00 SENATE BILL NO. 199 01 "An Act relating to charitable gaming and to gaming on state ferries; and 02 providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 05.15.060(a) is amended to read: 05  (a) The department shall adopt regulations under AS 44.62 (Administrative 06 Procedure Act) necessary to carry out this chapter covering, but not limited to, 07  (1) the issuance, renewal, and revocation of permits, licenses, and pull- 08 tab and video lottery vendor registrations; 09  (2) a method of ascertaining net proceeds, the determination of items of 10 expense that may be incurred or paid, and the limitation of the amount of the items of 11 expense to prevent the proceeds from the activity permitted from being diverted to 12 noncharitable, noneducational, nonreligious, or profit-making organizations, individuals, 13 or groups; 14  (3) the immediate revocation of permits, licenses, and pull-tab and video 01 lottery vendor registrations authorized under this chapter if this chapter or regulations 02 adopted under it are violated; 03  (4) the requiring of detailed, sworn, financial reports of operations from 04 permittees and licensees including detailed statements of receipts and payments; 05  (5) the investigation of permittees, licensees, registered pull-tab or video 06 lottery vendors, and their employees, including the fingerprinting of those permittees, 07 licensees, registered pull-tab or video lottery vendors, and employees whom the 08 department considers it advisable to fingerprint; 09  (6) the method and manner of conducting authorized activities and 10 awarding of prizes or awards, and the equipment that may be used; 11  (7) the number of activities that may be held, operated, or conducted 12 under a permit during a specified period; however, the department may not allow more 13 than 14 bingo sessions a month and 35 bingo games a session to be conducted under a 14 permit; the holders of a multiple-beneficiary permit under AS 05.15.100(d) may hold, 15 operate, or conduct the number of sessions and games a month equal to the number 16 allowed an individual permittee per month multiplied by the number of holders of the 17 multiple-beneficiary permit; 18  (8) a method of accounting for receipts and disbursements by operators, 19 including the keeping of records and requirements for the deposit of all receipts in a 20 bank; 21  (9) the disposition of funds in possession of a permittee, a person, 22 municipality, or qualified organization that possesses an operator's license, or a registered 23 pull-tab or video lottery vendor at the time a permit, a license, or a pull-tab or video 24 lottery vendor registration is surrendered, revoked, or invalidated; 25  (10) restrictions on the participation by employees of the Department of 26 Fish and Game in salmon classics and in king salmon classics, and by employees of 27 Douglas Island Pink and Chum in king salmon classics; 28  (11) other matters the department considers necessary to carry out this 29 chapter or protect the best interest of the public. 30 * Sec. 2. AS 05.15.070 is amended to read: 31  Sec. 05.15.070. Examination of books and records. The department may 01 examine or have examined the books and records of a permittee, an operator, a 02 registered pull-tab or video lottery vendor, or a person licensed to manufacture or to 03 distribute video lottery machines or pull-tab games in the state. The department may 04 issue subpoenas for the attendance of witnesses and the production of books, records, 05 and other documents. 06 * Sec. 3. AS 05.15.095(a) is amended to read: 07  (a) The applications and reports to the department required by this chapter 08 shall be signed under penalty of unsworn falsification by the following person, as 09 applicable: 10  (1) the member in charge for the qualified organization; 11  (2) a person authorized to sign on behalf of the municipality; 12  (3) the operator or the operator's agent; 13  (4) the licensed pull-tab distributor or the distributor's agent; [OR] 14  (5) the licensed pull-tab manufacturer or the manufacturer's agent; 15  (6) the licensed video lottery machine distributor or the 16 distributor's agent; 17  (7) the licensed video lottery machine manufacturer or the 18 manufacturer's agent; 19  (8) the registered video lottery vendor or the vendor's agent; or 20  (9) the registered pull-tab vendor or the vendor's agent. 21 * Sec. 4. AS 05.15.100 is amended by adding a new subsection to read: 22  (e) The department may issue a permit to a municipality or qualified 23 organization to conduct video lotteries through the use of video lottery machines by 24 registered video lottery vendors. 25 * Sec. 5. AS 05.15.105(a) is amended to read: 26  (a) If a person has been convicted of a violation of a law of this state that is, 27 or a law or ordinance of another jurisdiction that would be if it had been committed 28 in this state, a felony, or a violation of a law or ordinance of this state or another 29 jurisdiction that is a crime involving theft or dishonesty or a violation of gambling 30 laws 31  (1) the department may not issue a license to the person; 01  (2) the department may not issue a license to, or register as a pull-tab 02 or video lottery vendor, an applicant who employs the person in a managerial or 03 supervisory capacity or uses the person as a fund raiser or consultant; 04  (3) the department may not issue a permit for an activity if the person 05 is responsible for the operation of the activity; 06  (4) the person may not be employed in a managerial or supervisory 07 capacity by a licensee or vendor or used as a fund raiser or consultant by a licensee 08 or a pull-tab or video lottery vendor; 09  (5) the person may not participate in charitable gaming as a permittee, 10 licensee, or pull-tab or video lottery vendor. 11 * Sec. 6. AS 05.15.115(c) is amended to read: 12  (c) A permittee may not contract with more than one operator at a time to 13 conduct the same type of activity. For the purposes of this subsection, bingo games, 14 raffles, lotteries, pull-tab games, ice classics, rain classics, goose classics, mercury 15 classics, deep freeze classics, mushing sweepstakes, canned salmon classics, salmon 16 classics, king salmon classics, dog mushers' contests, snow machine classics, fish 17 derbies, and contests of skill are each a different type of activity.  A permittee may 18 not contract with an operator to conduct video lotteries. 19 * Sec. 7. AS 05.15.124 is amended to read: 20  Sec. 05.15.124. Municipal regulation of operators or vendors. A 21 municipality may by ordinance prohibit an operator, a pull-tab vendor, or a video 22 lottery vendor from conducting activities under this chapter within the municipality. 23 * Sec. 8. AS 05.15.128(a) is amended to read: 24  (a) The department shall revoke the license of an operator who does not 25  (1) report an adjusted gross income of at least 15 percent of gross 26 income annually based on the total operation of the operator; or 27  (2) pay to each authorizing permittee annually at least 30 percent of the 28 adjusted gross income, as determined under (1) of this subsection, from a pull-tab 29 activity or at least 10 percent of the adjusted gross income, as determined under (1) 30 of this subsection, from a gaming activity other than video lotteries and pull-tabs, 31 received from activities conducted on behalf of the authorizing permittee. 01 * Sec. 9. AS 05.15.150(a) is amended to read: 02  (a) The authority to conduct the activity authorized by this chapter is contingent 03 upon the dedication of the net proceeds of the charitable gaming activity to the awarding 04 of prizes to contestants or participants and to [POLITICAL,] educational, civic, public, 05 charitable, patriotic, or religious uses in the state. "Educational [POLITICAL, 06 EDUCATIONAL], civic, public, charitable, patriotic, or religious uses" means uses 07 benefiting persons either by bringing them under the influence of education or religion 08 or relieving them from disease, suffering, or constraint, or by assisting them in 09 establishing themselves in life, or by providing for the promotion of the welfare and 10 well-being of the membership of the organization within their own community, [OR 11 THROUGH AIDING CANDIDATES FOR PUBLIC OFFICE OR GROUPS THAT 12 SUPPORT CANDIDATES FOR PUBLIC OFFICE,] or by erecting or maintaining public 13 buildings or works, or lessening the burden on government, but does not include 14  (1) the direct or indirect payment of any portion of the net proceeds of 15 a bingo, video lottery, or pull-tab game to a lobbyist registered under AS 24.45; 16  (2) the erection, acquisition, improvement, maintenance, or repair of real, 17 personal, or mixed property unless it is used exclusively for one or more of the permitted 18 uses; or 19  (3) the direct or indirect payment of any portion of the net proceeds of 20 a charitable gaming activity, except the proceeds of a raffle and lottery, 21  (A) to aid candidates for public office or groups that support or 22 oppose candidates for public office; 23  (B) to a political party or to an organization affiliated with a 24 political party; or 25  (C) to a group, as that term is defined in AS 15.13.400, or a 26 political group, as that term is defined in AS 15.60, that seeks to influence the 27 outcome of an election. 28 * Sec. 10. AS 05.15.160(d) is amended to read: 29  (d) The total amount of authorized expenses that may be incurred under (a) of 30 this section in connection with any gaming activity other than video lotteries and 31 pull-tabs may not exceed 90 percent of the adjusted gross income from that gaming 01 activity. 02 * Sec. 11. AS 05.15.170 is amended to read: 03  Sec. 05.15.170. Suspension or revocation of permit, license, or vendor 04 registration. (a) The department may suspend, for a period of up to one year, or 05 revoke a permit, license, or pull-tab or video lottery vendor registration, after giving 06 notice to and an opportunity to be heard by the permittee or licensee, if the permittee, 07 licensee, or pull-tab or video lottery vendor 08  (1) violates or fails to comply with a requirement of this chapter or of 09 a regulation adopted under this chapter; 10  (2) breaches a contractual agreement with a permittee, licensee, or 11 registered pull-tab or video lottery vendor; 12  (3) becomes disqualified to participate in charitable gaming as provided 13 in AS 05.15.105; for the purposes of this paragraph, a permittee, licensee, or pull-tab 14 or video lottery vendor that is not a natural person is considered convicted if an owner 15 or manager of the permittee, licensee, or pull-tab or video lottery vendor is convicted; 16  (4) knowingly submits false information to the department or, in the case 17 of a registered pull-tab or video lottery vendor, to a permittee when the pull-tab or 18 video lottery vendor knows that the false information will be submitted to the 19 department as part of an application for registration; or 20  (5) gives or acts upon any inside information on the status of the prizes 21 awarded or to be awarded in a pull-tab game. 22  (b) If the department revokes a license or pull-tab or video lottery vendor 23 registration under this section, it may prohibit the licensee or pull-tab or video lottery 24 vendor from reapplying for a license or pull-tab or video lottery vendor registration for 25 a period of not more than five years. If the department revokes a permit under this 26 section, it may prohibit the permittee from reapplying for a permit for a period of not 27 more than one year. 28 * Sec. 12. AS 05.15.180(a) is amended to read: 29  (a)  Except as provided in AS 05.15.300 - 05.15.360, this [THIS] chapter does 30 not authorize the use of playing cards, dice, roulette wheels, coin-operated instruments 31 or machines, or other objects or instruments used, designed, or intended primarily for 01 gaming or gambling or any other method or implement not expressly authorized by the 02 department. 03 * Sec. 13. AS 05.15.180(b) is amended to read: 04  (b) With the exception of raffles, lotteries, bingo games, video lotteries, pull-tab 05 games, rain classics, goose classics, mercury classics, deep freeze classics, snow machine 06 classics, mushing sweepstakes, canned salmon classics, salmon classics, king salmon 07 classics, an activity may not be licensed under this chapter unless it existed in the state 08 in substantially the same form and was conducted in substantially the same manner 09 before January 1, 1959. A snow machine classic may not be licensed under this chapter 10 unless it has been in existence for at least five years before the licensing. 11 * Sec. 14. AS 05.15.180(g) is amended to read: 12  (g) A municipality or a qualified organization may award a maximum of 13 $1,000,000 in prizes each year in activities authorized under this chapter; however, if a 14 municipality or a qualified organization contracts with an operator to conduct on its 15 behalf activities authorized under this chapter, the municipality or qualified organization 16 may award a maximum of $500,000 in prizes each year. The holders of a 17 multiple-beneficiary permit under AS 05.15.100(d) may award a maximum in prizes each 18 year of $1,000,000 times the number of holders of the permit for activities authorized 19 under this chapter. In this subsection, "activities authorized under this chapter" means 20 all activities subject to this chapter other than bingo and video lotteries. 21 * Sec. 15. AS 05.15.183(e) is amended to read: 22  (e) A distributor may not 23  (1) take an order for the purchase of a pull-tab series from a pull-tab 24 vendor; 25  (2) sell a pull-tab series to a pull-tab vendor; or 26  (3) deliver a pull-tab series to a pull-tab vendor. 27 * Sec. 16. AS 05.15.187(h) is amended to read: 28  (h) An owner, manager, or employee of a person holding a permit or license 29 under this chapter, or registered under this chapter as a pull-tab vendor, may not 30 purchase a pull-tab from a pull-tab series manufactured, distributed, or sold by the 31 permittee, licensee, or registered pull-tab vendor. 01 * Sec. 17. AS 05.15.187(i) is amended to read: 02  (i) A permittee, operator, or registered pull-tab vendor may not turn over a prize 03 of $50 or more to a person with a pull-tab card entitling the person to that prize unless 04 the person signs a receipt for the prize and returns the receipt to the permittee, operator, 05 or pull-tab vendor. The receipt must be in a form approved by the department. 06 * Sec. 18. AS 05.15.188 is amended to read: 07  Sec. 05.15.188. Pull-tab sales by pull-tab vendors on behalf of permittees; 08 pull-tab vendor registration. (a) A permittee may contract with a pull-tab vendor to 09 sell pull-tabs on behalf of the permittee, if the permittee first registers the pull-tab 10 vendor with the department by applying for registration on a form prescribed by the 11 department and by submitting the registration fee of $50 for each location at which the 12 pull-tab vendor will sell pull-tabs. 13  (b) Upon approval of the pull-tab vendor registration, the department shall issue 14 an endorsement to the permittee's permit that authorizes the conduct of pull-tab sales at 15 that pull-tab vendor location. 16  (c) The endorsement issued under (b) of this section is an extension of the 17 permittee's privilege under AS 05.15.100 to conduct pull-tab sales in this state. A pull- 18 tab vendor may not sell a pull-tab series until a copy of the permit containing the endorsement 19 for the new pull-tab vendor location has been posted by the permittee in the registered pull-tab 20 vendor establishment. The endorsed permit must be clearly visible to the gaming public. 21  (d) A separate endorsement shall be issued for each pull-tab vendor location. 22 The permittee shall inform the department when a pull-tab vendor with whom the 23 permittee is contracting changes the physical location at which pull-tabs are sold, and 24 shall return to the department all copies of a permit endorsed to a pull-tab vendor that 25 is no longer selling pull-tabs on behalf of the permittee. Failure to inform the 26 department of a change in pull-tab vendor location, or to return the endorsed copies of 27 a permit to the department after a pull-tab vendor change, may constitute grounds for 28 the suspension or revocation of a permittee's permit. 29  (e) At the time that a permittee annually renews its permit, it shall also renew 30 the registration of all locations where a pull-tab vendor is selling pull-tabs on the 31 permittee's behalf and shall pay a registration fee of $50 for each pull-tab vendor 01 location. 02  (f) A permittee that uses a pull-tab vendor to sell pull-tabs on its behalf shall 03 enter into a written contract with that pull-tab vendor. The department may inspect this 04 contract. If the contract contains provisions that violate this chapter or the regulations 05 adopted under it, the department may declare the contract void, and may suspend or 06 revoke the registration of the pull-tab vendor and the permit of the permittee. 07  (g) A person, other than a permittee's member-in-charge, may not directly supply 08 a pull-tab series to a registered pull-tab vendor for sale by that pull-tab vendor on 09 behalf of the permittee. 10  (h) If a permittee contracts with a pull-tab vendor under (a) of this section, the 11 contract must provide that the permittee shall receive no less than 70 percent of the ideal 12 net. 13  (i) An amount equal to the ideal net less the compensation owed to the pull-tab 14 vendor shall be paid by the pull-tab vendor to the member-in-charge upon delivery of 15 a pull-tab series to the pull-tab vendor for sale. The amount required to be paid by the 16 pull-tab vendor shall be paid by check and the check may not be drawn in a manner that 17 the payee is not identified. 18  (j) An operator may not contract with or use a pull-tab vendor to sell pull-tabs. 19  (k) A permittee may not contract with more than five pull-tab vendors under 20 this section. 21 * Sec. 19. AS 05.15 is amended by adding new sections to read: 22 Article 2A. Video Lotteries. 23  Sec. 05.15.300. Video lottery. (a) The department may issue a video lottery 24 endorsement to a permittee to conduct video lottery charitable gaming. The endorsement 25 provides the permittee with the authority to 26  (1) contract with a video lottery vendor to conduct video lottery 27 charitable gaming by use of video lottery machines; or 28  (2) if the permittee has a club license under AS 04.11.110, conduct video 29 lottery charitable gaming by use of video lottery machines. 30  (b) To obtain an video lottery endorsement under 31  (1) (a)(1) of this section, a permittee shall register the video lottery 01 vendor with the department by applying for registration on a form prescribed by the 02 department and by submitting a fee of $100 for each location at which the video lottery 03 vendor will conduct video lottery charitable gaming and a fee of $100 for each video 04 lottery machine the permittee will have at each location; 05  (2) (a)(2) of this section, the permittee shall submit proof of the club 06 license to the department and submit a fee of $100 for each licensed location and a fee 07 of $100 for each video lottery machine the permittee will operate at each location. 08  (c) The endorsement issued under (a) of this section is an extension of the 09 permittee's privilege to conduct charitable gaming in this state. In addition to the 10 endorsement, the department shall issue a machine permit for each video lottery machine 11 for which the permittee has paid the fee required under (b) of this section. A permittee 12 or registered video lottery vendor may not conduct video lottery charitable gaming until 13 a copy of the permit and the endorsement is posted by the permittee at the establishment 14 where the machine is located and the machine permit is posted on the machine. The 15 permit, endorsement, and each machine permit must be clearly visible to the public. 16  (d) A separate endorsement shall be issued for each permittee or video lottery 17 vendor location. The permittee shall inform the department when the permittee, or a 18 video lottery vendor with whom the permittee is contracting, changes the physical 19 location at which video lottery charitable gaming is conducted and shall return to the 20 department all copies of a permit endorsed to a permittee, or a video lottery vendor, that 21 is no longer conducting video lottery charitable gaming. Failure to inform the 22 department of a change in permittee or video lottery vendor location, or to return the 23 endorsed copies of a permit to the department after a permittee or video lottery vendor 24 change, constitutes grounds for the suspension or revocation of a permittee's permit. 25  (e) At the time that a permittee annually renews its permit, the permittee shall 26 also renew the registration of all locations where the permittee or a video lottery vendor 27 is conducting video lottery charitable gaming and shall pay the fees required under (b) 28 of this section for each location and machine. 29  (f) A permittee that uses a video lottery vendor to conduct video lottery 30 charitable gaming on its behalf shall enter into a written contract with that video lottery 31 vendor. The department may inspect this contract. If the contract contains provisions 01 that violate this chapter or the regulations adopted under it, the department may declare 02 the contract void, and may suspend or revoke the registration of the video lottery vendor 03 and the permit of the permittee. The contract must contain provisions regarding the 04 allocation of the costs of purchasing or leasing the video lottery machines. 05  (g) Only video lottery machines approved by the department may be used for 06 video lottery charitable gaming. A permittee may purchase the machines directly from 07 a licensed video lottery machine distributor or may enter into a lease or lease-purchase 08 arrangement for the machines with the distributor. A lease or lease-purchase 09 arrangement must be approved by the department. 10  (h) If a permittee 11  (1) contracts with a video lottery vendor under (a)(1) of this section, the 12 contract must provide that the 13  (A) permittee shall receive 30 percent of the net machine income; 14  (B) registered video lottery vendor shall receive 30 percent of the 15 net machine income; 16  (C) state shall receive 15 percent of the net machine income; and 17  (D) municipality in which each machine is located, or the state 18 if the machine is located in the unorganized borough outside of municipalities, 19 shall receive 25 percent of the net machine income; 20  (2) conducts video lottery charitable gaming under (a)(2) of this section, 21 the permittee must remit the percentages of net machine income under (1) of this 22 subsection to the state and municipality, if any, at times set by the department by 23 regulation. 24  (i) The odds of winning each video lottery game shall be posted on or near each 25 video lottery machine. The manner in which the odds are calculated and how they are 26 posted shall be set by the department by regulation. 27  (j) A video lottery machine may 28  (1) not be played by a person under the age of 21; 29  (2) only be played during the legal hours of operation allowed by the 30 permittee's or video lottery vendor's license under AS 04.11 and applicable municipal 31 ordinance; 01  (3) not be played if the machine permit is not posted on the machine. 02  (k) A permittee may not contract with more than five video lottery vendors 03 under this section. A video lottery vendor may not have more than 10 video lottery 04 machines at each video lottery vendor location. 05  (l) All video lottery machines shall be monitored by the video lottery vendor 06 during business hours. Monitoring shall be accomplished by the physical presence of an 07 employee of the video lottery vendor or by an employee using video cameras or mirrors 08 and by periodic personal inspections of the machines and the area in which the machines 09 are located. 10  (m) A permittee or a registered video lottery vendor may not advertise in any 11 manner the possession or availability of video lottery machines on their premises or 12 under their permit or registration. 13  (n) If the sale of alcoholic beverages has been prohibited within a municipality 14 under AS 04.11.490, the department may issue a video lottery endorsement to a permittee 15 within the municipality that provides the permittee with the authority to conduct video 16 lottery charitable gaming by use of video lottery machines in the manner permittees with 17 club licenses under AS 04.11.110 are authorized to conduct video lottery charitable 18 gaming if the video lottery charitable gaming is only conducted within a location into 19 which the access is restricted to persons 21 years of age or older. 20  Sec. 05.15.310. Video lottery machines. The department may not approve a 21 video lottery machine unless the machine 22  (1) offers only games authorized by the department; 23  (2) does not have any means of manipulation that affect the random 24 probabilities of winning a game; 25  (3) is designed to accept coins or cash in the form of bills, to prevent the 26 obtaining of plays or credits without paying by stringing, slamming, drilling, or other 27 means of manipulation, and to suspend itself from operation until it is physically reset 28 if physically tampered with; 29  (4) has nonresettable meters housed in a readily accessible locked 30 machine area that keeps a permanent record of all money inserted into the machine, all 31 refunds of winnings made by the machine's printer, credits played for video lottery 01 games, and credits won by video lottery players; 02  (5) does not directly pay off winning players by means of coins, cash, 03 or tokens but is capable of printing a ticket voucher stating the value of the prize for the 04 player at the completion of each video lottery game, the time of day in a 24-hour format 05 showing hours and minutes, the date, the machine serial number, the sequential number 06 of the ticket vouchers, and an encrypted validation number from which the validity of 07 the prize may be determined; 08  (6) has accounting software that keeps an electronic record that includes 09 total money inserted into the machine, the value of winning tickets claimed by players, 10 the total video lottery credits awarded by a video lottery game, and the payback 11 percentages credited players of each video lottery game; 12  (7) is linked under a central communications system to provide auditing 13 program information as approved by the department; the communications system 14 approved by the department under this paragraph may not limit participation to only one 15 manufacturer of video lottery machines by either the cost of implementing the necessary 16 program modifications to communicate or the inability to communicate with the central 17 communications system; this paragraph does not require that a machine to be approved 18 must be on-line or otherwise in constant communication with a central computer; 19  (8) does not allow more than $2 to be played on a game or award free 20 games or credits in excess of the value of $125 per credit value of $.25 played; and 21  (9) has a total payoff of at least 80 percent of the value of one $.25 22 credit. 23  Sec. 05.15.320. Video lottery machine manufacturers. (a) A person may not 24 manufacture video lottery machines or associated equipment in the state, and may not 25 sell or distribute a video lottery machine or associated equipment that the person has 26 manufactured outside of the state to persons in the state, unless the person has received 27 a video lottery manufacturer's license issued by the department. 28  (b) The department may issue a video lottery machine manufacturer's license to 29 a person who pays an annual fee of $5,000. 30  (c) A video lottery machine or associated equipment may not be manufactured, 31 sold, or distributed in the state unless it has been approved by the department. The 01 department shall examine prototypes of video lottery machines and associated equipment 02 that a licensed manufacturer wishes to manufacture, sell, or distribute in the state. The 03 manufacturer shall pay in advance the costs of the examination and approval of a video 04 lottery machine or associated equipment. The department may contract with another 05 state or person for the examination required under this subsection. 06  (d) A video lottery machine manufacturer may distribute video lottery machines 07 and associated equipment only to a licensed video lottery machine distributor unless the 08 video lottery machine manufacturer is also a licensed video lottery machine distributor. 09  (e) A video lottery machine manufacturer shall report to the department by the 10 last business day of the month on each machine or associated equipment sold or 11 distributed within the state during the preceding month, including the serial number of 12 each machine or associated equipment distributed and the name of the distributor to 13 whom the machine or associated equipment was sold or distributed. 14  Sec. 05.15.330. Video lottery machine distributors. (a) A person may not 15 distribute video lottery machines or associated equipment unless the person has received 16 a video lottery machine distributor's license issued by the department. 17  (b) The department may issue a video lottery machine distributor's license to a 18 person who pays an annual fee of $5,000. 19  (c) Video lottery machines and associated equipment may be distributed only 20 from a location in the state. A person may not distribute video lottery machines or 21 associated equipment directly to another person in the state from a location outside of 22 this state. 23  (d) A video lottery distributor shall report to the department by the last business 24 day of each month on each video lottery machine and associated equipment distributed 25 in the preceding month. The report must include the name of the permittee to whom 26 each video lottery machine or associated equipment is distributed and the serial number 27 of each machine. 28  (e) A distributor may not 29  (1) take an order for the purchase of a video lottery machine or 30 associated equipment from a video lottery vendor; or 31  (2) sell a video lottery machine or associated equipment to a video lottery 01 vendor. 02  Sec. 05.15.340. Distribution of net income from video lottery charitable 03 gaming. The department shall immediately revoke the video lottery endorsement of a 04 permittee or video lottery vendor that fails to pay the following percentages of net 05 machine income from each video lottery machine at the times directed by the 06 department: 07  (1) 30 percent to the video lottery vendor; 08  (2) 30 percent to the permittee; 09  (3) 15 percent to the state; and 10  (4) 25 percent to the municipality in which the machine is located, or to 11 the state if the machine is located in the unorganized borough outside of municipalities. 12  Sec. 05.15.350. Video lottery revenues may be appropriated for education. 13 The state's percentage of video lottery charitable adjusted gross income received under 14 AS 05.15.340 shall be deposited in the general fund. The annual estimated balance in 15 the account maintained under AS 37.05.142 for money received under AS 05.15.340 may 16 be appropriated by the legislature to provide for education. Nothing in this section 17 creates a dedicated fund. 18  Sec. 05.15.360. Department to contract. The department, to the maximum 19 extent practicable, shall solicit bids and contract for the performance of duties required 20 to monitor and conduct video lottery charitable gaming when the contracting will not 21 jeopardize the integrity of the gaming and enforcement of the laws of the state. 22 * Sec. 20. AS 05.15.620(c) is amended to read: 23  (c) If a majority of the voters vote "yes" on the question set out in (a), (b), or 24 (d) [(a) OR (b)] of this section, the department shall be notified immediately after 25 certification of the results of the election and thereafter the department may not issue a 26 license, permit, or pull-tab or video lottery vendor registration authorizing charitable 27 gaming, video lotteries, or pull-tab sales, as appropriate, within the boundaries of a 28 municipality and in unincorporated areas within five miles of the boundaries of the 29 municipality or within the perimeter of an established village. As necessary to 30 implement the results of an election under (a), (b), or (d) [(a) OR (b)] of this section, 31 existing licenses, permits, and pull-tab or video lottery vendor registrations for 01 charitable gaming, video lotteries, or pull-tab sales within the boundaries of a 02 municipality and in unincorporated areas within five miles of the boundaries of the 03 municipality or within the perimeter of an established village are void 90 days after the 04 results of the election are certified. A license or pull-tab or video lottery vendor 05 registration that will expire during the 90 days after the results of a local option election 06 under this section are certified is void as of the expiration date. 07 * Sec. 21. AS 05.15.620 is amended by adding a new subsection to read: 08  (d) The following question, appearing alone, may be placed before the voters of 09 a municipality or an established village in accordance with AS 05.15.625: "Shall video 10 lotteries in ................. (name of municipality or village) be prohibited? (yes or no)." 11 * Sec. 22. AS 05.15.680 is amended to read: 12  Sec. 05.15.680. Penalties. (a)  Except as provided in (c) of this section, a 13 [A] person who knowingly violates or aids or solicits a person to violate this chapter 14 is guilty of a violation for the first offense and a class B misdemeanor for the second 15 and each subsequent offense. 16  (b) A person who, with the intent to mislead a public servant in the 17 performance of the public servant's duty, submits a false statement in an application 18 for a permit, license, or pull-tab or video lottery vendor registration under this 19 chapter is guilty of unsworn falsification. 20 * Sec. 23. AS 05.15.680 is amended by adding new subsections to read: 21  (c) A person 22  (1) may not, with criminal negligence as that term is defined in 23 AS 11.81.900, allow a person under 21 years of age to use a video lottery machine; 24  (2) who is under the age of 21 may not use a video lottery machine; 25  (3) may not manipulate or attempt to manipulate the outcome or payoff 26 of a video lottery machine by tampering or otherwise interfering with the proper 27 functioning of the machine. 28  (d) Violation of (c) of this section is a class A misdemeanor. 29 * Sec. 24. AS 05.15.690(36) is amended to read: 30  (36) "qualified organization" means a bona fide civic or service 31 organization or a bona fide religious, charitable, fraternal, veterans, [LABOR, 01 POLITICAL,] or educational organization, police or fire department and company, dog 02 mushers' association, outboard motor association, or fishing derby or nonprofit trade 03 association in the state, that operates without profits to its members and that has been 04 in existence continually for a period of three years immediately before applying for a 05 license; the organization may be a firm, corporation, company, association, or 06 partnership; 07 * Sec. 25. AS 05.15.690(43) is amended to read: 08  (43) "pull-tab vendor" means a business whose primary activity is not 09 regulated by this chapter but that 10  (A) is engaged in the sale of pull-tabs on behalf of a permittee; 11  (B) holds a business license under AS 43.70; and 12  (C) is an establishment holding a 13  (i) beverage dispensary license under AS 04.11.090 that 14 has not been designated by the Alcoholic Beverage Control Board under 15 AS 04.16.049(a)(2) - (3), has not been exempted by the Department of 16 Labor under AS 04.16.049(c) and AS 23.10.355, and, if the 17 establishment is a hotel, motel, resort, or similar business that caters to 18 the traveling public as a substantial part of its business, does not allow 19 the sale of pull-tabs in a dining room, banquet room, guest room, or 20 other public areas other than a room in which there is regularly 21 maintained a fixed counter or service bar at which alcoholic beverages 22 are sold or served to members of the public for consumption; 23  (ii) package store license under AS 04.11.150; 24 * Sec. 26. AS 05.15.690 is amended by adding new paragraphs to read: 25  (45) "net machine income" means money put into a video lottery 26 machine minus credits paid out in cash; 27  (46) "video lottery machine" means an electronic video game machine 28 that upon insertion of coin or cash is able to play or simulate the play of a video 29 game, including video poker, keno, or blackjack, authorized by the department using 30 a video display and microprocessors in which, by chance, the player may receive free 31 games or credits that can be redeemed for cash; 01  (47) "video lottery vendor" means a business whose primary activity 02 is not regulated by this chapter but that 03  (A) conducts video lotteries on behalf of a permittee; 04  (B) holds a business license under AS 43.70; and 05  (C) is an establishment holding a 06  (i) beverage dispensary license under AS 04.11.090 that 07 has not been designated by the Alcoholic Beverage Control Board under 08 AS 04.16.049(a)(2) - (3), has not been exempted by the Department of 09 Labor under AS 04.16.049(c) and AS 23.10.355, and if the 10 establishment is a hotel, motel, resort, or similar business that caters to 11 the traveling public as a substantial part of its business, does not 12 conduct the video lotteries in a dining room, banquet room, guest room, 13 or other public areas other than a room in which there is regularly 14 maintained a fixed counter or service bar at which alcoholic beverages 15 are sold or served to members of the public for consumption; 16  (ii) package store license under AS 04.11.150. 17 * Sec. 27. AS 11.66.280(2) is amended to read: 18  (2) "gambling" means that a person stakes or risks something of value 19 upon the outcome of a contest of chance or a future contingent event not under the 20 person's control or influence, upon an agreement or understanding that that person or 21 someone else will receive something of value in the event of a certain outcome; 22 "gambling" does not include 23  (A) bona fide business transactions valid under the law of 24 contracts for the purchase or sale at a future date of securities or commodities 25 and agreements to compensate for loss caused by the happening of chance, 26 including contracts of indemnity or guaranty and life, health, or accident 27 insurance; or 28  (B) playing an amusement device that 29  (i) confers only an immediate right of replay not 30 exchangeable for something of value other than the privilege of 31 immediate replay; and 01  (ii) does not contain a method or device by which the 02 privilege of immediate replay may be canceled or revoked; 03  (C) an activity authorized by the Department of Revenue under 04 AS 05.15 or AS 19.65.035; 05 * Sec. 28. AS 11.66.280(3) is amended to read: 06  (3) "gambling device" means any device, machine, paraphernalia, or 07 equipment that is used or usable in the playing phases of unlawful gambling, whether 08 it consists of gambling between persons or gambling by a person involving the playing 09 of a machine; "gambling device" does not include 10  (A) lottery tickets, policy slips, or other items used in the 11 playing phases of lottery or policy schemes; [OR] 12  (B) an amusement device as described in (2)(B) of this section; 13 or 14  (C) a video lottery machine permitted by the commissioner 15 of revenue under AS 05.15 or AS 19.65.035; 16 * Sec. 29. AS 11.66.280(4) is amended to read: 17  (4) "gambling enterprise" means a gambling business that 18  (A) includes five or more persons who conduct, finance, 19 manage, supervise, direct, or own all or part of the business; 20  (B) has been or remains in substantially continuous operation 21 for a period in excess of 30 days or has a gross income of $2,000 or more in 22 any single day; and 23  (C) is not a 24   (i) vessel of the Alaska marine highway system or the 25 Department of Transportation and Public Facilities when they are 26 lawfully conducting an activity licensed under AS 19.65.035; or 27   (ii) municipality or a qualified organization under 28 AS 05.15.690, except that, for purposes of this paragraph, no 29 application for a license under AS 05.15 is required to be considered a 30 qualified organization; 31 * Sec. 30. AS 19.65 is amended by adding new sections to article 1 to read: 01  Sec. 19.65.035. Video lottery machines authorized. (a) The Department of 02 Revenue may license a vessel of the Alaska marine highway system to operate video 03 lottery machines in a portion of the vessel that persons under 21 years of age are 04 prohibited from entering. 05  (b) A license issued under (a) of this section is not valid when the vessel is 06 in a jurisdiction outside of the state unless that jurisdiction also allows the licensed 07 activity. 08  (c) The Department of Transportation and Public Facilities shall operate video 09 lottery machines aboard a vessel of the Alaska marine highway system licensed under 10 (a) of this section or may contract for their operation under AS 36.30. 11  (d) The commissioner of revenue shall adopt regulations under AS 44.62 12 (Administrative Procedure Act) to implement this section. Those regulations must be 13 consistent, to the extent practicable, with statutes or regulations governing video 14 lotteries and video lottery machines under AS 05.15. 15  Sec. 19.65.040. Prohibitions on video lottery machine operation; penalties. 16 (a) An employee of the Alaska marine highway system or of a contractor under 17 AS 19.65.035(c) may not with criminal negligence allow a person under 21 years of 18 age to use a video lottery machine authorized under AS 19.65.035. A person under 19 21 years of age may not use a video lottery machine authorized under AS 19.65.035. 20 In this subsection, "criminal negligence" has the meaning given in AS 11.81.900. 21  (b) A person may not manipulate or attempt to manipulate the outcome or 22 payoff of a video lottery machine authorized under AS 19.65.035 by tampering or 23 otherwise interfering with the proper functioning of the machine. 24  (c) Violation of this section is a class A misdemeanor. 25  Sec. 19.65.045. Revenues to general fund; appropriation for Alaska marine 26 highway system. Revenues from video lottery machines, less prizes awarded, shall 27 be deposited in the general fund. The legislature may appropriate the annual estimated 28 balance in the account maintained under AS 37.05.142 for revenues deposited under 29 this section for the Alaska marine highway system. Nothing in this section creates 30 a dedicated fund. 31  Sec. 19.65.050. Definition for AS 19.65.035 - 19.65.050. In AS 19.65.035 - 01 19.65.050, "video lottery machine" has the meaning given in AS 05.15.690. 02 * Sec. 31. Section 4, ch. 13, SLA 1995, is repealed and reenacted to read: 03  Sec. 4. AS 05.15.115(c) is repealed and reenacted to read: 04  (c) A permittee may not contract with more than one operator at a time to 05 conduct the same type of activity. For the purposes of this subsection, bingo games, 06 raffles, lotteries, pull-tab games, ice classics, rain classics, goose classics, mercury 07 classics, canned salmon classics, salmon classics, king salmon classics, deep freeze 08 classics, dog mushers' contests, snow machine classics, fish derbies, contests of skill, 09 and all activities permitted under AS 05.15.100(b) are each a different type of activity. 10 A permittee may not contract with an operator to conduct video lotteries. 11 * Sec. 32. Section 6, ch. 13, SLA 1995, is repealed and reenacted to read: 12  Sec. 6. AS 05.15.180(b) is repealed and reenacted to read: 13  (b) With the exception of raffles, lotteries, bingo games, video lotteries, pull- 14 tab games, rain classics, goose classics, mercury classics, deep freeze classics, snow machine 15 classics, canned salmon classics, salmon classics, king salmon classics, and other activities 16 authorized under AS 05.15.100(b), an activity may not be licensed under this chapter unless 17 it existed in the state in substantially the same form and was conducted in substantially the 18 same manner before January 1, 1959. 19 * Sec. 33. AS 05.15.690(25) and 05.15.690(34), are repealed. 20 * Sec. 34. Notwithstanding the effective date of secs. 1 - 33 of this Act, the Department 21 of Revenue shall begin the process under AS 44.62 of adopting regulations to implement this 22 Act so that the regulations can take effect January 1, 1998, or as soon thereafter as is possible. 23 * Sec. 35. Except for sec. 34 of this Act, this Act takes effect January 1, 1998. 24 * Sec. 36. Section 34 of this Act takes effect immediately under AS 01.10.070(c).