Legislature(1993 - 1994)
04/10/1993 10:15 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 76(JUD):
An Act requiring regulations relating to pull-tabs
adopted by the Department of Commerce and Economic
Development to be consistent with the North American
Gaming Regulators Association standards on pull-tabs;
allowing permittees to contract with vendors to sell
pull-tabs on behalf of the permittee; restricting the
purchase of pull-tabs by certain persons; requiring the
sale of pull-tabs by vendors to be solely by a pull-tab
ticket dispensing machine; requiring receipts before
certain prizes may be paid; prohibiting distributors
from supplying pull-tabs to vendors; relating to
registration of vendors; requiring the licensing of
out-of-state manufacturers; allowing public or
nonprofit broadcasting stations to sell pull-tabs at
more than one location; preventing persons with certain
convictions from being involved in charitable gaming
activities as a permittee, licensee, vendor, person
responsible for an activity, fund raiser or consultant
of a licensee, or employee in a managerial or
supervisory capacity and providing exceptions for
certain persons whose convictions are at least 10 years
old; relating to multiple-beneficiary charitable gaming
permits and door prizes for charitable gaming;
requiring Department of Commerce and Economic
Development approval of contracts between charitable
gaming permittees and operators before gaming may
occur; limiting the amount of authorized expenses to a
percentage of adjusted gross income for a charitable
gaming activity; relating to the reporting and payment
of a percentage of the adjusted gross income by
operators to permittees; requiring Department of
Commerce and Economic Development approval of contracts
between permittees and operators; allowing the
commissioner of commerce and economic development to
issue orders prohibiting violations of state gaming
laws; relating to the authority of the commissioner of
commerce and economic development to suspend or revoke
a permit, license, or registration; relating to the
uses to which charitable gaming proceeds may be put;
relating to `political uses' and `political
organizations' as those terms are used in the
charitable gaming statutes; and providing for an
effective date.
Co-chair Pearce announced that CSSB 76(FIN) work draft "M"
was before the committee. Senator Jacko MOVED for adoption
of the "M" version of CSSB 76(FIN). Hearing no objections,
IT WAS SO ORDERED.
Co-chair Pearce, prime sponsor of SB 76, spoke to the bill.
She said the original bill excluded some felons from access
to gaming in Alaska in terms of acting as supervisory or
management personnel. Secondly, it prevented proceeds from
gaming to be used for direct contributions to political
candidates. She said the Department of Commerce & Economic
Development had requested some additions to the legislation.
She explained that the finance version would still include a
prohibition against using net proceeds to pay registered
lobbyists. It also added third party vendor language which
allows charitable organizations direct profitable
alternatives by placing their permits with profit operators.
Permittees who operate their own permits often double their
net proceeds. It allows these permittees to contract with
vendors to sell pull tabs for them. It also adds multiple
beneficiary permit language which allows the department to
issue permits authorizing two to six permittees to jointly
operate under one permit. This enables the permittees to
band together and allows them to hire a management team to
run their games that is answerable only to them. The
permittees would have the direct hire and fire authority.
The Department of Commerce & Economic Development also asked
to approve contracts between operators and permittees.
Language has been included that allows the department to
revoke a permit license or vendor registration upon proof
that insider information was given or acted upon. She said
that language has also been included that gives the
department discretion over mandating the use of ticket
dispensing machines for pull tabs. There is a requirement
that the department would license out of state manufacturers
of pull tabs. She also stated that Alaska Public Radio
Network had asked for a statewide on-line game. The
language in the bill clarifies the type of game APRN could
run. The proceeds from that game would then fund an
endowment that would eliminate the need for APRN to continue
receiving general funds from the state.
Co-chair Pearce said that a teleconference had been held on
SB 76 and two main concerns had been raised and addressed in
this legislation. First, because of problems with
dispensing machines, their use has been left to the
discretion of the department. Secondly, language in the
bill has been changed to say that direct payment from gaming
cannot be made to a registered lobbyist or a political
candidate.
Senator Kelly voiced his opinion that SB 76 allowed a
statewide lottery for public radio. JOHN HANSEN, JR.,
Gaming Manager, Department of Commerce & Economic
Development, said that this legislation would allow APRN to
sell a larger series pull tab game in more than one location
on a given day. It would also provide them with the
opportunity to have that game extended to include a drawing.
The provisions of the drawing are currently in the state
regulations.
Senator Kelly asked if this was not the same as authorizing
a statewide lottery. Mr. Hansen said that there were
significant differences between this legislation and a
statewide lottery, but confirmed that there had been a
similar game without the drawing that had been shut down
some years back.
PAUL FUHS, Commissioner, Department of Community & Economic
Development, said he wanted it to be clear that the Governor
was not in support of the section of the bill that applied
to the APRN gaming. Co-chair Pearce said that section had
been added in the Judiciary Committee by Senator Jacko.
Senator Kelly asked where the provision was that provided
for an endowment with the proceeds of the APRN game.
Senator Kelly voiced his concern that APRN would be the only
organization that could profit from such a statewide game.
Co-chair Pearce asked if Senator Kelly would be in favor of
APRN paying a portion of their proceeds into the general
fund. Discussion was had by Senators Kelly, Pearce and Mr.
Fuhs regarding the APRN game.
Commissioner Fuhs also pointed out that CSSB 76(FIN) was
different than the Judiciary CS in that it removes as third
party vendor outlets, retail and eating establishments. He
said that the department was strongly in support of that
action because gaming is an adult activity. Discussion was
had by Senator Kelly, Mr. Hansen and Mr. Fuhs regarding
vendors, operators, and the percentage of profit outlined in
the bill.
End SFC-93 #52, Side 2
Begin SFC-93 #56, Side 1
Senator Sharp asked for clarification regarding the adjusted
gross income in regard to gaming. Mr. Fuhs explained that
the adjusted gross income is the total amount of proceeds
minus prizes and taxes. After that, the overhead of running
the operation is subtracted, and according to this
legislation, only 70 percent of that can be subtracted as
overhead. Mr. Hansen said that there are two acceptable
accounting methods in the statutes. One method is the
actual cash method where every night sales are reported.
The other method is the ideal method, where a number of pull
tabs are considered for sale and the accounting is done
around that number. The only difference between the ideal
net and the adjusted gross are the taxes owed -- a three
percent pull tab tax and any federal income tax.
Senator Kelly MOVED amendment #1 that would add a new
section to read "Section 1. SHORT TITLE. This act may be
known as the Gaming Reform Act 1993" (copy on file). No
objections being raised, it was ADOPTED.
In answer to Senator Sharp, Mr. Hansen said that the percent
required by operators to pay permittees each quarter was
reduced from 15 to 10 percent for non-pull tabs. He said
that about 80 percent of the gaming activity is pull tab
activity. Of that remaining 20 percent about 17 percent is
bingo. In the past, many operations have used other non-
pull tab expenses to reduce pull tab income. The
percentages in this version of legislation are significant
because they no longer allow the losses of other activities
to offset the pull tab activity. Mr. Fuhs said that in the
some village operations 15 percent is too high. If bingo is
even one percent it helps a lot on the pull tab because they
can't write the losses off. He felt 10 percent was
reasonable.
Senator Jacko MOVED for passage of CSSB 76(FIN) from
committee with individual recommendations. Senator Kelly
OBJECTED. Co-chair Pearce announced that CSSB 76(FIN) would
be HELD in committee until April 12, 1993.
ADJOURNMENT
The meeting was adjourned at approximately 12:12 a.m.
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