Legislature(2021 - 2022)BELTZ 105 (TSBldg)
05/03/2021 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HJR14 | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 14 | TELECONFERENCED | |
| *+ | SB 130 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 130-ELECTRONIC PULL-TAB GAMES
1:49:53 PM
CHAIR COSTELLO announced the consideration of SENATE BILL NO.
130 "An Act relating to electronic pull-tabs."
1:50:19 PM
MELODIE WILTERDINK, Staff, Senator Mia Costello, Alaska State
Legislature, Juneau, Alaska, introduced SB 130 on behalf of the
Senate Labor and Commerce Committee. She read the following
sponsor statement into the record:
Traditional paper pull-tabs are multilayered 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.
MS. WILTERDINK showed the committee the number of used pull-tabs
from one bartender in a single shift and the number of used
pull-tabs created from a single bar in six weeks to illustrate
the paper waste that SB 130 has the potential to reduce or
eliminate by giving operators the option to switch to electronic
pull-tabs.
CHAIR COSTELLO asked her to talk about eliminating both the
potential for fraud and the administrative burden of parsing
through used pull-tabs.
1:53:28 PM
MS. WILTERDINK explained that the bar puts up the up-front
payment and the charity is responsible for delivering the pull-
tabs to the bar. She noted that many charities hire a third
party to do deliveries, which reduces the profit to the charity
by tens of thousands of dollars per year. Inside the bar, the
profit on individual pull-tabs is small but the volume is high.
The bartender counts out individual pull-tabs to customers and
they may accidentally give extras. This is a loss to the
charities but it is difficult to count and track individual
pull-tabs. She relayed stories of people taking a winning pull-
tab from one bar and slipping it in at another bar to receive
payment twice. She said the fraud can be onerous and the
responsibility falls on the bar owners who are putting up the
up-front cash to support the charities.
1:54:43 PM
SENATOR GRAY-JACKSON asked how a winning tab is paid.
MS. WILTERDINK replied that winnings are paid in cash and that
would not change with electronic pull-tabs.
SENATOR GRAY-JACKSON offered her understanding that other states
pay winnings from electronic pull-tabs with a check. She asked
whether winners, particularly large winners, would receive a
check in the mail.
MS. WILTERDINK deferred the question to representatives from the
Department of Revenue.
1:56:25 PM
CHAIR COSTELLO clarified that the pull-tab kiosks would still be
on the premises, not offsite. She noted that this bill is
different from the charitable gaming bill the committee
considered where individuals were able to donate to charities
from their home using their own electronic device.
1:57:07 PM
SENATOR MICCICHE joined the committee.
SENATOR GRAY-JACKSON said the explanation answered her
questions.
CHAIR COSTELLO turned to invited testimony on SB 130.
1:57:50 PM
ANGIE FRAIZE, Communications Officer, Anchorage Police
Department Employee Association (APDEA), Anchorage, Alaska,
testified in support of SB 130. She advised that since 2017,
APDEA has had a nonprofit arm called Anchorage Cops for
Community that works to connect to the community in non-law-
enforcement ways. In the first three years, they received close
to $100,000 in gaming money to help meet the mission to foster
and inspire community wellbeing through collaboration between
the community and law enforcement. She listed some of the
programs and projects and noted that they give to five main
charities every year if the funds are available.
MS. FRAIZE said SB 130 offers a way for community members to
responsibly engage in gaming and help nonprofits. Transitioning
to electronic pull-tabs brings this aspect of gaming up to
modern times and makes it easier for everyone.
2:01:04 PM
CHAIR COSTELLO opened public testimony on SB 130.
2:01:17 PM
JOHN POWERS, Tudor Bingo Center, Anchorage, Alaska, said he
opposes SB 130 right now because the gaming industry is evolving
so rapidly. He noted that there are several versions of
electronic pull-tabs and one looks and plays like a slot
machine. The play is very rapid and he believes this could lead
to overspending. He said he also supports maintaining the
existing payout limits. He said states that have adopted
electronic pull-tabs generally have specific rules and
guidelines and he would request the committee table this bill at
least this session and get input from industry leaders like
himself. He referenced previous testimony and said his company
also supports charities and they recycle all the used pull-tabs.
He also suggested imposing limits on the number of terminals or
machines in each facility to prevent a casino atmosphere. He
reiterated his opposition to SB 130 without further input from
people like himself.
CHAIR COSTELLO clarified that SB 130 provides the option, not a
mandate, for electronic pull-tabs. The regulation process will
address the fine details to ensure compliance with the existing
charitable gaming laws.
2:05:56 PM
SENATOR GRAY-JACKSON asked Mr. Powers if he had pull-tabs at his
bingo hall.
MR. POWERS answered yes.
SENATOR GRAY-JACKSON asked if he was aware that SB 130 offers a
choice of transitioning to electronic pull-tabs or continuing to
use paper.
MR. POWERS answered yes but he is concerned that this change
could lead to additional bad actors entering the industry in
Anchorage and throughout Alaska. He said the big issue is that
the charities suffer.
SENATOR GRAY-JACKSON thanked him for his email.
CHAIR COSTELLO returned to invited testimony and recognized Jack
Tripp.
2:08:31 PM
JACK TRIPP, former owner, The Viking, Juneau, Alaska, advised
that in the 32 years he owned the bar he ran a lot of pull-tabs
and helped many charities. He referenced the suggestion to wait
to ensure against bad actors and pointed out that the issue of
fraud in gaming has been discussed for 20 years. He mentioned a
catastrophic theft by bartenders that he once suffered and said
it almost put him out of business but the charity absorbed none
of the loss.
He said electronic pull-tabs are a way to safeguard against bad
actors. The play is encapsulated and there is no opportunity for
theft. He said it makes sense and it removes the human error. He
said people think pull-tabs generate a lot of money for the
vender but venders receives just 30 percent. The profit margin
on a game might be $300 so the vender would sell 3,000 tickets
to make $90 before paying the bartender. He reiterated that
removing the human time makes sense and will help clean up an
industry that probably could use a little clean up.
CHAIR COSTELLO asked if there were any unresolved concerns
related to pull-tabs or if this is the right time to move in
this direction.
MR. TRIPP replied he thinks it is the right time. He thinks that
people will like electronic pull-tabs and it will increase
gaming, which will help the charities. The only people who will
be hurt are the ones who opt to continue to use the paper pull-
tabs. He added that it is difficult to steal from a machine but
easy to steal from a pull-tab bin.
2:12:15 PM
CHAIR COSTELLO continue with public testimony.
2:12:26 PM
SANDY POWERS, representing self, said she operates Big Valley
Bingo in Willow, Alaska. She has been looking at electronic
pull-tabs for some time and her biggest concern is that the play
is very fast and people may have a tendency to overspend. This
has the potential to increase financial and societal problems.
Additionally, it might bring in the tourism industry and she
does not typically market to that industry. She acknowledged the
reduced potential for theft with electronic pull-tabs but
pointed out that businesses would still need to keep lots of
cash on hand because faster play means the vender will pay out
more money.
CHAIR COSTELLO asked Scott Henneman to respond to the concern
about the speed of play. She specifically asked whether play
speeds up with electronic pull-tabs and if that can be programed
into the device.
2:15:43 PM
SCOTT HENNEMAN, Vice President, Business Development and
Governmental Affairs, Grover Gaming, Omaha, Nebraska, testified
in support of SB 130. He advised that speed of play for
electronic pull-tabs can be regulated and programed into the
device. Speed of play has not been an issue in the business he
does in numerous states manufacturing both paper and electronic
pull-tab products. He noted that he has been involved in
charitable gaming for more than 30 years as a gaming regulator
and working in the private sector manufacturing paper and
electronic pull-tab products.
2:16:46 PM
MR HENNEMAN said e-tabs have modernized pull-tab gaming but they
have the same fundamental characteristics. The only difference
is that e-tab play is on a touch screen monitor with a digital
display. He said the characteristics are like the paper game
where there are finite and predetermined winners in a box of
pull-tabs. Each game has a predetermined payout and profit,
which is completely different and can be easily distinguished
from a slot machine that uses a random number generator to
determine its outcome. E-tabs are player-versus-player, which is
unlike a slot machine where it is player versus a machine.
Regarding what an electronic pull-tab might look like, he said
it could be a standalone kiosk, a handheld tablet, or a device
that allows players to play an electronic representation of the
paper pull-tabs. All hardware and software are tested and
approved by an independent laboratory to ensure that the games a
charity offers meet the state's particular rules and
regulations. He noted that the Department of Revenue would make
those determinations.
MR. HENNEMAN summarized that speed of play for e-tabs has not
been an issue in his experience. A number of states already use
them in fundraising activities. If approved, venders would have
the option of switching to the electronic product. It is not
mandatory but new players are familiar with and prefer to play
games with a visual digital play accompanied by a sound
stimulus. Charities do not have to store or manually add tickets
to machines in the electronic format, there is no physical
inventory to count, and monitoring is from an internet
connection. The electronic format makes scheduling, ordering,
and reporting to the regulatory agency more efficient.
Furthermore, all communication with the regulatory agency is
encrypted to maintain security and integrity.
2:21:40 PM
SENATOR GRAY-JACKSON asked if he currently uses electronic pull-
tabs in his business.
MR. HENNEMAN answered yes; Grover Gaming manufacturers the
electronic devices and the tickets that are loaded through the
internet to a controlled site at a bingo hall or a charitable
gaming site that sells pull-tabs. Responding to another
question, he clarified that he is a manufacturer as opposed to a
vender.
SENATOR GRAY-JACKSON asked if venders have said that electronic
play has resulted in players spending more money, potentially
more than they can afford.
MR. HENNEMAN replied it has not been an issue that people are
spending more with pull-tabs in the electronic format as opposed
to the paper format. He cited the sales in the state of
Minnesota as an example. Paper pull-tabs accounted for $1.4
billion in sales compared to $600 million in the electronic
format.
2:23:29 PM
SENATOR STEVENS joined the committee.
CHAIR COSTELLO asked if any states that offer both options saw
electronic sales become a higher percentage of sales. She also
asked if his experience is that less revenue is coming from the
electronic format than the paper format.
MR. HENNEMAN replied it depends on the state but Grover Gaming
has worked to ensure that electronic pull-tabs do not
cannibalize existing products like paper pull-tabs and bingo.
There is a social aspect to the paper products but that does not
disappear with the electronic format. Players can take the
tablet to their table or sit at a booth or stool and play. He
said Alaska is in the top six markets of paper pull-tabs in the
country but the player base in aging. He said he believes the
state will see more incremental sales if it offers electronic
pull-tabs as an option. He reiterated that it depends on the
state but some states that offer both options have seen an
increase in paper pull-tab sales.
2:26:39 PM
NANCY DECHERNEY, Executive Director, Juneau Arts and Humanities
Council, Juneau, Alaska, stated that she was calling to support
SB 130. Nonprofits benefit from pull-tab gaming but small
businesses find it cumbersome to run these gaming operations. SB
130 offers the option to use electronic pull-tabs, which she
believes will alleviate the administrative burden. The
electronic format will be easier to manage, easier to track, and
perhaps make more money for nonprofits in the state.
2:27:59 PM
MACK MEINERS, representing self, Juneau, Alaska, stated that he
has been involved in charitable gaming for over 20 years in
various locations throughout the state. He agreed that there has
been some trouble in bars with misplaced and lost tickets but
Mr. Tripp clarified that the vender pays for any losses. He
emphasized the need for strict quality control.
MR. MEINERS said he believes Grover Gaming offers a good
opportunity to clean up the game and provide a choice of
electronic or paper play. He said he supports the option of
using electronic pull-tabs and he believes it will increase the
opportunity to raise money for charities. That is the point.
2:33:12 PM
JOHNATHON GREEN, Attorney, Kempell, Huffman, and Elise, Wasilla,
Alaska, advised that his firm was hired to analyze whether SB
130 would expand requirements for the state to negotiate with
tribal entities for class III gaming. He said the short answer
is no. He offered to elaborate if there were questions.
CHAIR COSTELLO polled the members and determined that further
elaboration was not necessary.
2:34:39 PM
DAVID LAMBERT, representing self, Fairbanks, Alaska, stated that
he is a charitable gaming operator who has raised funds for over
30 nonprofits. He pointed out that over the last 30 years,
everything associated with charitable gaming has gone up but a
$1 pull-tab still costs just $1. He said it is important to
offer options to attract a new player base and that includes
electronic pull-tabs. He suggested addressing the concern about
casinos by limiting the number of machines per location. He said
modernizing the game by offering electronic pull-tabs as an
option for players would resolve the problem with backlogs on
paper pull-tabs.
SENATOR STEVENS asked what number of machines per location he
would recommend.
MR. LAMBERT said he believes six machines per location would be
reasonable because each machine can hold 20-30 games.
CHAIR COSTELLO asked Ms. Mitchell with the Department of Revenue
whether SB 130 would expand the application process for somebody
to sell electronic pull-tabs.
2:38:05 PM
KATRINA MITCHELL, Gaming Manager, Tax Division, Department of
Revenue, Juneau, Alaska, asked if the question was whether
adding a new game type such as electronic pull-tabs would
require a change in the application process.
CHAIR COSTELLO clarified that she was relaying Mr. Lambert's
concern about too many devices in one location creating a casino
atmosphere.
MS. MITCHELL answered that a licensee is not limited in the
number of paper pull-tab games he or she may offer at one time.
She supposed that limiting the number of electronic pull-tab
games would require a change in the statute or regulations.
CHAIR COSTELLO said she did not believe there was interest in
any limitations because the free market is providing the limits.
She asked if the administration had a position on the
legislation.
2:39:56 PM
COLLEEN GLOVER, Director, Tax Division, Department of Revenue,
Anchorage, Alaska, said the administration does not have a
position on SB 130.
CHAIR COSTELLO asked if she believes that electronic pull-tabs
would reduce record keeping errors.
MS. GLOVER answered that DOR does not have enough information to
make a determination, but they are have reached out to Grover
Gaming and other states that have passed similar legislation to
understand how this would work and to confirm that the
electronic format would be more secure.
2:40:51 PM
At ease
2:43:01 PM
CHAIR COSTELLO reconvened the meeting.
2:43:10 PM
CHAIR COSTELLO closed public testimony on SB 130.
2:43:18 PM
SENATOR REVAK moved to report SB 130, work order 32-LS0811\A,
from committee with individual recommendations and attached
fiscal note(s).
CHAIR COSTELLO found no objection and SB 130 was reported from
the Senate Labor and Commerce Standing Committee.