00 SENATE BILL NO. 144 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  and  [,] lotteries, pull-tab games, ice classics, race classics, rain classics, goose 15 classics, mercury classics, deep freeze classics, mushing sweepstakes, canned salmon 16 classics, salmon classics, king salmon classics, dog mushers' contests, snow machine 17 classics, fish derbies, and contests of skill are each a different type of activity.  A 18 permittee may 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  and  [,] lotteries, bingo games,  video lotteries, 05 pull-tab games, race classics, rain classics, goose classics, mercury classics, deep freeze 06 classics, dog mushers' contests, snow machine classics, mushing sweepstakes, canned 07 salmon classics, salmon classics, and king salmon classics, an activity may not be 08 licensed under this chapter unless it existed in the state in substantially the same form 09 and was conducted in substantially the same manner before January 1, 1959. A snow 10 machine classic may not be licensed under this chapter unless it has been in existence 11 for at least five years before the licensing. 12 * Sec. 14. AS 05.15.180(g) is amended to read: 13  (g) A municipality or a qualified organization may award a maximum of 14 $1,000,000 in prizes each year in activities authorized under this chapter; however, if a 15 municipality or a qualified organization contracts with an operator to conduct on its 16 behalf activities authorized under this chapter, the municipality or qualified organization 17 may award a maximum of $500,000 in prizes each year. The holders of a 18 multiple-beneficiary permit under AS 05.15.100(d) may award a maximum in prizes each 19 year of $1,000,000 times the number of holders of the permit for activities authorized 20 under this chapter. In this subsection ,  "activities authorized under this chapter" means 21 all activities subject to this chapter other than bingo  and video lotteries . 22 * Sec. 15. AS 05.15.183(e) is amended to read: 23  (e) A distributor may not 24  (1) take an order for the purchase of a pull-tab series from a  pull-tab  25 vendor; 26  (2) sell a pull-tab series to a  pull-tab  vendor; or 27  (3) deliver a pull-tab series to a  pull-tab  vendor. 28 * Sec. 16. AS 05.15.187(h) is amended to read: 29  (h) An owner, manager, or employee of a person holding a permit or license 30 under this chapter, or registered under this chapter as a  pull-tab  vendor, may not 31 purchase a pull-tab from a pull-tab series manufactured, distributed, or sold by the 01 permittee, licensee, or registered  pull-tab  vendor. 02 * Sec. 17. AS 05.15.187(i) is amended to read: 03  (i) A permittee, operator, or registered  pull-tab  vendor may not turn over a prize 04 of $50 or more to a person with a pull-tab card entitling the person to that prize unless 05 the person signs a receipt for the prize and returns the receipt to the permittee, operator, 06 or  pull-tab  vendor. The receipt must be in a form approved by the department. 07 * Sec. 18. AS 05.15.188 is amended to read: 08  Sec. 05.15.188. Pull-tab sales by pull-tab vendors on behalf of permittees; 09 pull-tab vendor registration. (a) A permittee may contract with a  pull-tab  vendor to 10 sell pull-tabs on behalf of the permittee, if the permittee first registers the  pull-tab  11 vendor with the department by applying for registration on a form prescribed by the 12 department and by submitting the registration fee of $50 for each location at which the 13  pull-tab  vendor will sell pull-tabs. 14  (b) Upon approval of the  pull-tab  vendor registration, the department shall issue 15 an endorsement to the permittee's permit that authorizes the conduct of pull-tab sales at 16 that  pull-tab  vendor location. 17  (c) The endorsement issued under (b) of this section is an extension of the 18 permittee's privilege under AS 05.15.100 to conduct pull-tab sales in this state. A  pull- 19 tab  vendor may not sell a pull-tab series until a copy of the permit containing the endorsement 20 for the new  pull-tab  vendor location has been posted by the permittee in the registered  pull-tab  21 vendor establishment. The endorsed permit must be clearly visible to the gaming public. 22  (d) A separate endorsement shall be issued for each  pull-tab  vendor location. 23 The permittee shall inform the department when a  pull-tab  vendor with whom the 24 permittee is contracting changes the physical location at which pull-tabs are sold, and 25 shall return to the department all copies of a permit endorsed to a  pull-tab  vendor that 26 is no longer selling pull-tabs on behalf of the permittee. Failure to inform the 27 department of a change in  pull-tab  vendor location, or to return the endorsed copies of 28 a permit to the department after a  pull-tab  vendor change, may constitute grounds for 29 the suspension or revocation of a permittee's permit. 30  (e) At the time that a permittee annually renews its permit, it shall also renew 31 the registration of all locations where a  pull-tab  vendor is selling pull-tabs on the 01 permittee's behalf and shall pay a registration fee of $50 for each  pull-tab  vendor 02 location. 03  (f) A permittee that uses a  pull-tab vendor to sell pull-tabs on its behalf shall 04 enter into a written contract with that  pull-tab  vendor. The department may inspect this 05 contract. If the contract contains provisions that violate this chapter or the regulations 06 adopted under it, the department may declare the contract void, and may suspend or 07 revoke the registration of the  pull-tab  vendor and the permit of the permittee. 08  (g) A person, other than a permittee's member-in-charge, may not directly supply 09 a pull-tab series to a registered  pull-tab  vendor for sale by that  pull-tab  vendor on 10 behalf of the permittee. 11  (h) If a permittee contracts with a  pull-tab  vendor under (a) of this section, the 12 contract must provide that the permittee shall receive no less than 70 percent of the ideal 13 net. 14  (i) An amount equal to the ideal net less the compensation owed to the  pull-tab  15 vendor shall be paid by the  pull-tab  vendor to the member-in-charge upon delivery of 16 a pull-tab series to the  pull-tab  vendor for sale. The amount required to be paid by the 17  pull-tab  vendor shall be paid by check and the check may not be drawn in a manner that 18 the payee is not identified. 19  (j) An operator may not contract with or use a  pull-tab  vendor to sell pull-tabs. 20  (k) A permittee may not contract with more than five  pull-tab  vendors under 21 this section. 22 * Sec. 19. AS 05.15 is amended by adding new sections to read: 23 Article 2A. Video Lotteries. 24  Sec. 05.15.300. Video lottery. (a) The department may issue a video lottery 25 endorsement to a permittee to conduct video lottery charitable gaming. The endorsement 26 provides the permittee with the authority to 27  (1) contract with a video lottery vendor to conduct video lottery 28 charitable gaming by use of video lottery machines; or 29  (2) if the permittee has a club license under AS 04.11.110, conduct video 30 lottery charitable gaming by use of video lottery machines. 31  (b) To obtain an video lottery endorsement under 01  (1) (a)(1) of this section, a permittee shall register the video lottery 02 vendor with the department by applying for registration on a form prescribed by the 03 department and by submitting a fee of $100 for each location at which the video lottery 04 vendor will conduct video lottery charitable gaming and a fee of $100 for each video 05 lottery machine the permittee will have at each location; 06  (2) (a)(2) of this section, the permittee shall submit proof of the club 07 license to the department and submit a fee of $100 for each licensed location and a fee 08 of $100 for each video lottery machine the permittee will operate at each location. 09  (c) The endorsement issued under (a) of this section is an extension of the 10 permittee's privilege to conduct charitable gaming in this state. In addition to the 11 endorsement, the department shall issue a machine permit for each video lottery machine 12 for which the permittee has paid the fee required under (b) of this section. A permittee 13 or registered video lottery vendor may not conduct video lottery charitable gaming until 14 a copy of the permit and the endorsement is posted by the permittee at the establishment 15 where the machine is located and the machine permit is posted on the machine. The 16 permit, endorsement, and each machine permit must be clearly visible to the public. 17  (d) A separate endorsement shall be issued for each permittee or video lottery 18 vendor location. The permittee shall inform the department when the permittee, or a 19 video lottery vendor with whom the permittee is contracting, changes the physical 20 location at which video lottery charitable gaming is conducted and shall return to the 21 department all copies of a permit endorsed to a permittee, or a video lottery vendor, that 22 is no longer conducting video lottery charitable gaming. Failure to inform the 23 department of a change in permittee or video lottery vendor location, or to return the 24 endorsed copies of a permit to the department after a permittee or video lottery vendor 25 change, constitutes grounds for the suspension or revocation of a permittee's permit. 26  (e) At the time that a permittee annually renews its permit, the permittee shall 27 also renew the registration of all locations where the permittee or a video lottery vendor 28 is conducting video lottery charitable gaming and shall pay the fees required under (b) 29 of this section for each location and machine. 30  (f) A permittee that uses a video lottery vendor to conduct video lottery 31 charitable gaming on its behalf shall enter into a written contract with that video lottery 01 vendor. The department may inspect this contract. If the contract contains provisions 02 that violate this chapter or the regulations adopted under it, the department may declare 03 the contract void, and may suspend or revoke the registration of the video lottery vendor 04 and the permit of the permittee. The contract must contain provisions regarding the 05 allocation of the costs of purchasing or leasing the video lottery machines. 06  (g) Only video lottery machines approved by the department may be used for 07 video lottery charitable gaming. A permittee may purchase the machines directly from 08 a licensed video lottery machine distributor or may enter into a lease or lease-purchase 09 arrangement for the machines with the distributor. A lease or lease-purchase 10 arrangement must be approved by the department. 11  (h) If a permittee 12  (1) contracts with a video lottery vendor under (a)(1) of this section, the 13 contract must provide that the 14  (A) permittee shall receive 30 percent of the net machine income; 15  (B) registered video lottery vendor shall receive 30 percent of the 16 net machine income; 17  (C) state shall receive 15 percent of the net machine income; and 18  (D) municipality in which each machine is located, or the state 19 if the machine is located in the unorganized borough outside of municipalities, 20 shall receive 25 percent of the net machine income; 21  (2) conducts video lottery charitable gaming under (a)(2) of this section, 22 the permittee must remit the percentages of net machine income under (1) of this 23 subsection to the state and municipality, if any, at times set by the department by 24 regulation. 25  (i) The odds of winning each video lottery game shall be posted on or near each 26 video lottery machine. The manner in which the odds are calculated and how they are 27 posted shall be set by the department by regulation. 28  (j) A video lottery machine may 29  (1) not be played by a person under the age of 21; 30  (2) only be played during the legal hours of operation allowed by the 31 permittee's or video lottery vendor's license under AS 04.11 and applicable municipal 01 ordinance; 02  (3) not be played if the machine permit is not posted on the machine. 03  (k) A permittee may not contract with more than five video lottery vendors 04 under this section. A video lottery vendor may not have more than 10 video lottery 05 machines at each video lottery vendor location. 06  (l) All video lottery machines shall be monitored by the video lottery vendor 07 during business hours. Monitoring shall be accomplished by the physical presence of an 08 employee of the video lottery vendor or by an employee using video cameras or mirrors 09 and by periodic personal inspections of the machines and the area in which the machines 10 are located. 11  (m) A permittee or a registered video lottery vendor may not advertise in any 12 manner the possession or availability of video lottery machines on their premises or 13 under their permit or registration. 14  (n) If the sale of alcoholic beverages has been prohibited within a municipality 15 under AS 04.11.491, the department may issue a video lottery endorsement to a permittee 16 within the municipality that provides the permittee with the authority to conduct video 17 lottery charitable gaming by use of video lottery machines in the manner permittees with 18 club licenses under AS 04.11.110 are authorized to conduct video lottery charitable 19 gaming if the video lottery charitable gaming is only conducted within a location into 20 which the access is restricted to persons 21 years of age or older. 21  Sec. 05.15.310. Video lottery machines. The department may not approve a 22 video lottery machine unless the machine 23  (1) offers only games authorized by the department; 24  (2) does not have any means of manipulation that affect the random 25 probabilities of winning a game; 26  (3) is designed to accept cash, in the form of coins or bills, to prevent 27 the obtaining of plays or credits without paying by stringing, slamming, drilling, or other 28 means of manipulation, and to suspend itself from operation until it is physically reset 29 if physically tampered with; 30  (4) has nonresettable meters housed in a readily accessible locked 31 machine area that keeps a permanent record of all money inserted into the machine, all 01 refunds of winnings made by the machine's printer, credits played for video lottery 02 games, and credits won by video lottery players; 03  (5) does not directly pay off winning players by means of tokens or cash, 04 in the form of coins or bills, but is capable of printing a ticket voucher stating the value 05 of the prize for the player at the completion of each video lottery game, the time of day 06 in a 24-hour format showing hours and minutes, the date, the machine serial number, the 07 sequential number of the ticket vouchers, and an encrypted validation number from 08 which the validity of the prize may be determined; 09  (6) has accounting software that keeps an electronic record that includes 10 total money inserted into the machine, the value of winning tickets claimed by players, 11 the total video lottery credits awarded by a video lottery game, and the payback 12 percentages credited players of each video lottery game; 13  (7) is linked under a central communications system to provide auditing 14 program information as approved by the department; the communications system 15 approved by the department under this paragraph may not limit participation to only one 16 manufacturer of video lottery machines by either the cost of implementing the necessary 17 program modifications to communicate or the inability to communicate with the central 18 communications system; this paragraph does not require that a machine to be approved 19 must be on-line or otherwise in constant communication with a central computer; 20  (8) does not allow more than $2 to be played on a game or award free 21 games or credits in excess of the value of $125 per credit value of $.25 played; and 22  (9) has a total payoff of at least 80 percent of the value of one $.25 23 credit. 24  Sec. 05.15.320. Video lottery machine manufacturers. (a) A person may not 25 manufacture video lottery machines or associated equipment in the state, and may not 26 sell or distribute a video lottery machine or associated equipment that the person has 27 manufactured outside of the state to persons in the state, unless the person has received 28 a video lottery manufacturer's license issued by the department. 29  (b) The department may issue a video lottery machine manufacturer's license to 30 a person who pays an annual fee of $5,000. 31  (c) A video lottery machine or associated equipment may not be manufactured, 01 sold, or distributed in the state unless it has been approved by the department. The 02 department shall examine prototypes of video lottery machines and associated equipment 03 that a licensed manufacturer wishes to manufacture, sell, or distribute in the state. The 04 manufacturer shall pay in advance the costs of the examination and approval of a video 05 lottery machine or associated equipment. The department may contract with another 06 state or person for the examination required under this subsection. 07  (d) A video lottery machine manufacturer may distribute video lottery machines 08 and associated equipment only to a licensed video lottery machine distributor unless the 09 video lottery machine manufacturer is also a licensed video lottery machine distributor. 10  (e) A video lottery machine manufacturer shall report to the department by the 11 last business day of the month on each machine or associated equipment sold or 12 distributed within the state during the preceding month, including the serial number of 13 each machine or associated equipment distributed and the name of the distributor to 14 whom the machine or associated equipment was sold or distributed. 15  Sec. 05.15.330. Video lottery machine distributors. (a) A person may not 16 distribute video lottery machines or associated equipment unless the person has received 17 a video lottery machine distributor's license issued by the department. 18  (b) The department may issue a video lottery machine distributor's license to a 19 person who pays an annual fee of $5,000. 20  (c) Video lottery machines and associated equipment may be distributed only 21 from a location in the state. A person may not distribute video lottery machines or 22 associated equipment directly to another person in the state from a location outside of 23 this state. 24  (d) A video lottery distributor shall report to the department by the last business 25 day of each month on each video lottery machine and associated equipment distributed 26 in the preceding month. The report must include the name of the permittee to whom 27 each video lottery machine or associated equipment is distributed and the serial number 28 of each machine. 29  (e) A distributor may not 30  (1) take an order for the purchase of a video lottery machine or 31 associated equipment from a video lottery vendor; or 01  (2) sell a video lottery machine or associated equipment to a video lottery 02 vendor. 03  Sec. 05.15.340. Distribution of net income from video lottery charitable 04 gaming. The department shall immediately revoke the video lottery endorsement of a 05 permittee or video lottery registration of a video lottery vendor that fails to pay the 06 following percentages of net machine income from each video lottery machine at the 07 times directed by the department: 08  (1) 30 percent to the video lottery vendor; 09  (2) 30 percent to the permittee; 10  (3) 15 percent to the state; and 11  (4) 25 percent to the municipality in which the machine is located, or to 12 the state if the machine is located in the unorganized borough outside of municipalities. 13  Sec. 05.15.350. Video lottery revenues may be appropriated for education. 14 The state's percentage of video lottery charitable adjusted gross income received under 15 AS 05.15.340 shall be deposited in the general fund. The annual estimated balance in 16 the account maintained under AS 37.05.142 for money received under AS 05.15.340 may 17 be appropriated by the legislature to provide for education. Nothing in this section 18 creates a dedicated fund. 19  Sec. 05.15.360. Department to contract. The department, to the maximum 20 extent practicable, shall solicit bids and contract for the performance of duties required 21 to monitor and conduct video lottery charitable gaming when the contracting will not 22 jeopardize the integrity of the gaming and enforcement of the laws of the state. 23 * Sec. 20. AS 05.15.620(c) is amended to read: 24  (c) If a majority of the voters vote "yes" on the question set out in  (a), (b), or 25 (d)  [(a) OR (b)] of this section, the department shall be notified immediately after 26 certification of the results of the election and thereafter the department may not issue a 27 license, permit, or  pull-tab or video lottery  vendor registration authorizing charitable 28 gaming , video lotteries,  or pull-tab sales, as appropriate, within the boundaries of a 29 municipality and in unincorporated areas within five miles of the boundaries of the 30 municipality or within the perimeter of an established village. As necessary to 31 implement the results of an election under  (a), (b), or (d)  [(a) OR (b)] of this section, 01 existing licenses, permits, and  pull-tab or video lottery  vendor registrations for 02 charitable gaming , video lotteries,  or pull-tab sales within the boundaries of a 03 municipality and in unincorporated areas within five miles of the boundaries of the 04 municipality or within the perimeter of an established village are void 90 days after the 05 results of the election are certified. A license or  pull-tab or video lottery  vendor 06 registration that will expire during the 90 days after the results of a local option election 07 under this section are certified is void as of the expiration date. 08 * Sec. 21. AS 05.15.620 is amended by adding a new subsection to read: 09  (d) The following question, appearing alone, may be placed before the voters of 10 a municipality or an established village in accordance with AS 05.15.625: "Shall video 11 lotteries in ................. (name of municipality or village) be prohibited? (yes or no)." 12 * Sec. 22. AS 05.15.680 is amended to read: 13  Sec. 05.15.680. Penalties. (a)  Except as provided in (c) of this section, a  14 [A] person who knowingly violates or aids or solicits a person to violate this chapter 15 is guilty of a violation for the first offense and a class B misdemeanor for the second 16 and each subsequent offense. 17  (b) A person who, with the intent to mislead a public servant in the 18 performance of the public servant's duty, submits a false statement in an application 19 for a permit, license, or  pull-tab or video lottery  vendor registration under this 20 chapter is guilty of unsworn falsification. 21 * Sec. 23. AS 05.15.680 is amended by adding new subsections to read: 22  (c) A person 23  (1) may not with criminal negligence allow a person under 21 years of 24 age to use a video lottery machine; 25  (2) who is under the age of 21 may not with criminal negligence use 26 a video lottery machine; 27  (3) may not with criminal negligence manipulate or attempt to 28 manipulate the outcome or payoff of a video lottery machine by tampering or 29 otherwise interfering with the proper functioning of the machine. 30  (d) In this section, 31  (1) "criminal negligence" has the meaning given in AS 11.81.900; 01  (2) "knowingly" has the meaning given in AS 11.81.900; 02  (3) "with the intent" has the meaning given to "intentionally" in 03 AS 11.81.900. 04  (e) Violation of (c) of this section is a class A misdemeanor. 05 * Sec. 24. AS 05.15.690(36) is amended to read: 06  (36) "qualified organization" means a bona fide civic or service 07 organization or a bona fide religious, charitable, fraternal, veterans, [LABOR, 08 POLITICAL,] or educational organization, police or fire department and company, dog 09 mushers' association, outboard motor association, or fishing derby or nonprofit trade 10 association in the state, that operates without profits to its members and that has been 11 in existence continually for a period of three years immediately before applying for a 12 license; the organization may be a firm, corporation, company, association, or 13 partnership; 14 * Sec. 25. AS 05.15.690(44) is amended to read: 15  (44) " pull-tab  vendor" means a business whose primary activity is not 16 regulated by this chapter but that 17  (A) is engaged in the sale of pull-tabs on behalf of a permittee; 18  (B) holds a business license under AS 43.70; and 19  (C) is an establishment holding a 20  (i) beverage dispensary license under AS 04.11.090 that 21 has not been designated by the Alcoholic Beverage Control Board under 22 AS 04.16.049(a)(2) - (3), has not been exempted by the Department of 23 Labor under AS 04.16.049(c) and AS 23.10.355, and ,  if the 24 establishment is a hotel, motel, resort, or similar business that caters to 25 the traveling public as a substantial part of its business, does not allow 26 the sale of pull-tabs in a dining room, banquet room, guest room, or 27 other public areas other than a room in which there is regularly 28 maintained a fixed counter or service bar at which alcoholic beverages 29 are sold or served to members of the public for consumption; 30  (ii) package store license under AS 04.11.150; 31 * Sec. 26. AS 05.15.690 is amended by adding new paragraphs to read: 01  (46) "net machine income" means money put into a video lottery 02 machine minus credits paid out in cash; 03  (47) "video lottery machine" means an electronic video game machine 04 that upon insertion of cash, in the form of coins or bills, is able to play or simulate the 05 play of a video game, including video poker, keno, or blackjack, authorized by the 06 department, using a video display and microprocessors so that, by chance, the player 07 may receive free games or credits that can be redeemed for cash; 08  (48) "video lottery vendor" means a business whose primary activity 09 is not regulated by this chapter but that 10  (A) conducts video lotteries 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 19 conduct the video lotteries in a dining room, banquet room, guest room, 20 or 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. 27. AS 11.66.280(2) is amended to read: 25  (2) "gambling" means that a person stakes or risks something of value 26 upon the outcome of a contest of chance or a future contingent event not under the 27 person's control or influence, upon an agreement or understanding that that person or 28 someone else will receive something of value in the event of a certain outcome; 29 "gambling" does not include 30  (A) bona fide business transactions valid under the law of 31 contracts for the purchase or sale at a future date of securities or commodities 01 and agreements to compensate for loss caused by the happening of chance, 02 including contracts of indemnity or guaranty and life, health, or accident 03 insurance; or 04  (B) playing an amusement device that 05  (i) confers only an immediate right of replay not 06 exchangeable for something of value other than the privilege of 07 immediate replay; and 08  (ii) does not contain a method or device by which the 09 privilege of immediate replay may be canceled or revoked; 10  (C) an activity authorized by the Department of Revenue under 11 AS 05.15  or AS 19.65.035 ; 12 * Sec. 28. AS 11.66.280(3) is amended to read: 13  (3) "gambling device" means any device, machine, paraphernalia, or 14 equipment that is used or usable in the playing phases of unlawful gambling, whether 15 it consists of gambling between persons or gambling by a person involving the playing 16 of a machine; "gambling device" does not include 17  (A) lottery tickets, policy slips, or other items used in the 18 playing phases of lottery or policy schemes; [OR] 19  (B) an amusement device as described in (2)(B) of this section; 20  or 21  (C) a video lottery machine permitted by the commissioner 22 of revenue under AS 05.15 or AS 19.65.035;  23 * Sec. 29. AS 11.66.280(4) is amended to read: 24  (4) "gambling enterprise" means a gambling business that 25  (A) includes five or more persons who conduct, finance, 26 manage, supervise, direct, or own all or part of the business; 27  (B) has been or remains in substantially continuous operation 28 for a period in excess of 30 days or has a gross income of $2,000 or more in 29 any single day; and 30  (C) is not a 31   (i) vessel of the Alaska marine highway system or the 01 Department of Transportation and Public Facilities when they are 02 lawfully conducting an activity licensed under AS 19.65.035; or  03   (ii)  municipality or a qualified organization under 04 AS 05.15.690, except that, for purposes of this  subparagraph  05 [PARAGRAPH], no application for a license under AS 05.15 is 06 required to be considered a qualified organization; 07 * Sec. 30. AS 19.65 is amended by adding new sections to article 1 to read: 08  Sec. 19.65.035. Video lottery machines authorized. (a) The Department of 09 Revenue may license a vessel of the Alaska marine highway system to operate video 10 lottery machines in a portion of the vessel that persons under 21 years of age are 11 prohibited from entering. 12  (b) A license issued under (a) of this section is not valid when the vessel is 13 in a jurisdiction outside of the state unless that jurisdiction also allows the licensed 14 activity. 15  (c) The Department of Transportation and Public Facilities shall operate video 16 lottery machines aboard a vessel of the Alaska marine highway system licensed under 17 (a) of this section or may contract for their operation under AS 36.30. 18  (d) The commissioner of revenue shall adopt regulations under AS 44.62 19 (Administrative Procedure Act) to implement this section. Those regulations must be 20 consistent, to the extent practicable, with statutes or regulations governing video 21 lotteries and video lottery machines under AS 05.15. 22  Sec. 19.65.040. Prohibitions on video lottery machine operation; penalties. 23 (a) An employee of the Alaska marine highway system or of a contractor under 24 AS 19.65.035(c) may not with criminal negligence allow a person under 21 years of 25 age to use a video lottery machine authorized under AS 19.65.035. A person under 26 21 years of age may not with criminal negligence use a video lottery machine 27 authorized under AS 19.65.035. 28  (b) A person may not with criminal negligence manipulate or attempt to 29 manipulate the outcome or payoff of a video lottery machine authorized under 30 AS 19.65.035 by tampering or otherwise interfering with the proper functioning of the 31 machine. 01  (c) In this section, "criminal negligence" has the meaning given in 02 AS 11.81.900. 03  (d) Violation of this section is a class A misdemeanor. 04  Sec. 19.65.045. Revenues to general fund; appropriation for Alaska marine 05 highway system. Revenues from video lottery machines, less prizes awarded, shall 06 be deposited in the general fund. The legislature may appropriate the annual estimated 07 balance in the account maintained under AS 37.05.142 for revenues deposited under 08 this section for the Alaska marine highway system. Nothing in this section creates a 09 dedicated fund. 10  Sec. 19.65.050. Definition for AS 19.65.035 - 19.65.050. In AS 19.65.035 - 11 19.65.050, "video lottery machine" has the meaning given in AS 05.15.690. 12 * Sec. 31. Section 4, ch. 13, SLA 1995, as repealed and reenacted by sec. 7, ch. 41, SLA 13 1997, is repealed and reenacted to read: 14  Sec. 4. AS 05.15.115(c) is repealed and reenacted to read: 15  (c) A permittee may not contract with more than one operator at a time to 16 conduct the same type of activity. For the purposes of this subsection, bingo games, 17 raffles and lotteries, pull-tab games, ice classics, race classics, rain classics, goose 18 classics, mercury classics, canned salmon classics, salmon classics, king salmon 19 classics, deep freeze classics, dog mushers' contests, snow machine classics, fish 20 derbies, contests of skill, and all activities permitted under AS 05.15.100(b) are each 21 a different type of activity. A permittee may not contract with an operator to conduct 22 video lotteries. 23 * Sec. 32. Section 6, ch. 13, SLA 1995, as repealed and reenacted by sec. 3, ch. 35, SLA 24 1997, and sec. 8, ch. 41, SLA 1997, is repealed and reenacted to read: 25  Sec. 6. AS 05.15.180(b) is repealed and reenacted to read: 26  (b) With the exception of raffles and lotteries, bingo games, video lotteries, 27 pull-tab games, race classics, rain classics, goose classics, mercury classics, deep freeze 28 classics, dog mushers' contests, snow machine classics, canned salmon classics, salmon 29 classics, and king salmon classics, an activity may not be licensed under this chapter 30 unless it existed in the state in substantially the same form and was conducted in 31 substantially the same manner before January 1, 1959. 01 * Sec. 33. AS 05.15.690(25) and 05.15.690(34), are repealed. 02 * Sec. 34. Notwithstanding the effective date of secs. 1 - 33 of this Act, the Department 03 of Revenue shall begin the process under AS 44.62 of adopting regulations to implement this 04 Act so that the regulations can take effect January 1, 2001, or as soon thereafter as is possible. 05 * Sec. 35. Except for sec. 34 of this Act, this Act takes effect January 1, 2001. 06 * Sec. 36. Section 34 of this Act takes effect immediately under AS 01.10.070(c).