Legislature(2021 - 2022)SENATE FINANCE 532
05/12/2021 09:00 AM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 130 | TELECONFERENCED | |
| += | HB 69 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 130
"An Act relating to electronic pull-tabs."
9:04:01 AM
SENATOR MIA COSTELLO, SPONSOR, introduced the legislation.
She stated that the bill was a committee bill from the
Senate Labor and Commerce Committee. She remarked that the
committee had focused on modernizing some of the statutes.
9:05:17 AM
MELODIE WILTERDINK, STAFF, SENATOR MIA COSTELLO, read the
Sponsor Statement (copy on file):
Traditional paper pull-tabs are miltilayered tickets
with perforated sections that when "pulled" by tearing
the perforation, reveal symbols which indicate whether
the player has won. Pull-tab gaming permits are
exclusively available to charities in Alaska for
fundraising, and Alaska charities have benefitted by
receiving donations through pull-tab games.
Senate Bill 130 would allow pull-tab operators the
choice of providing paper pull-tab tickets or
electronic pull-tab tickets, which are accessed onsite
through a kiosk or tablet device. Electronic pull-tabs
are played in the same manner as paper pull-tabs, but
there are no physical tickets for operators to count,
deface, or store. Benefits of electronic pull-tabs
include increased security, easier tracking and
reporting, and reduced fraud. Modernizing pull-tabs
makes it less onerous for small businesses to become
pull-tab operators in support of local charities.
9:06:56 AM
Ms. Wilterdink discussed the Sectional Analysis (copy on
file):
Sec. 1 AS 05.15.690 Page 1, Lines 3-8
Amends AS 05.15.690(38) to insert the phrase "or
electronic representation of a card" when describing
pull-tab games.
Sec. 2 Page 1, Lines 9-12
Amends uncodified law to add a new section which
allows the Department of Revenue to adopt regulations
necessary to implement the Act.
9:07:30 AM
Senator Wielechowski wondered whether there was somewhere
in the title that limited the location of where the games
could be played.
9:07:46 AM
Ms. Wilterdink replied that the bill would not change any
other laws surrounding pull tab games. Electronic games
would have to be played on site of a pull tab
establishment.
9:08:16 AM
Senator Wielechowski felt that the description was broad.
He clarified that a person would not be able to use an
iPhone to gamble outside of an establishment.
9:08:40 AM
Ms. Wilterdink replied in the affirmative.
9:08:52 AM
Senator Wilson wondered how the gaming establishment set
probabilities on the games.
9:09:04 AM
Ms. Wilterdink replied that the pull-tabs were currently a
fixed run, with a certain number of winners. She said that
approximately 75 percent of what was paid in was paid back
out.
9:09:58 AM
Senator Wilson asked whether the vendor would set the
probability of the winnings. He remarked that he may have a
conflict of interest as he owned stock in an electronic
gaming vendor.
9:10:39 AM
Ms. Wilterdink replied that that probability was not up to
operators and vendors. She said that pull tab manufacturers
in the state had regulations set by the Department of
Revenue. She said that by the time the pull tabs reached
the vendors the decision on winners had been well
established.
9:11:27 AM
Senator von Imhof surmised that currently a person could
only play for as long as they had cash to spend. She
assumed that electronic playing would use a credit card and
wondered whether limits would be placed on spending.
9:12:23 AM
Ms. Wilterdink responded that the electronic sales would
still use cash. Cash would be given to the vendor who would
then upload the game.
9:13:18 AM
Senator von Imhof understood that the vendor would accept
the cash and load the electronic game to a device. She
wondered whether the games could be hacked and might not be
more secure than paper.
9:14:21 AM
Senator Olson wondered how the electronic games would be
delivered to rural areas of the state.
9:14:37 AM
Ms. Wilterdink thought that the electronic gaming might
make access to playing easier for rural Alaskans.
9:15:37 AM
Senator Olson understood that someone without internet
service would be unable to participate.
9:15:46 AM
Ms. Wilterdink deferred to an invited testifier.
9:15:53 AM
Senator Olson wondered how gambling addicts could be
protected from the electronic games.
9:16:17 AM
Ms. Wilterdink thought that having to pay cash to have the
games loaded to a device could help limit spending.
9:16:32 AM
Senator Wielechowski noted that current statute required
that each series of pull tabs manufactured in the state
needed to be sealed and have a serial number.
9:17:12 AM
Co-Chair Bishop interjected that there were members of the
executive branch online to answer questions.
9:17:44 AM
Ms. Wilterdink deferred to the Department of Revenue (DOR).
9:18:23 AM
COLLEEN GLOVER, TAX DIVISION DIRECTOR, DEPARTMENT OF
REVENUE, ANCHORAGE (via teleconference), relayed that the
department was working with the Department of Law to
determine how the bill could marry existing statute. She
stated that there was existing detail in statue for paper
pull tabs but not much detail in regulations. She believed
that it could be cleaner to have a separate set of statutes
for electronic pull tabs.
9:20:00 AM
Senator Wielechowski wondered whether there was a
difference between the definition of a pull tab and a
pull tab game.
9:20:27 AM
Ms. Glover replied that in statute there was only a
definition for pull tab game and not a pull tab ticket.
9:20:43 AM
Co-Chair Bishop asked about the tax on charitable gaming in
regard to the state treasury.
9:21:08 AM
Ms. Glover replied that currently there was a 3 percent
pull tab tax, and associated fees and licenses with all
game types, which brought in approximately $2.5 million per
year to the state treasury.
9:21:38 AM
Co-Chair Bishop noted that there was a box of receipts
before the committee. He understood that an argument for
electronic pull tabs was that they would be more efficient
to handle for the Tax Division and could help eliminate
fraud. He requested an estimate on how much lost revenue
and fraud the state experienced due to paper pull tabs.
9:22:21 AM
Ms. Glover could not speak to fraud. She said that the
department had reached out to other states who had
implemented electronic pull tabs with questions concerning
effectiveness.
9:23:52 AM
Co-Chair Bishop OPENED invited testimony.
ANGIE FRAIZER, COMMUNICATIONS OFFICER, ANCHORAGE POLICE
DEPARTMENT EMPLOYEES ASSOCIATION, ANCHORAGE (via
teleconference), spoke in support of the bill. She stated
that charitable gaming was important for fundraising
efforts made by her organization. She thought that moving
to electronic gaming would benefit charitable fundraising
in the state.
9:26:56 AM
JACK TRIPP, OWNER, THE VIKING, JUNEAU (via teleconference),
testified in support of the legislation. He believed that
electronic pull tabs would be more secure than paper and
would eliminate human error.
Co-Chair Bishop OPENED public testimony.
9:29:19 AM
MACK MEINERS, SELF, JUNEAU (via teleconference), testified
in support of the bill. He believed that electronic games
would increase play and accountability. He thought that
rules should be put in place and suggested a trial run.
9:31:58 AM
SANDY POWERS, BIG VALLEY BINGO, WILLOW (via
teleconference), felt that the legislation needed to
protect the charities and businesses and benefitted the
economy. She spoke of the state limitations on gaming
expenses. She express concern that out of state companies
that provided the games to vendors could require 50 percent
of the profits, leaving little behind for the state and
Alaskan charities. She spoke of the changes that would be
needed to current statute. She worried that outside gaming
companies could have influence over DOR and what was
written into the new electronic gaming statutes. She agreed
that electronic games would be more secure.
9:35:45 AM
KATHY FITZGERALD, SELF, FAIRBANKS (via teleconference),
testified in support of the legislation. She felt that the
electronic games would bring in a new and younger
demographic to the industry. She thought that electronic
gaming would be more efficient and secure. She spoke of
illegal gambling that was occurring on Facebook.
9:38:49 AM
Senator Wilson commented that notification and letters had
been issued to those gambling on Facebook by Alaska State
Troopers.
9:39:34 AM
Senator von Imhof stated that in 2018, gaming brought in
$376 million in total gross receipts; $385 million in 2019.
She said that there were 1,101 permit holders in the state,
28 percent of which were in rural Alaska, which meant that
28 percent of $285 million was brought in from rural
Alaska. She noted that rural Alaska had the highest sales
tax in the state and hosted the highest cost of goods and
services. She worried that the electronic games would be
another way to separate people in the area from their
money.
9:41:15 AM
Co-Chair Bishop CLOSED public testimony.
9:41:18 AM
Senator Wielechowski asked about the percentage breakdown
of each dollar raised by pull tab gaming.
9:41:57 AM
Ms. Glover deferred to Katrina Mitchell.
9:42:22 AM
KATRINA MITCHELL, AUDIT SUPERVISOR, TAX DIVISION, JUNEAU
(via teleconference), said that of the gross receipts taken
in, prized were first paid out. She stated that potential
profits were know to vendors upon purchase of the game. She
explained once the prizes were extracted, whatever was left
was adjusted gross income. She relayed that according to
statute no more than 70 percent of adjusted gross income
could go toward paying gaming related expenses. The other
30 percent, or net proceeds, was the amount of profit that
went to charities and was reinvested into communities
9:44:08 AM
Senator Wielechowski surmised that of the gross receipts 70
percent went to the pull tab operator in terms of gaming
expenses and then 30 percent went to charity.
9:44:21 AM
Ms. Mitchell replied in the affirmative. She stated that
the statute required that a minimum of 30 percent of
adjusted gross income would be paid to the organization
holding the permit.
9:44:42 AM
Co-Chair Bishop requested a hypothetical scenario involving
one charity and one game.
9:44:55 AM
Ms. Mitchell explained that a vendor would buy a game from
licensed pull tab manufacturer. Then the game is sold to an
organization authorized to sell pull tabs under the
Charitable Gaming Act. The vendor collects 3 percent tax on
the ideal net of the game, which is remitted to the state.
Finally, the game is sold to customers.
9:47:11 AM
Co-Chair Bishop wondered how much money would go to
charities.
9:47:31 AM
Ms. Mitchell replied that 30 percent of the adjusted gross
income would be remitted to the charity.
9:47:57 AM
Senator Costello clarified the previous testimony that 50
percent of the money would go outside of the state economy.
She reminded that the remaining dollars still went to
Alaskan communities. She also noted that of the $376
million in gaming dollars only a fraction was from pull
tabs.
9:48:53 AM
Ms. Wilterdink said that the state collected $2.7 million
from pull tabs in the state. She noted that there were only
19 pull tab operators in the state, but many vendors such
as bars and liquor stores.
9:49:51 AM
Senator Wielechowski looked at the gross receipts and asked
whether the 70 percent in expenses included any profit for
the bar or vendor.
9:50:06 AM
Ms. Wilterdink replied in the affirmative. She added that
the amount was small and noted that sometimes bars could
suffer losses.
9:50:48 AM
Senator Costello thought Grover Gaming could discuss
tracking paper pull tabs versus electronic pull tabs.
9:51:15 AM
SCOTT HENNEMAN, VICE PRESIDENT, GROVER GAMING, NORTH
CAROLINA (via teleconference), discussed purchasing tickets
from manufacturers. He clarified that the bill offered
additional security. He spoke to the ease of running
reports using the electronic system. He said that no credit
cards were used for charitable gaming in the United States.
He was not sure about the 50 percent of funds leaving the
state. He
9:53:54 AM
Senator Wilson asked whether the machines were sold or
leased.
Mr. Henneman said that in many cases, machines were
donated. He stated that occasionally they were leased. He
relayed that the bar generally had to buy a dispensing
device.
9:54:59 AM
Senator Wilson wondered who paid the sales tax to the
state.
Ms. Wilterdink replied that the proceed fees were paid by
the charity. She deferred to DOR.
9:56:08 AM
Co-Chair Bishop discussed housekeeping.
9:56:37 AM
Co-Chair Stedman shared the anticipated afternoon schedule
and work that the Senate Finance Committee would conduct
during the 1PM meeting.
9:59:01 AM
Senator Olson wondered whether the afternoon conversation
would pertain to the PFD amount.
9:59:11 AM
Co-Chair Stedman responded that the presentation would be
more of a high-level overview to offer members food for
thought to start formulating policy positions.
SB 130 was HEARD and HELD in committee for further
consideration.