00 SENATE BILL NO. 186 01 "An Act relating to authorizing charitable gaming permittees to use up to five electronic 02 gaming machines at certain locations with certain liquor licenses or certain other places 03 where access is restricted to persons 21 years of age or older as an authorized form of 04 charitable gaming; limiting the maximum number of electronic gaming machines for 05 which a vendor may have an endorsement to not more than 10; relating to licensing 06 manufacturers and distributors of electronic gaming machines; relating to local 07 prohibition of electronic gaming; limiting the authority of municipalities to tax 08 electronic gaming machines; relating to penalties concerning charitable gaming; making 09 conforming amendments; and providing for an effective date." 10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 11  * Section 1. AS 05.15.020(b) is amended to read: 12 (b) An additional fee of one percent of the net proceeds received during the 01 preceding year from the activities authorized under the permit shall be paid to the 02 department annually by the municipality or qualified organization authorized to 03 conduct activities under this chapter, if the gross receipts for the activities were 04 $20,000 or more. In this subsection, "activities authorized under the permit" does  05 not include activities conducted under an endorsement issued to a permittee  06 under AS 05.15.300.  07  * Sec. 2. AS 05.15.060(a) is amended to read: 08 (a) The department shall adopt regulations under AS 44.62 (Administrative 09 Procedure Act) necessary to carry out this chapter covering, but not limited to, 10 (1) the issuance, renewal, and revocation of permits, licenses, and pull- 11 tab and electronic gaming vendor registrations; 12 (2) a method of ascertaining net proceeds, the determination of items 13 of expense that may be incurred or paid, and the limitation of the amount of the items 14 of expense to prevent the proceeds from the activity permitted from being diverted to 15 noncharitable, noneducational, nonreligious, or profit-making organizations, 16 individuals, or groups; 17 (3) the immediate revocation of permits, licenses, and pull-tab and  18 electronic vendor registrations authorized under this chapter if this chapter or 19 regulations adopted under it are violated; 20 (4) the requiring of detailed, sworn, financial reports of operations 21 from permittees and licensees including detailed statements of receipts and payments; 22 (5) the investigation of permittees, licensees, registered pull-tab or  23 electronic gaming vendors, and their employees, including the fingerprinting of those 24 permittees, licensees, registered pull-tab or electronic gaming vendors, and 25 employees whom the department considers it advisable to fingerprint; 26 (6) the method and manner of conducting authorized activities and 27 awarding of prizes or awards, and the equipment that may be used; 28 (7) the number of activities that may be held, operated, or conducted 29 under a permit during a specified period; however, the department may not allow more 30 than 14 bingo sessions a month and 35 bingo games a session to be conducted under a 31 permit; the holders of a multiple-beneficiary permit under AS 05.15.100(d) may hold, 01 operate, or conduct the number of sessions and games a month equal to the number 02 allowed an individual permittee per month multiplied by the number of holders of the 03 multiple-beneficiary permit; 04 (8) a method of accounting for receipts and disbursements by 05 operators, including the keeping of records and requirements for the deposit of all 06 receipts in a bank; 07 (9) the disposition of funds in possession of a permittee, a person, 08 municipality, or qualified organization that possesses an operator's license, or a 09 registered pull-tab or electronic gaming vendor at the time a permit, a license, or a 10 pull-tab or electronic gaming vendor registration is surrendered, revoked, or 11 invalidated; 12 (10) restrictions on the participation by employees of the Department 13 of Fish and Game in salmon classics and in king salmon classics, and by employees of 14 Douglas Island Pink and Chum in king salmon classics; 15 (11) other matters the department considers necessary to carry out this 16 chapter or protect the best interest of the public. 17  * Sec. 3. AS 05.15.070 is amended to read: 18 Sec. 05.15.070. Examination of books and records. The department may 19 examine or have examined the books and records of a permittee, an operator, a 20 registered pull-tab or electronic gaming vendor, or a person licensed to manufacture 21 or to distribute electronic gaming machines or pull-tab games in the state. The 22 department may issue subpoenas for the attendance of witnesses and the production of 23 books, records, and other documents. 24  * Sec. 4. AS 05.15.095(a) is amended to read: 25 (a) The applications and reports to the department required by this chapter 26 shall be signed under penalty of unsworn falsification by the following person, as 27 applicable: 28 (1) the member in charge for the qualified organization; 29 (2) a person authorized to sign on behalf of the municipality; 30 (3) the operator or the operator's agent; 31 (4) the licensed pull-tab distributor or the distributor's agent; [OR] 01 (5) the licensed pull-tab manufacturer or the manufacturer's agent; 02 (6) the licensed electronic gaming machine distributor or the  03 distributor's agent;  04 (7) the licensed electronic gaming machine manufacturer or the  05 manufacturer's agent;  06 (8) the registered electronic gaming vendor or the vendor's agent;  07 or  08 (9) the registered pull-tab vendor or the vendor's agent. 09  * Sec. 5. AS 05.15.100 is amended by adding a new subsection to read: 10 (e) The department may issue a permit to a municipality or qualified 11 organization to conduct electronic gaming activities through the use of electronic 12 gaming machines. 13  * Sec. 6. AS 05.15.105(a) is amended to read: 14 (a) If a person has been convicted of a violation of a law of this state that is, or 15 a law or ordinance of another jurisdiction that would be if it had been committed in 16 this state, a felony, or a violation of a law or ordinance of this state or another 17 jurisdiction that is a crime involving theft or dishonesty or a violation of gambling 18 laws 19 (1) the department may not issue a license to the person; 20 (2) the department may not issue a license to, or register as a pull-tab  21 or electronic gaming vendor, an applicant who employs the person in a managerial or 22 supervisory capacity or uses the person as a fund raiser or consultant; 23 (3) the department may not issue a permit for an activity if the person 24 is responsible for the operation of the activity; 25 (4) the person may not be employed in a managerial or supervisory 26 capacity by a licensee or vendor or used as a fund raiser or consultant by a licensee or 27 a pull-tab or electronic gaming vendor; 28 (5) the person may not participate in charitable gaming as a permittee, 29 licensee, or pull-tab or electronic gaming vendor. 30  * Sec. 7. AS 05.15.115(c) is amended to read: 31 (c) A permittee may not contract with more than one operator at a time to 01 conduct the same type of activity. For the purposes of this subsection, bingo games, 02 raffles, lotteries, pull-tab games, ice classics, race classics, rain classics, goose 03 classics, mercury classics, deep freeze classics, canned salmon classics, salmon 04 classics, king salmon classics, dog mushers' contests, snow machine classics, fish 05 derbies, and contests of skill are each a different type of activity. A permittee may  06 not contract with an operator to conduct electronic gaming activities. 07  * Sec. 8. AS 05.15.124 is amended to read: 08 Sec. 05.15.124. Municipal regulation of operators or vendors. A 09 municipality may by ordinance prohibit an operator, a pull-tab vendor, or an  10 electronic gaming [A] vendor from conducting activities under this chapter within the 11 municipality. 12  * Sec. 9. AS 05.15.128(a) is amended to read: 13 (a) The department shall revoke the license of an operator who does not 14 (1) report an adjusted gross income of at least 15 percent of gross 15 income annually based on the total operation of the operator; or 16 (2) pay to each authorizing permittee annually at least 30 percent of the 17 adjusted gross income, as determined under (1) of this subsection, from a pull-tab 18 activity or at least 10 percent of the adjusted gross income, as determined under (1) of 19 this subsection, from a gaming activity other than electronic gaming activities and 20 pull-tabs, received from activities conducted on behalf of the authorizing permittee. 21  * Sec. 10. AS 05.15.150(a) is amended to read: 22 (a) The authority to conduct the activity authorized by this chapter is 23 contingent upon the dedication of the net proceeds of the charitable gaming activity to 24 the awarding of prizes to contestants or participants and to political, educational, civic, 25 public, charitable, patriotic, or religious uses in the state. "Political, educational, civic, 26 public, charitable, patriotic, or religious uses" means uses benefiting persons either by 27 bringing them under the influence of education or religion or relieving them from 28 disease, suffering, or constraint, or by assisting them in establishing themselves in life, 29 or by providing for the promotion of the welfare and well-being of the membership of 30 the organization within their own community, or through aiding candidates for public 31 office or groups that support candidates for public office, or by erecting or maintaining 01 public buildings or works, or lessening the burden on government, but does not 02 include 03 (1) the direct or indirect payment of any portion of the net proceeds of 04 a bingo, electronic gaming, or pull-tab game to a lobbyist registered under AS 24.45; 05 (2) the erection, acquisition, improvement, maintenance, or repair of 06 real, personal, or mixed property unless it is used exclusively for one or more of the 07 permitted uses; or 08 (3) the direct or indirect payment of any portion of the net proceeds of 09 a charitable gaming activity, except the proceeds of a raffle and lottery, 10 (A) to aid candidates for public office or groups that support or 11 oppose candidates for public office; 12 (B) to a political party or to an organization affiliated with a 13 political party; or 14 (C) to a group, as that term is defined in AS 15.13.400, or a 15 political group, as that term is defined in AS 15.60, that seeks to influence the 16 outcome of an election. 17  * Sec. 11. AS 05.15.160(d) is amended to read: 18 (d) The total amount of authorized expenses that may be incurred under (a) of 19 this section in connection with any gaming activity other than electronic gaming  20 activities and pull-tabs may not exceed 90 percent of the adjusted gross income from 21 that gaming activity. 22  * Sec. 12. AS 05.15.170 is amended to read: 23 Sec. 05.15.170. Suspension or revocation of permit, license, or vendor  24 registration. (a) The department may suspend, for a period of up to one year, or 25 revoke a permit, license, or pull-tab or electronic gaming vendor registration, after 26 giving notice to and an opportunity to be heard by the permittee or licensee, if the 27 permittee, licensee, or pull-tab or electronic gaming vendor 28 (1) violates or fails to comply with a requirement of this chapter or of a 29 regulation adopted under this chapter; 30 (2) breaches a contractual agreement with a permittee, licensee, or 31 registered pull-tab or electronic gaming vendor; 01 (3) becomes disqualified to participate in charitable gaming as 02 provided in AS 05.15.105; for the purposes of this paragraph, a permittee, licensee, or 03 pull-tab or electronic gaming vendor that is not a natural person is considered 04 convicted if an owner or manager of the permittee, licensee, or pull-tab or electronic  05 gaming vendor is convicted; 06 (4) knowingly submits false information to the department or, in the 07 case of a registered pull-tab or electronic gaming vendor, to a permittee when the 08 pull-tab or electronic gaming vendor knows that the false information will be 09 submitted to the department as part of an application for registration; or 10 (5) gives or acts upon any inside information on the status of the prizes 11 awarded or to be awarded in a pull-tab game. 12 (b) If the department revokes a license or pull-tab or electronic gaming 13 vendor registration under this section, it may prohibit the licensee or pull-tab or  14 electronic gaming vendor from reapplying for a license or pull-tab or electronic  15 gaming vendor registration for a period of not more than five years. If the department 16 revokes a permit under this section, it may prohibit the permittee from reapplying for a 17 permit for a period of not more than one year. 18  * Sec. 13. AS 05.15.180(a) is amended to read: 19 (a) Except as provided in AS 05.15.300 - 05.15.350, this [THIS] chapter 20 does not authorize the use of playing cards, dice, roulette wheels, coin-operated 21 instruments or machines, or other objects or instruments used, designed, or intended 22 primarily for gaming or gambling or any other method or implement not expressly 23 authorized by the department. 24  * Sec. 14. AS 05.15.180(b) is amended to read: 25 (b) With the exception of raffles, lotteries, bingo games, electronic gaming  26 activities, pull-tab games, race classics, rain classics, goose classics, mercury classics, 27 deep freeze classics, dog mushers' contests, snow machine classics, canned salmon 28 classics, salmon classics, and king salmon classics, an activity may not be licensed 29 under this chapter unless it existed in the state in substantially the same form and was 30 conducted in substantially the same manner before January 1, 1959. A snow machine 31 classic may not be licensed under this chapter unless it has been in existence for at 01 least five years before the licensing. 02  * Sec. 15. AS 05.15.180(g) is amended to read: 03 (g) A municipality or a qualified organization may award a maximum of 04 $1,000,000 in prizes each year in activities authorized under this chapter; however, if a 05 municipality or a qualified organization contracts with an operator to conduct on its 06 behalf activities authorized under this chapter, the municipality or qualified 07 organization may award a maximum of $500,000 in prizes each year. The holders of a 08 multiple-beneficiary permit under AS 05.15.100(d) may award a maximum in prizes 09 each year of $1,000,000 times the number of holders of the permit for activities 10 authorized under this chapter. In this subsection, "activities authorized under this 11 chapter" means all activities subject to this chapter other than bingo and electronic  12 gaming activities. 13  * Sec. 16. AS 05.15.183(e) is amended to read: 14 (e) A distributor may not 15 (1) take an order for the purchase of a pull-tab series from a pull-tab 16 vendor; 17 (2) sell a pull-tab series to a pull-tab vendor; or 18 (3) deliver a pull-tab series to a pull-tab vendor. 19  * Sec. 17. AS 05.15.187(h) is amended to read: 20 (h) An owner, manager, or employee of a person holding a permit or license 21 under this chapter, or registered under this chapter as a pull-tab vendor, may not 22 purchase a pull-tab from a pull-tab series manufactured, distributed, or sold by the 23 permittee, licensee, or registered pull-tab vendor. 24  * Sec. 18. AS 05.15.187(i) is amended to read: 25 (i) A permittee, operator, or registered pull-tab vendor may not turn over a 26 prize of $50 or more to a person with a pull-tab card entitling the person to that prize 27 unless the person signs a receipt for the prize and returns the receipt to the permittee, 28 operator, or pull-tab vendor. The receipt must be in a form approved by the 29 department. 30  * Sec. 19. AS 05.15.188 is amended to read: 31 Sec. 05.15.188. Pull-tab sales by pull-tab vendors on behalf of permittees;  01 pull-tab vendor registration. (a) A permittee may contract with a pull-tab vendor 02 to sell pull-tabs on behalf of the permittee [,] if the permittee first registers the pull- 03 tab vendor with the department by applying for registration on a form prescribed by 04 the department and by submitting the registration fee of $50 for each location at which 05 the pull-tab vendor will sell pull-tabs. 06 (b) Upon approval of the pull-tab vendor registration, the department shall 07 issue an endorsement to the permittee's permit that authorizes the conduct of pull-tab 08 sales at that pull-tab vendor location. 09 (c) The endorsement issued under (b) of this section is an extension of the 10 permittee's privilege under AS 05.15.100 to conduct pull-tab sales in this state. A 11 pull-tab vendor may not sell a pull-tab series until a copy of the permit containing the 12 endorsement for the new pull-tab vendor location has been posted by the permittee in 13 the registered pull-tab vendor establishment. The endorsed permit must be clearly 14 visible to the gaming public. 15 (d) A separate endorsement shall be issued for each pull-tab vendor location. 16 The permittee shall inform the department when a pull-tab vendor with whom the 17 permittee is contracting changes the physical location at which pull-tabs are sold, and 18 shall return to the department all copies of a permit endorsed to a pull-tab vendor that 19 is no longer selling pull-tabs on behalf of the permittee. Failure to inform the 20 department of a change in pull-tab vendor location, or to return the endorsed copies of 21 a permit to the department after a pull-tab  vendor change, may constitute grounds for 22 the suspension or revocation of a permittee's permit. 23 (e) At the time that a permittee annually renews its permit, it shall also renew 24 the registration of all locations where a pull-tab vendor is selling pull-tabs on the 25 permittee's behalf and shall pay a registration fee of $50 for each pull-tab vendor 26 location. 27 (f) A permittee that uses a pull-tab vendor to sell pull-tabs on its behalf shall 28 enter into a written contract with that pull-tab vendor. The department may inspect 29 this contract. If the contract contains provisions that violate this chapter or the 30 regulations adopted under it, the department may declare the contract void, and may 31 suspend or revoke the registration of the pull-tab vendor and the permit of the 01 permittee. 02 (g) A person, other than a permittee's member-in-charge, may not directly 03 supply a pull-tab series to a registered pull-tab vendor for sale by that pull-tab vendor 04 on behalf of the permittee. 05 (h) If a permittee contracts with a pull-tab vendor under (a) of this section, the 06 contract must provide that the permittee shall receive no less than 70 percent of the 07 ideal net. 08 (i) An amount equal to the ideal net less the compensation owed to the pull- 09 tab vendor shall be paid by the pull-tab vendor to the member-in-charge upon 10 delivery of a pull-tab series to the pull-tab vendor for sale. The amount required to be 11 paid by the pull-tab vendor shall be paid by check and the check may not be drawn in 12 a manner that the payee is not identified. 13 (j) An operator may not contract with or use a pull-tab vendor to sell pull- 14 tabs. 15 (k) A permittee may not contract with more than five pull-tab vendors under 16 this section. 17  * Sec. 20. AS 05.15 is amended by adding new sections to read: 18 Article 2A. Electronic Gaming Activities. 19 Sec. 05.15.300. Electronic gaming. (a) The department may issue an 20 electronic gaming endorsement to a permittee to conduct electronic gaming charitable 21 gaming. The endorsement provides the permittee with the authority to 22 (1) contract with electronic gaming vendors to conduct electronic 23 gaming by use of electronic gaming machines; 24 (2) if the permittee has a club license under AS 04.11.110, conduct 25 electronic gaming by use of electronic gaming machines at the location of the club. 26 (b) To obtain an electronic gaming endorsement under 27 (1) (a)(1) of this section, a permittee shall register each electronic 28 gaming vendor with the department by applying for registration on a form prescribed 29 by the department, by submitting a fee of $100 for each location at which the 30 electronic gaming vendor will conduct electronic gaming, and by 31 (A) identifying the locations of the electronic gaming 01 machines; 02 (B) identifying the number of electronic gaming machines the 03 permittee will have at each location; and 04 (C) paying an annual fee of $100 for each electronic gaming 05 machine; 06 (2) (a)(2) of this section, the permittee shall submit proof of the club 07 license to the department and 08 (A) identify the location of the club and pay a $100 fee for that 09 location; 10 (B) identify the number of electronic gaming machines the 11 permittee will have at the club; and 12 (C) pay an annual fee of $100 for each electronic gaming 13 machine. 14 (c) A permittee issued an endorsement to conduct electronic gaming activities 15 under 16 (1) (a)(1) of this section may not be issued an endorsement under 17 (a)(2)of this section; 18 (2) (a)(2) of this section may not be issued an endorsement under 19 (a)(1) of this section. 20 (d) The endorsement issued under (a) of this section is an extension of the 21 permittee's privilege to conduct charitable gaming in this state. In addition to the 22 endorsement, the department shall issue a machine permit for each electronic gaming 23 machine the permittee has identified under (b) of this section. A permittee or 24 registered electronic gaming vendor may not conduct electronic gaming until a copy 25 of the permit and the endorsement is posted by the permittee at the establishment 26 where the machine is located and the machine permit is posted on the machine. The 27 permit, endorsement, and each machine permit must be clearly visible to the public. 28 (e) A separate endorsement shall be issued for each permittee location or 29 electronic gaming vendor location. The endorsement for a location may not be 30 transferred to another location. The permittee shall inform the department if the 31 permittee or its electronic gaming vendor discontinues conducting electronic gaming. 01 Failure to return the endorsed copies of a permit to the department after a permittee or 02 an electronic gaming vendor change constitutes grounds for the suspension or 03 revocation of a permittee's permit. 04 (f) At the time that a permittee annually renews its permit, the permittee shall 05 also renew the registration of the locations where the permittee or an electronic 06 gaming vendor is conducting electronic gaming. 07 (g) A permittee that uses an electronic gaming vendor to conduct electronic 08 gaming on its behalf shall enter into a written contract with that electronic gaming 09 vendor. The department may inspect this contract. If the contract contains provisions 10 that violate this chapter or the regulations adopted under it, the department may 11 declare the contract void, and may suspend or revoke the registration of the electronic 12 gaming vendor and the permit of the permittee. The contract must contain provisions 13 that allocate all of the costs of purchasing, leasing, operating, and monitoring the 14 electronic gaming machines to the electronic gaming vendor. 15 (h) Only electronic gaming machines approved by the department may be used 16 for electronic gaming. A permittee may purchase the machines directly from a licensed 17 electronic gaming machine distributor or may enter into a lease or lease-purchase 18 arrangement for the machines with the distributor. A lease or lease-purchase arrangement 19 must be approved by the department. 20 (i) If a permittee 21 (1) contracts with an electronic gaming vendor under (a)(1) of this 22 section, the contract must provide that the 23 (A) permittee shall receive 30 percent of the net machine 24 income; 25 (B) registered electronic gaming vendor shall receive 30 26 percent of the net machine income; 27 (C) state shall receive 15 percent of the net machine income; 28 and 29 (D) municipality in which each machine is located, or the state 30 if the machine is located in the unorganized borough outside of municipalities, 31 shall receive 25 percent of the net machine income; if the machine is located in 32 a city within an organized borough, 15 percent shall be paid to the city and 10 01 percent to the borough; 02 (2) conducts electronic gaming under (a)(2) of this section, the 03 permittee must remit the percentages of net machine income under (1) of this 04 subsection to the state and municipality, if any, at times set by the department by 05 regulation. 06 (j) The odds of winning each electronic gaming game shall be posted on or 07 near each electronic gaming machine. The manner in which the odds are calculated 08 and how they are posted shall be set by the department by regulation. 09 (k) An electronic gaming machine may 10 (1) not be played by a person under the age of 21 and may not be 11 located in any place accessible to persons under the age of 21; 12 (2) only be played during the regular business hours for the location 13 and, if the permittee or electronic gaming vendor is licensed under AS 04.11, during 14 the legal hours of operation allowed by the license and applicable municipal 15 ordinance; 16 (3) not be played if the machine permit is not posted on the machine. 17 (l) A permittee may not have more than 5 electronic gaming machines at a 18 location for which the permittee has an endorsement. An electronic gaming vendor 19 may not have endorsements from permittees for more than 10 machines. A permittee 20 may not contract with more than five electronic gaming vendors. A permittee may not 21 have endorsements cumulatively totaling more than 5 machines. 22 (m) All electronic gaming machines shall be monitored by the permittee or the 23 electronic gaming vendor during business hours. Monitoring shall be accomplished 24 by the physical presence of an employee of the permittee or the electronic gaming 25 vendor or by an employee using video cameras or mirrors and by periodic personal 26 inspections of the machines and the area in which the machines are located. 27 (n) A permittee or a registered electronic gaming vendor may not advertise in 28 any manner the possession or availability of electronic gaming machines on their 29 premises or under their permit or registration. 30 (o) If the sale of alcoholic beverages has been prohibited within a municipality 31 under AS 04.11.491, the department may issue an electronic gaming endorsement to a 01 permittee within the municipality that provides the permittee with the authority to 02 conduct electronic gaming by use of electronic gaming machines in the manner 03 permittees with club licenses under AS 04.11.110 are authorized to conduct electronic 04 gaming if the electronic gaming is only conducted within a location into which the 05 access is restricted to persons 21 years of age or older. 06 (p) The department may by regulation exempt a permittee under this section 07 from the reporting requirements of AS 05.15.080 if the information required to be 08 submitted in the report can be obtained directly by the department from the electronic 09 gaming machines. 10 Sec. 05.15.310. Electronic gaming machines. The department may not 11 approve an electronic gaming machine unless the machine 12 (1) offers only games authorized by the department; 13 (2) does not have any means of manipulation that affect the random 14 probabilities of winning a game; 15 (3) is designed to accept cash, in the form of coins or bills, to prevent 16 the obtaining of plays or credits without paying by stringing, slamming, drilling, or 17 other means of manipulation, and to suspend itself from operation until it is physically 18 reset if physically tampered with; 19 (4) has nonresettable meters housed in a readily accessible locked 20 machine area that keeps a permanent record of all money inserted into the machine, all 21 refunds of winnings made by the machine's printer, credits played for electronic 22 gaming games, and credits won by electronic gaming players; 23 (5) does not directly pay off winning players by means of tokens or 24 cash, in the form of coins or bills, but is capable of printing a ticket voucher stating the 25 value of the prize for the player at the completion of each electronic gaming game, the 26 time of day in a 24-hour format showing hours and minutes, the date, the machine 27 serial number, the sequential number of the ticket vouchers, and an encrypted 28 validation number from which the validity of the prize may be determined; 29 (6) has accounting software that keeps an electronic record that 30 includes total money inserted into the machine, the value of winning tickets claimed 31 by players, the total electronic gaming credits awarded by an electronic gaming game, 01 and the payback percentages credited players of each electronic gaming game; 02 (7) is linked under a central communications system to provide 03 auditing program information as approved by the department; the communications 04 system approved by the department under this paragraph may not limit participation to 05 only one manufacturer of electronic gaming machines by either the cost of 06 implementing the necessary program modifications to communicate or the inability to 07 communicate with the central communications system; this paragraph does not require 08 that a machine to be approved must be on-line or otherwise in constant communication 09 with a central computer; 10 (8) does not allow more than $2 to be played on a game or award free 11 games or credits in excess of the value of $125 for each credit value of $.25 played; 12 and 13 (9) has a total payoff of at least 80 percent of the value of one $.25 14 credit. 15 Sec. 05.15.320. Electronic gaming machine manufacturers. (a) A person 16 may not manufacture electronic gaming machines or associated equipment in the state, 17 and may not sell or distribute an electronic gaming machine or associated equipment 18 that the person has manufactured outside of the state to persons in the state, unless the 19 person has received an electronic gaming manufacturer's license issued by the 20 department. 21 (b) The department may issue an electronic gaming machine manufacturer's 22 license to a person who pays an annual fee of $5,000. 23 (c) An electronic gaming machine or associated equipment may not be 24 manufactured, sold, or distributed in the state unless it has been approved by the 25 department. The department shall examine prototypes of electronic gaming machines 26 and associated equipment that a licensed manufacturer wishes to manufacture, sell, or 27 distribute in the state. The manufacturer shall pay in advance the costs of the 28 examination and approval of an electronic gaming machine or associated equipment. 29 The department may contract with another state or person for the examination required 30 under this subsection. 31 (d) An electronic gaming machine manufacturer may distribute electronic 01 gaming machines and associated equipment only to a licensed electronic gaming 02 machine distributor unless the electronic gaming machine manufacturer is also a 03 licensed electronic gaming machine distributor. 04 (e) An electronic gaming machine manufacturer shall report to the department 05 by the last business day of the month on each machine or associated equipment sold or 06 distributed within the state during the preceding month, including the serial number of 07 each machine or associated equipment distributed and the name of the distributor to 08 whom the machine or associated equipment was sold or distributed. 09 Sec. 05.15.330. Electronic gaming machine distributors. (a) A person may 10 not distribute electronic gaming machines or associated equipment in this state unless 11 the person has received an electronic gaming machine distributor's license issued by 12 the department. 13 (b) The department may issue an electronic gaming machine distributor's 14 license to a person who pays an annual fee of $5,000. 15 (c) Electronic gaming machines and associated equipment may be distributed 16 only from a location in the state. A person may not distribute electronic gaming 17 machines or associated equipment directly to another person in the state from a 18 location outside of this state. 19 (d) An electronic gaming distributor shall report to the department by the last 20 business day of each month on each electronic gaming machine and associated 21 equipment distributed in the preceding month. The report must include the name of 22 the permittee to whom each electronic gaming machine or associated equipment is 23 distributed and the serial number of each machine. 24 (e) A distributor may only sell or lease an electronic gaming machine and 25 associated equipment to the permittee. A distributor may not 26 (1) take an order for the purchase or lease of an electronic gaming 27 machine or associated equipment from an electronic gaming vendor; or 28 (2) sell or lease an electronic gaming machine or associated equipment 29 to an electronic gaming vendor. 30 Sec. 05.15.340. Distribution of net income from electronic gaming;  31 appropriations for education. (a) The department shall immediately revoke the 01 electronic gaming endorsement of a permittee or the electronic gaming registration of 02 an electronic gaming vendor that fails to pay the following percentages of net machine 03 income from each electronic gaming machine at the times directed by the department: 04 (1) 60 percent to the permittee or, if the permittee uses an electronic 05 gaming vendor, 30 percent to the permittee and 30 percent to the electronic gaming 06 vendor; 07 (2) 15 percent to the state; and 08 (3) 25 percent to the municipality in which the machine is located, or 09 to the state if the machine is located in the unorganized borough outside of 10 municipalities; if the machine is located in a city within an organized borough, 15 11 percent shall be paid to the city and 10 percent to the borough. 12 (b) The state's percentage of video lottery charitable adjusted gross income 13 received under this section shall be deposited in the general fund. The annual 14 estimated balance in the account maintained under AS 37.05.142 for money received 15 under this section may be appropriated by the legislature to provide for education. 16 Nothing in this subsection creates a dedicated fund. 17 Sec. 05.15.350. Department to contract. The department, to the maximum 18 extent practicable, shall solicit bids and contract for the performance of duties required 19 to monitor and conduct electronic gaming when the contracting will not jeopardize the 20 integrity of the gaming and enforcement of the laws of the state. 21  * Sec. 21. AS 05.15.620(c) is amended to read: 22 (c) If a majority of the voters vote "yes" on the question set out in (a), (b), or  23 (d) [(a) OR (b)] of this section, the department shall be notified immediately after 24 certification of the results of the election and thereafter the department may not issue a 25 license, permit, endorsement, or pull-tab or electronic gaming vendor registration 26 authorizing charitable gaming, electronic gaming activities, or pull-tab sales, as 27 appropriate, within the boundaries of a municipality and in unincorporated areas 28 within five miles of the boundaries of the municipality or within the perimeter of an 29 established village. As necessary to implement the results of an election under (a),  30 (b), or (d) [(a) OR (b)] of this section, existing licenses, permits, endorsement, and 31 pull-tab or electronic gaming vendor registrations for charitable gaming, electronic  01 gaming activities, or pull-tab sales within the boundaries of a municipality and in 02 unincorporated areas within five miles of the boundaries of the municipality or within 03 the perimeter of an established village are void 90 days after the results of the election 04 are certified. A license, endorsement, or pull-tab or electronic gaming vendor 05 registration that will expire during the 90 days after the results of a local option 06 election under this section are certified is void as of the expiration date. 07  * Sec. 22. 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 09 of a municipality or an established village in accordance with AS 05.15.625: "Shall 10 electronic gaming activities in . . . . . . . . (name of municipality or village) be 11 prohibited? (yes or no)." 12  * Sec. 23. AS 05.15.680 is amended to read: 13 Sec. 05.15.680. Penalties. (a) Except as provided in (e) of this section, a 14 [A] person who knowingly violates or aids or solicits a person to violate this chapter is 15 guilty of a violation for the first offense and a class B misdemeanor for the second and 16 each subsequent offense. In this subsection, "knowingly" has the meaning given in  17 AS 11.81.900. 18 (b) A person who, with [THE] intent to mislead a public servant in the 19 performance of the public servant's duty, submits a false statement in an application 20 for a permit, license, endorsement, or pull-tab or electronic gaming vendor 21 registration under this chapter is guilty of unsworn falsification. In this subsection,  22 "with intent" has the meaning given to "intentionally" in AS 11.81.900.  23  * Sec. 24. AS 05.15.680 is amended by adding new subsections to read: 24 (c) A person 25 (1) may not with criminal negligence allow a person under 21 years of 26 age to use an electronic gaming machine; 27 (2) who is under the age of 21 may not with criminal negligence use an 28 electronic gaming machine; 29 (3) may not with criminal negligence manipulate or attempt to 30 manipulate the outcome or payoff of an electronic gaming machine by tampering or 31 otherwise interfering with the proper functioning of the machine. 01 (d) In this section, "criminal negligence" has the meaning given in 02 AS 11.81.900. 03 (e) Violation of (c) of this section is a class A misdemeanor. 04  * Sec. 25. AS 05.15.690 is amended by adding new paragraphs to read: 05 (46) "electronic gaming" means a game of chance that uses an 06 electronic gaming machine; 07 (47) "electronic gaming machine" means an electronic video game 08 machine that, upon insertion of cash, in the form of coins or bills, is able to play or 09 simulate the play of a video game, including video poker, keno, or blackjack, 10 authorized by the department, using a video display and microprocessors so that, by 11 chance, the player may receive free games or credits that can be redeemed for cash; 12 (48) "electronic gaming vendor" means a business whose primary 13 activity is not regulated by this chapter but that 14 (A) conducts electronic gaming activities on behalf of a 15 permittee; 16 (B) holds a business license under AS 43.70; and 17 (C) is an establishment holding a beverage dispensary license 18 under AS 04.11.090 that has not been designated by the Alcoholic Beverage 19 Control Board under AS 04.16.049(a)(2) - (3), has not been exempted by the 20 Department of Labor and Workforce Development under AS 04.16.049(c) and 21 AS 23.10.355, and, if the establishment is a hotel, motel, resort, or similar 22 business that caters to the traveling public as a substantial part of its business, 23 does not conduct the electronic gaming activities in a dining room, banquet 24 room, guest room, or other public areas other than a room in which there is 25 regularly maintained a fixed counter or service bar at which alcoholic 26 beverages are sold or served to members of the public for consumption, or a 27 package store license under AS 04.11.150; 28 (49) "net machine income" means money put into an electronic gaming 29 machine minus credits paid out in cash; 30 (50) "pull-tab vendor" means a business whose primary activity is not 31 regulated by this chapter but that 01 (A) is engaged in the sale of pull-tabs on behalf of a permittee; 02 (B) holds a business license under AS 43.70; and 03 (C) is an establishment holding a 04 (i) beverage dispensary license under AS 04.11.090 that 05 has not been designated by the Alcoholic Beverage Control Board 06 under AS 04.16.049(a)(2) - (3), has not been exempted by the 07 Department of Labor and Workforce Development under 08 AS 04.16.049(c) and AS 23.10.355, and if the establishment is a hotel, 09 motel, resort, or similar business that caters to the traveling public as a 10 substantial part of its business, does not allow the sale of pull-tabs in a 11 dining room, banquet room, guest room, or other public areas other 12 than a room in which there is regularly maintained a fixed counter or 13 service bar at which alcoholic beverages are sold or served to members 14 of the public for consumption; 15 (ii) package store license under AS 04.11.150. 16  * Sec. 26. AS 11.66.280(3) is amended to read: 17 (3) "gambling device" means any device, machine, paraphernalia, or 18 equipment that is used or usable in the playing phases of unlawful gambling, whether 19 it consists of gambling between persons or gambling by a person involving the playing 20 of a machine; "gambling device" does not include 21 (A) lottery tickets, policy slips, or other items used in the 22 playing phases of lottery or policy schemes; [OR] 23 (B) an amusement device as described in (2)(B) of this section; 24 or  25 (C) an electronic gaming machine permitted by the  26 commissioner of revenue under AS 05.15;  27  * Sec. 27. AS 29.10.200(51) is amended to read: 28 (51) AS 29.45.650(c), (d), (e), [AND] (f), and (i) (sales and use tax); 29  * Sec. 28. AS 29.45.650 is amended by adding a new subsection to read: 30 (i) A borough may not levy or collect a sales tax on sales, rents, and services, 31 or a use tax on the storage, use, or consumption of personal property on electronic 01 gaming machines and electronic gaming. This subsection applies to home rule and 02 general law municipalities. 03  * Sec. 29. AS 29.45.700(d) is amended to read: 04 (d) A city that levies and collects sales and use taxes under (a) of this section 05 may not levy and collect a sales tax on a purchase made with (1) food coupons, food 06 stamps, or other types of allotments issued under 7 U.S.C. 2011 - 2036 (Food Stamp 07 Program); or (2) food instruments, food vouchers, or other type of certificate issued 08 under 42 U.S.C. 1786 (Special Supplemental Food Program for Women, Infants, and 09 Children). For purposes of this subsection, the value of a food stamp allotment paid in 10 the form of a wage subsidy as authorized under AS 47.25.975(b) is not considered to 11 be an allotment issued under 7 U.S.C. 2011 - 2036 (Food Stamp Program). A city  12 that levies and collects sales and use taxes under (a) of this section may not levy  13 and collect a sales or use tax on sales, rents, services, storage, use, or  14 consumption, of electronic gaming machines or electronic gaming. This 15 subsection applies to home rule and general law municipalities. 16  * Sec. 30. AS 05.15.690(44) is repealed. 17  * Sec. 31. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 REGULATIONS. Notwithstanding the effective date of secs. 1 - 30 of this Act, the 20 Department of Revenue shall begin the process under AS 44.62 (Administrative Procedure 21 Act) of adopting regulations to implement this Act so that the regulations can take effect 22 January 1, 2004, or as soon thereafter as is possible. 23 * Sec. 32. Except for sec. 31 of this Act, this Act takes effect January 1, 2004. 24 * Sec. 33. Section 31 of this Act takes effect immediately under AS 01.10.070(c).