked what percentage charities receive.
1:56:47 PM
MR. SPANOS replied that he would defer that question to Martha
Abel.
1:57:14 PM
MARTHA ABEL, Gaming Manager, Department of Revenue (DOR),
Juneau, Alaska, said that she was unable to hear the question.
1:57:35 PM
SENATOR GRAY-JACKSON asked what percentage charities receive
from gaming.
1:57:40 PM
MS. ABEL replied that nonprofits (permittees) receive 100
percent of net proceeds from gaming. She explained that the
gross receipts come in, expenses are subtracted from this total.
Certain licensees charge a fee, which is in an additional
expense. The net proceeds are what is left after all of these
fees are taken out. She was unable to give an exact percentage
but offered to get back to the committee with this information.
1:59:01 PM
SENATOR GRAY-JACKSON expressed her appreciation and said that
this provides a clear answer.
1:59:11 PM
CHAIR BJORKMAN indicated that the committee would be interested
to know - for every dollar spent on a pull-tab - how many cents
are going to charity.
MS. ABEL replied that she would provide this information to the
committee.
1:59:50 PM
MR. SPANOS expressed his appreciation to the committee.
2:00:36 PM
MARY MAGNUSON, Vice President of Governmental Affairs, Arrow
International, St. Paul, Minnesota, began her presentation on SB
146. She advanced to slide 2 and offered a brief history of her
work experience and Arrow International (Arrow). She explained
that e-tabs are an evolution of paper pull-tabs, not a
replacement. She emphasized that Arrow is not attempting to
create a monopoly, though they did recently acquire a
distributor in Alaska - Whaler Casino Supply - this was to
create more distribution outlets for product. She pointed out
that, in Alaska, it is possible for a manufacturer to also hold
a distributor license. She described the purchase as an
investment in Alaska.
2:04:12 PM
MS. MAGNUSON advanced to slide 3 and compared paper and
electronic pull tabs. She explained that there is little
difference between the two formats. She briefly discussed the
cost range for both. With respect to paybacks - the amount that
goes back to the player in the form of prizes - she stated that
paper games average 82 percent (the charity holds roughly 18
percent). Electronic games tend to run a little higher, with a
90 percent payback. She added that charities do very well at
this rate of payback but acknowledged that some have expressed
concern with this amount not leaving enough to the charity (10
percent). However, she explained that, like paper games,
electronic games are offered in a variety of paybacks (developed
based on market demand). She stated that there is no need to
fear that all games will include a 90 percent payback since the
game payback will adjust to market demand.
2:06:04 PM
MS. MAGNUSON advanced to slide 4:
[Original punctuation provided.]
ELECTRONIC PULL TABS
• Electronic pull tab devices show the ticket
results on a digital display
• Replicates existing paper pull tab with low
stakes, low wagers & limited prizes
• Multiple games on each device
• Multiple payout options - 85 percent or 90
percent
• Connects to standard internet and for tablets,
standard Wi-Fi
• New games provided regularly
• Robust record keeping and reporting features,
including reports configured to state
requirements and direct DOR access
MS. MAGNUSON explained that the payout for paper pull-tabs is
around 82 percent, leaving 18 percent for the charity. E-tabs
tend to run a little higher, with a 90 percent payout. She
acknowledged that there has been concern that a 90 percent
payout does not leave enough for charities (10 percent);
however, electronic games (like their paper counterparts) can
have a variety of payouts. She indicated that whatever the
market wants can be developed. She opined that there is no need
to fear a 90 percent (or more) payout. She explained that the
games can either come in a stand-alone cabinet style or a more
portable tablet. SB 146 would allow both. She pointed out that
tablets offer greater ease and flexibility for rural
communities.
2:09:06 PM
MS. MAGNUSON advanced to slide 5:
[Original punctuation provided.]
BENEFITS OF ELECTRONIC PULL TABS
• Increased revenues to charities (permittees)
• Average 74 percent increase in other states
with electronic pull tabs based on state
data
• Attracts new players
• Provides sustainability for veteran and
fraternal clubs
• Complements paper games
• No significant decline in paper ticket sales
in any state
• Competitive pricing
• Likely 30 percent to 33 percent of net
• Increases accountability
• Simplifies monitoring and reporting
• Enhances regulatory oversight
MS. MAGNUSUN noted that "net revenue" is equal to wagers less
prizes. She explained that there are no upfront costs to
charities; if no one played the e-tabs then the charity would
not lose money. She went on to say that the charity pays when
pull-tabs and e-tabs are sold. She stated that there would be
competitive pricing and indicated that concerns related to
manufacturers taking too much money are unfounded. She briefly
discussed distributor rates and explained that paper pull-tabs
cost 20 percent while e-tabs would cost 30 percent. She
emphasized that the charities receive the equipment up front -
at no cost. All equipment servicing is included, and new games
are provided on a regular basis. She noted that these games cost
between $200,000 and $300,000 to develop. In addition, there is
24-hour customer service available for any questions. She opined
that the price may be higher but there are more benefits that
justify this price increase. She contrasted the sale of e-tabs
(if they do not sell, no payment is required) to the sale of
paper pull-tabs (the box of tickets is purchased up-front, so if
tickets are not sold, the charity loses money).
2:15:23 PM
MS. MAGNUSON reiterated that with e-tabs, the charities only pay
for what they sell. This eliminates the "unplayed ticket"
penalty. She went on to explain that e-tabs increase
accountability by utilizing back-end reporting that allows for
easier monitoring. Additionally, it is impossible for a seller
to suggest that one game might be better than others based on
the number of winners and remaining number of tickets, as this
information is not available when playing e-tabs. She noted that
the rule disallowing the sale of pull-tabs to relatives does not
apply to e-tabs. E-tabs increase regulatory oversight by
allowing electronic reports and back-end device access via an
online portal system.
2:16:47 PM
MS. MAGNUSON advanced to slide 6:
[Original punctuation provided.]
WHAT CAN ALASKA EXPECT FROM ELECTRONIC PULL TABS?
• Electronic pull tabs will be optional, NOT
mandatory.
• Paper pull tabs will NOT go away.
• Bingo will not be destroyed.
• NO up-front investment required; Charity has no
risk.
• NOT an expansion of gaming; just pull tabs in a
modern format.
• The current regulatory structure will NOT change.
• Charity gaming revenue WILL increase.
MS. MAGNUSON noted that currently, the maximum amount that can
be spent per ticket is $2 and maximum prize is $500. This
remains the same for e-tabs.
2:18:19 PM
MS. MAGNUSON advanced to slide 7, titled "Net Profit Comparison:
Paper pull-tabs and electronic pull-tabs" and explained that in
states that utilize both paper pull-tabs and e-tabs, there has
been an average increase of 74 percent of net receipts. In these
states, paper pull-tab sales continue to increase alongside the
adoption of e-tabs. She noted that the numbers included come
from state agencies.
2:19:29 PM
MS. MAGNUSON advanced to slide 8, depicting a graph of Ohio
pull-tab net receipts, and explained that the net receipts for
charities increased from $200 million around $375 million with
the addition of e-tabs.
2:19:49 PM
MS. MAGNUSON advanced to slide 9, depicting a graph of Minnesota
pull tab net receipts, and explained that Minnesota sells more
pull-tabs than any other state. The addition of e-tabs has
resulted in a dramatic increase in charitable revenue.
2:20:20 PM
MS. MAGNUSON advanced to slide 10, depicting a graph of North
Dakota pull tab net receipts, and noted the steady sale of paper
pull-tabs contrasted with the tremendous growth of e-tab sales.
2:20:31 PM
MS. MAGNUSON advanced to slide 11, depicting a graph of Kentucky
pull tab net receipts, and noted the significant growth in e-tab
sales.
2:20:34 PM
MS. MAGNUSON advanced to slide 12, depicting a graph of Virginia
pull tab net receipts, electronic games.
2:20:40 PM
SENATOR DUNBAR referred to slide 10 and noted that North
Dakota's population size is similar to Alaska. He asked how much
gaming activity is required to reach $200 million in net
receipts.
MS. MAGNUSON answered that it likely takes around $1 billion in
gross receipts.
2:21:46 PM
SENATOR DUNBAR commented that North Dakota's population is
slightly larger than Alaska.
2:21:58 PM
MS. MAGNUSON stated that North Dakota has a population of
770,000.
SENATOR DUNBAR noted that this is about 50 thousand people more
than live in Alaska. He asked if Alaska's industry would be of
approximate size.
MS. MAGNUSON replied that it is hard to predict. She said that
the gross receipt number can be misleading. She offered an
example of someone who has $20 to spend on gaming - and can
purchase paper pull-tabs or e-tabs.
2:22:58 PM
SENATOR MERRICK joined the meeting.
MS. MAGNUSON continued to explain that in North Dakota, the
payout (to charities) on paper pull-tabs is around 80 percent
and around 92 percent for e-tabs. She gave an example of someone
with $20 to spend on pull-tabs/e-tabs and the cycle of
winning/spending that would occur over the course of play.
Regardless of whether they go home with prize money, they have
still only spent the initial $20. The gross receipt amount
includes all of the money that the person won - and then chose
to reinvest in additional games ("playbacks"). She said that,
while this counts as economic activity, the number is a little
exaggerated.
2:24:13 PM
SENATOR DUNBAR asked if the 8 percent captured by operator is
equal to the nearly $200 million shown on the chart.
MS. MAGNUSON answered that the $200 million is the 8 percent.
SENATOR DUNBAR commented that the gross receipts must be over $2
billion in order to reach this number. He acknowledged that the
$2 billion is cycling; however, $2 million is extracted from
players (equal to 8 percent of the money spent). He asked for
clarification that this is accurate.
2:25:27 PM
MS. MAGNUSON answered that this is true for 92 percent and added
that this is an example of a high market. Most markets are
closer to 90 percent, and some are lower (around 85 percent).
She noted that it also depends on the payback. She confirmed
that the analysis is correct; however, the numbers involved
would change depending on the market percent.
SENATOR DUNBAR asked for clarification on the distinction
between the money received by the charity and the pull-tab net
receipt growth.
MS. MAGNUSON clarified that it is the amount of money that the
charity retains after all prizes paid.
2:26:47 PM
SENATOR DUNBAR pointed out that the charity is not the only
entity being paid - the government takes a tax, the owners take
a profit. He asked if the $200 million is distributed to these
entities and the charity receives a portion of this - or if the
entire $200 million is given to the charity.
2:27:04 PM
MS. MAGNUSON clarified that a portion of the $200 million goes
to taxes and expenses and whatever is left goes to the charity
as profit (net minus expenses).
2:27:31 PM
SENATOR GRAY-JACKSON expressed confusion and asked for
clarification about the amount that charities receive.
2:27:52 PM
MS. MAGNUSON explained that, in this case, "net receipts" are
what is left after all prizes are paid. The charity (permittee)
must pay expenses out of this net receipt amount. This includes
a 3 percent tax to the state, cost of games, employee salaries,
etc. Once these expenses are paid, what is left is considered
"net profit" and this is what the charity keeps. She noted that
if the charity has few expenses and works with volunteers, this
profit will be higher. She added that it is in the charity's
interest to control these expenses - which they generally try to
do.
2:29:17 PM
CHAIR BJORKMAN expressed interest in how the "pie" is divided
from previous pull-tabs to what is proposed by SB 146. He said
that he would like the distribution of funds to remain the same
or to have more of the money go to the charity - particularly
since more money would be redirected from the economy to pull-
tabs and e-tabs (the cabinet version of which is comparable to a
slot machine).
2:30:18 PM
SENATOR DUNBAR requested to see the last slide. He noted that
there is a projected 40 percent increase in net profits. He
asked why the projected increase is not more like that of North
Dakota.
2:31:00 PM
MS. MAGNUSON advanced to slide 13, depicting a graph of
projected Alaska gaming profits, and explained that this shows
the profit to Alaskan charities (about $46 million), which is
after all expenses. She clarified that the chart for North
Dakota was the gross less prizes, without expenses taken out. In
addition, she noted that this is a conservative projection and
is average across the country.
2:31:59 PM
CHAIR BJORKMAN opened public testimony on [SB 146].
2:32:17 PM
MAC MEINERS, representing self, Anchorage, Alaska, testified
with concerns on SB 146. He said he has been involved in gaming
for many years. He offered clarification on the amount received
by vendors, operators, and fraternal organizations. He
emphasized that the percentage must make the game viable or the
charity will suffer. He asserted that 22.5 to 24 percent is the
minimum required to make money. He expressed doubt that 10 to 15
percent would be successful. He stated that he agrees with the
increase in prize limits and believes the amount received by
manufacturers should be 20 percent.
2:34:43 PM
CHRISTA FOLI, Commander, American Veterans (AMVETS), Department
of Alaska, Anchorage, Alaska, testified in support of SB 146.
She said that sister organizations in states that utilize e-tabs
have had increased profits that are given to charities. She
added that these organizations are volunteer run, so the
charities receive 98 percent of the funds. She said that younger
adults are not interested in paper pull-tabs but enjoy spending
money at slot machines in Las Vegas. She would like to keep this
money in the state.
2:37:26 PM
DAVID SANDEN, Manager, Hidden Treasures Multi Beneficiary
Permit, Juneau, Alaska, testified in opposition to SB 146. He
stated that an increase in the prize allowance would result in
fewer non-profits receiving money through charitable gaming. He
asserted that SB 146 would limit participation in the
marketplace and that the market would likely be controlled by
the manufacturers and distributors of electronic gaming
equipment. He surmised that it would be possible to amend SB 146
to allow for an open and competitive market; however, this would
require a restructuring of the charitable gaming statute. He
suggested that an increase in the amount returned to charities
(e.g. increase from 30 to 35 percent of the net profits) as well
as the amount received by the state of Alaska (from 3 to 8
percent). In addition, he suggested disallowing local government
gross taxation on pull-tabs; instead, split the 8 percent
received by the state with local municipalities. He suggested
putting a cap on e-tabs at 15 percent.
2:39:55 PM
TIM NAVARE, representing self, Kenai, Alaska, testified in
opposition to SB 146. He opined that this legislation needs more
work. He suggested that there are potential issues with
distributors and the creation of a monopoly. He shared his
belief that, as it currently stands, everyone loses but the
manufacturers and distributors. He acknowledged that change is
needed but argued that it should be done right and not hurt
nonprofits.
2:42:04 PM
STEVE NERLAND, President, American Legion Baseball, Anchorage,
Alaska, testified with concerns on SB 146. He said that
permittees have little to do with the gaming itself - except as
a source of income. He stated that certainty is the most
important aspect of gaming income. Most entities identify the
monies that come in as additional found money to perform
services or to help their organizations. Very few budget for
this, because it is not a certain amount. He expressed concerns
that SB 146 would result in fewer nonprofit permittees.
2:44:12 PM
MICHELLE SAS, representing self, Anchorage, Alaska, testified in
support of SB 146. She said she is on the board for an American
Legion auxiliary unit. She shared her understanding that the
operators and people who produce the games make a lion's share
of the money; however, her small organization benefits from
being a permittee and would continue to benefit if e-tabs were
added, as this would draw additional people. She said that these
games generate the organization's largest share of money
annually. An increase in this amount would translate into more
money back into the communities supported by her organization.
She said she does not see a downside to increasing the income
received from charitable gaming.
2:45:47 PM
ANGEL WHITNEY, Unity Secretary, American Legion Post 29,
Anchorage, Alaska, testified in support of SB 146. She shared
her belief that nonprofits would thrive and thus would
contribute more to the community. She stated that e-tabs would
appeal to a younger demographic but would not decrease interest
in paper pull-tabs. She commented that electronic gaming is
reliable and shared her belief that profits and community
engagement would increase.
2:47:16 PM
SANDY POWERS, President, Alaska Charitable Gaming Alliance,
Anchorage, Alaska, testified with concerns on SB 146. She said
that she is unable to find a cost comparison for e-tabs versus
paper pull-tabs. She expressed concerns regarding the addictive
nature of e-tab machines. She noted that Alaska currently ranks
47th for gambling addiction and pointed out that states that
allow e-tabs are in the top 25 for gambling addiction.
2:49:33 PM
CHAIR BJORKMAN held public testimony on SB 146 open [and held SB
146 in committee].
2:49:44 PM
At ease
SB 219-PRIOR AUTH EXEMPT FOR HEALTH PROVIDERS
2:50:37 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 219, "An Act relating to
utilization review entities; exempting certain health care
providers from making preauthorization requests for certain
services; and providing for an effective date."
2:51:03 PM
SENATOR DAVID WILSON, District N, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 219, paraphrased the sponsor
statement for SB 219:
[Original punctuation provided.]
Sponsor Statement
Senate Bill 219
"An Act relating to utilization review entities;
exempting certain health care providers from making
preauthorization requests for certain services; and
providing for an effective date."
SB 219 aims to reduce the wait time for certain health
care services by exempting qualified health care
providers from making preauthorization requests for
said services. Currently, Alaskans who need certain
health care services must wait days or weeks to get
preauthorized to receive health care services because
of the processing time between the health care
provider and insurance companies. This bill would help
Alaskans receive health care services immediately,
especially health care services that could save their
lives.
Health care providers shall qualify for a prior
authorization exemption if at least 80 percent of
prior authorization requests submitted in the past 12-
month period were approved for that health care
service. Utilization review entities will provide
exempted health care providers with a list of health
care services for which the exemption applies and the
duration of the exemption. This helps eliminate
unnecessary delays in care by granting providers
exemptions who have demonstrated consistent adherence
to approval guidelines from prior authorization
requirements.
Other states with prior authorization exemptions have
seen increased frequency of patients who receive the
health care services they need and help eliminate
unnecessary delays in care. This bill will help
Alaskans receive fast, efficient, and quality
healthcare when they need it without waiting for a
preauthorization process that could cause their health
to decline even more.
Please contact Julia Fonov in my office at (907) 465-
4711 or [email protected] for any questions.
SENATOR WILSON explained that the onus is on the patient to seek
out preauthorization, although many healthcare providers take
this on in order to help the patients move forward with their
care. He stated that patients in his district have suffered for
months trying to get authorization for services. The lack of
integrated care in Alaska makes it difficult for people with
complex health issues to get the help that they need. He noted
that other states have passed similar programs, while some are
considering similar changes. He noted that he would not be
reviewing the sectional analysis in the interest of time.
2:54:43 PM
PAM VENTGEN, Executive Director, Alaska State Medical
Association (ASMA), Anchorage, Alaska, explained that prior-
authorization is a cost-control process requiring healthcare
professionals to obtain advance approval from health insurance
plans before a prescription medication or medical service
qualifies for payment and delivery. She stated that these are
time-consuming barriers to effective delivery of necessary
treatment and are especially burdensome for providers who
routinely get these authorizations approved. Prior
authorizations are approved over 80 percent of the time;
however, they delay necessary care 94 percent of the time. Up to
80 percent of patients abandon recommended care at least some of
the time. 33 percent of physicians report that prior
authorization has led to serious adverse events for the patients
in their care. 89 percent of physicians report that prior
authorization has a negative impact on patient care. 62 percent
of physicians report that prior authorization has led to
additional office and emergency department visits.
2:56:15 PM
MS. VENTGEN went on to explain that insurance companies claim
that their panel of reviewers is well qualified; however,
physicians report having to get prior approval from nurse
practitioners, physician assistants, and retired physicians -
not physicians who are well-versed in current standards of care.
She stated that she has heard from oncologists that it can take
multiple phone calls to get a physician reviewer - a peer-to-
peer reviewer - who must then be educated on the type and stage
of cancer and current best practices for treatment before
finally getting approval. She shared a story of an oncology
patient who sought treatment from a specialist who was out of
network and was faced with paying $40,000 out of pocket before
they could see this physician. She said that SB 219 will
decrease the burden on providers, increase the quality of care
to patients, and decrease costs of unnecessary office and
emergency department visits prior to authorization.
2:57:50 PM
CHAIR BJORKMAN asked if she would be surprised to hear that some
providers in his community often receive a denial in a matter of
minutes when they submit prior authorization claims.
2:58:05 PM
MS. VENTGEN replied that insurance companies will routinely
initially deny these requests. This initiates the appeal
process, involving multiple phone calls, long phone wait times,
and some offices hire additional staff to handle these prior
authorizations. She noted that it takes many hours per week to
deal with these authorizations.
2:58:35 PM
CHAIR BJORKMAN asked if, in her professional opinion, it is
possible for an experienced professional medical team to
evaluate most prior authorizations in a matter of minutes.
2:58:46 PM
MS. VENTGEN replied yes, if they were experienced in the
particular specialty area.
2:59:20 PM
CHAIR BJORKMAN stated that he has heard from providers who hit
send on a prior authorization request and receive denials within
five minutes. He commented that many of these providers report
that insurance companies are utilizing artificial intelligence
to deny these claims. He added that this would be explored more.
2:59:54 PM
MS. VENTGEN said that she does not know but would not be
surprised. She noted that if a prior approval is denied, some
will go on to appeals and some will not. If they do go on to
appeals, they are delayed for a prolonged period. She said that
a significant number of these requests are ultimately approved,
and this is what SB 219 is intended to address. She added the
physicians who receive approval are then exempted from this
process for a period of time.
3:01:00 PM
JEANNIE MONK, Senior Vice President, Alaska Hospital and
Healthcare Association, Juneau, Alaska, testified in support of
SB 219 and said that Alaska Hospital and Healthcare (AHA) is
committed to the well-being of patients and the efficient
operation of hospitals. She stated that AHA believes SB 219 is a
significant step forward in ensuring timely access to essential
medical care while reducing burdensome administrative
requirements. She explained that this directly impacts patient
health and wellbeing. The authorization process adds additional
stress for patients in need of medical care by adding
unnecessary delays and obstacles to treatment. She said that
this can apply to diagnostic testing, medications, and surgery.
This can present an even greater challenge for patients in rural
areas. She pointed out that making arrangements for time off
work, childcare, and transportation to receive medical care is
already challenging - and the uncertainty of whether the
insurance company will approve the procedure (and when) makes
planning more difficult (especially when travel is involved).
She said that patients may have to call repeatedly - and may
make travel arrangements or leave their community only to find
out that the initial request has been denied and the provider
must appeal.
MS. MONK explained that this process was intended to prevent
unnecessary procedures; however, prior authorization has also
become a tool to delay and deny necessary medical treatment and
avoid paying for services altogether. She reiterated that this
is a time consuming process for hospitals and medical practices,
who must have staff who navigate these administrative hurdles in
order to receive approval before they can deliver the necessary
care. She added that SB 219 recognizes the validity of the prior
authorization process while limiting unnecessary obstacles. She
explained that providers with a proven track record of
responsible practice can be exempt from the requirement for
specific services. This would streamline the care delivery
process and allow providers to focus on providing patients with
timely treatment. She opined that SB 219 strikes a good balance
between insuring responsible healthcare practices and reducing
administrative burden.
3:04:52 PM
SENATOR DUNBAR asked if there are any Employment Retirement
Insurance Security Act (ERISA) impacts. He noted a potential
"no" response from the director of the Division of Insurance and
requested this information in writing for the next hearing. He
pointed out that SB 219 applies to healthcare providers with a
proven track record and asked if there is any concern that this
may prevent new healthcare providers from entering the field
because they will be at a competitive disadvantage.
3:06:04 PM
SENATOR WILSON said that he would work with the director of the
Division of Insurance to provide information about ERISA
impacts. With respect to new healthcare providers, he said that
SB 219 would not impact new players coming into the market. He
explained that existing players would need to renew every 12
months. In their first year, new providers would be working
toward their initial authorization status but after that,
everyone would be on an equal playing field.
3:06:34 PM
CHAIR BJORKMAN held SB 219 in committee.
3:07:02 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:07 p.m.