HB 168 An Act relating to multiple-beneficiary charitable gaming permits and door prizes for charitable gaming; and providing for an effective date. CS HB 168 (FIN) was reported out of Committee with "no recommendation" and with a fiscal note by the Department of Commerce and Economic Development. HOUSE BILL 168 "An Act relating to multiple-beneficiary charitable gaming permits and door prizes for charitable gaming; and providing for an effective date." Representative Hanley MOVED the work draft #8-LS0674\I for CS HB 168 (FIN) dated 5/07/93 be the version before the Committee. Representative Martin OBJECTED noting for the 1 record that he disapproved of "opening-up" gambling in Alaska. Representative Martin WITHDREW his OBJECTION. There being NO FURTHER OBJECTIONS, the draft was adopted. Representative Brown MOVED a change to Page 3, Line 1, deleting "charitable gaming activity" and inserting "bingo or pull tab game". She pointed out this language would conform with Page 9, Lines 12 & 13. There being NO OBJECTIONS, it was so ordered. JOHN HANSEN, GAMING MANAGER, DIVISION OF OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, provided the Committee with a brief history of gaming in response to questions asked by Representative Martin. Mr. Hansen stated in 1984, the regulations were expanded on the games of chance and skill under "special raffles" to include pull tabs. By regulation in 1984, the Department of Revenue allowed the sale of pull tabs which continued until 1988 when the regulation changed into statute. In 1988, pull tabs became legalized. Representative Martin MOVED Amendment #1. [Attachment #1]. Representative Brown asked if the intent of the amendment was to remove the reference to pull tab in the bill. Mr. Hansen pointed out the proposed legislation including the pull tabs would generate ten percent proceeds on all activities including bingo. Co-Chair Larson OBJECTED to Amendment #1. PAUL FUHS, COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, stated that the net effect of Amendment #1 would reduce the $16 million dollars generated revenue for charities to $3 million dollars. A roll call was taken on the MOTION. IN FAVOR: Hanley, Martin, Navarre, Parnell, Brown. OPPOSED: Grussendorf, Therriault, MacLean, Larson. Representatives Foster and Hoffman were not present for the vote. The MOTION PASSED, (5-4). Co-Chair MacLean MOVED Amendment #2. [Attachment #2]. Representative Martin OBJECTED. Representative Navarre pointed out Amendment #2 could not be implemented with the previous action taken by the Committee on Amendment #1. Co-Chair MacLean MOVED TO RESCIND action taken on Amendment 2 commented that the Governor does not believe in gambling. He added, as the law exists charities should benefit charities. Pull tabs generate 80% of gaming revenue. A roll call was taken on the MOTION. IN FAVOR: Grussendorf, Therriault, Foster, Larson, MacLean. OPPOSED: Hanley, Martin, Navarre, Brown. Representatives Hoffman and Parnell were not present for the vote. The MOTION PASSED, (5-4). A roll call vote was taken on Amendment #1. IN FAVOR: Hanley, Brown. OPPOSED: Martin, Navarre, Therriault, Foster, Grussendorf, MacLean, Larson. Representatives Hoffman and Parnell were not present for the vote. The MOTION FAILED, (2-7). Co-Chair MacLean MOVED Amendment #2. Representative Martin OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Navarre, Brown, Foster, Grussendorf, Larson, MacLean. OPPOSED: Martin, Parnell, Therriault, Hanley. Representative Hoffman was not present for the vote. The MOTION PASSED, (6-4). Representative Brown provided the Committee with Amendment prohibit gaming within their districts by a vote. Co-Chair Larson OBJECTED. Commissioner Fuhs noted the Department would support the amendment. Co-Chair MacLean asked if it would be necessary for villages and municipalities to vote for gaming and pull tabs with the inclusion of the proposed amendment. Commissioner Fuhs 3 replied, the vote would be necessary only if the Committee wanted to prohibit gaming from occurring. Representative Hanley MOVED TO AMEND the amendment and change the number of registered voters from 35% to 10%. Co- Chair Larson OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Martin, Navarre, Parnell, Therriault, Brown, Hanley, MacLean. OPPOSED: Foster, Grussendorf, Larson. Representative Hoffman was not present for the vote. The MOTION PASSED, (7-3). Amendment #3 was once again before the Committee. There being NO OBJECTION, it was so ordered. Representative Brown WITHDREW AMENDMENT #4. [Attachment Representative Brown MOVED Amendment #5. [Attachment #5]. The amendment would increase the annual fee for a pull tab manufactures license from $500 to $2.5 thousand dollars. She added, that amount is closer to the national average. Commissioner Fuhs stated there are only ten manufactures in the United States and that $2.5 thousand dollars would be amongst the highest rate charged. Representative Martin OBJECTED to the amendment. A roll call was taken on the MOTION. IN FAVOR: Navarre, Parnell, Therriault, Brown, Grussendorf, Hanley. OPPOSED: Foster, Martin, Larson, MacLean. Representative Hoffman was not present for the vote. The MOTION PASSED, (6-4). Representative Brown MOVED Amendment #6. [Attachment #6]. The amendment would increase the age to play bingo or pull tab games from 19 to 21 years. Commissioner Fuhs replied, the Department would support the amendment. Representative Grussendorf pointed out that bingo is a family activity in many of the smaller communities and the proposed change could eliminate that. Representative Brown MOVED TO AMEND Amendment #6 changing the language to cover "pull tabs" only 4 which would continue to allow bingo and raffles. Representative Brown MOVED the language change. There being NO OBJECTION, it was so ordered. Representative Brown MOVED Amendment #7. [Attachment #7]. She explained the amendment would provide protection to consumers when purchasing pull tabs. Commissioner Fuhs explained the amendment would be unnecessary as that information is already required on the flyer cards. (Tape Change, HFC 93-132, Side 1). Representative Brown WITHDREW Amendment #7. There being NO OBJECTION, it was so ordered. Representative Brown MOVED Amendment #8. [Attachment #8]. REPRESENTATIVE JIM NORDLUND explained that Amendment #8 would require a bond be posted when selling pull tabs. Commissioner Fuhs explained there could be no way for a customer to make a claim against a bar for selling pull tabs and not advertising them. Representative Brown WITHDREW Amendment #8. There being NO OBJECTION, it was so ordered. Representative Brown MOVED Amendment #9 which would limit the number to five permittees who could contract with a vendor for the sale of pull tabs. [Attachment #9]. Mr. Hansen stated is limitation was addressed in SB 6 which limited the amount of locations a permittee could use. Representative Nordlund thought Amendment #10 would address the Department's concern stating there could be consolidation of permittees either way. Representative Brown WITHDREW Amendment #9. There being NO OBJECTION, it was so ordered. Representative Brown MOVED Amendment #10. Commissioner Fuhs noted the Department would support the amendment. There being NO OBJECTION, it was adopted. Commissioner Fuhs urged the Committee to support the legislation so that there could be further regulatory powers to insure that the charities benefit from the program. Representative Martin disagreed. He emphasized that the legislation would make gambling "wide-open" in the name of charity. REPRESENTATIVE CLIFF DAVIDSON questioned why the Department feels that the legislation does not represent an expansion of the pull tab business. Commissioner Fuhs replied, the legislation would not authorize any additional locations. Representative Davidson asked if a saturation point had been 5 reached for pull tabs in the State. Commissioner Fuhs stated the bill will not affect the saturation point. Currently, pulls tabs can exist in any location. He added, with paying 70% of the profit up-front, the profitability becomes marginal for the operations. Co-Chair Larson MOVED Amendment #11, [Attachment #11] which would make a title language. There being NO OBJECTION, it was adopted. Representative Brown MOVED a language change to Page 7, Line 19 deleting "quarter" and inserting "annual". Mr. Hansen stated under current law, operators are required to pay 15% of the adjusted gross income for no less than two consecutive quarters. The current law allows that the operators would be allowed to pay 7.5% on an annual basis and not be out of compliance. Commissioner Fuhs pointed out the existing bill contained a major loophole and the current law corrects that problem. He added there are seasonal changes making payment more difficult for some operators. Representative Brown MOVED the change which would read "...pay to each authorizing permittee at least 30% percent annually...". Representative Martin OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Therriault, Brown, Foster, Grussendorf. OPPOSED: Hanley, Martin, Parnell, Larson, MacLean. Representatives Hoffman and Navarre were not present for the vote. The MOTION FAILED, (4-5). Co-Chair MacLean MOVED to report CS HB 168 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Brown MOVED increasing the fiscal note to match the amount the House Finance Committee added to the budget. She stated $381 thousand dollars had been added to support auditing and enforcement of the legislation. Co-Chair Larson noted the House portion of the budget includes three investigators to the Department of Administration. Representative Martin stressed his dissatisfaction with the basic concept of the legislation. There being NO OBJECTION to moving the bill, it was so ordered. CS HB 168 (FIN) was reported out of Committee with "no recommendation" and with a new fiscal note by the Department 6 of Commerce and Economic Development.