Legislature(2025 - 2026)BELTZ 105 (TSBldg)
04/28/2025 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB156 | |
| SB49 | |
| SB103 | |
| SB170 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 156 | TELECONFERENCED | |
| += | SB 49 | TELECONFERENCED | |
| += | SB 103 | TELECONFERENCED | |
| += | SB 170 | TELECONFERENCED | |
SB 170-GAMING; ELECTRONIC PULL-TABS
1:58:08 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 170 "An Act relating to gaming;
relating to bingo; relating to pull-tabs and electronic pull-
tab systems; and providing for an effective date."
1:58:40 PM
KONRAD JACKSON, Staff, Senator Jesse Bjorkman, Alaska State
Legislature, Juneau, Alaska, provided a brief recap of SB 170 on
behalf of the sponsor. He said that SB 170 adds electronic pull
tabs to Alaska's charitable gaming statutes, updates rules for
gaming participants (excluding players), adjusts prize payouts
and bingo operations, and grants the department authority to
investigate legal and illegal gaming activities.
1:59:48 PM
CHAIR BJORKMAN stated that SB 170 is essential to help
nonprofits and charities continue benefiting from charitable
gaming, as rising costs have reduced their fundraising from
paper pull tabs. He said allowing electronic pull tabs would
restore their ability to raise funds for community programs and
ensure equal access and maximum benefit for Alaska's charitable
groups.
2:00:51 PM
CHAIR BJORKMAN announced invited testimony on SB 170.
2:02:13 PM
STEVE BORCHERDING, President, Whaler Casino Supplies (Whaler),
Anchorage, Alaska, testified by invitation on SB 170 and stated
that with 36 years in Alaska's gaming industry, including 21
years managing the state's largest charitable gaming operation,
expressed, he is in full support of electronic pull tabs. He
noted the success of electronic bingo in Alaska. However, he
said is opposing SB 170 arguing it has shifted from focusing on
e-tabs to including provisions that would fundamentally alter
the gaming industry, benefit only a few, and ultimately harm
charities. He stated that if SB 170 passed, it could force his
long-standing distributorship, Whaler Casino Supply, which
employs 12 people, out of business.
2:06:03 PM
MR. BORCHERDING explained that SB 170 includes provisions
preventing a distributorship like Whaler Casino Supply from
being owned by Arrow International (Arrow). He argued that the
restriction is unnecessary and unfair. He said if Arrow
International wanted to monopolize Alaska it could have; instead
it invested heavily and expand investments if electronic pull
tabs are permitted. SB 170's "must-sell" and custom game
restrictions would also harm long-standing local distributors
and charities by eliminating innovation and equalizing
businesses without regard for earned experience. He opined there
are unseen issues and he is willing to talk with legislators
when there is more time. He urged lawmakers to remove the
provisions that would end his company's long history and
commitment, emphasizing their company's long history and
commitment to Alaska's charitable gaming industry.
2:11:11 PM
NAM YANG, Employee, Whaler Casino Supplies, Anchorage, Alaska,
testified by invitation on SB 170 and stated that as an 11-year
employee of Whaler Casino Supply she opposed SB 170. She said
provisions in the bill threaten the jobs of long-term Alaskan
employees who rely on the company to support their families. She
described Whaler as a second family, highlighting coworkers with
personal hardships who would be devastated by job losses. She
credited Arrow International's ownership with providing
employees health insurance, childcare assistance, and financial
stability. She urged legislators to oppose SB 170 to protect
local Alaskans and preserve their livelihoods.
2:16:35 PM
JERRY LEWIS, Operator, Northern Lights Bingo, Anchorage, Alaska,
testified by invitation on SB 170 and stated that last year,
Alaska charities generated over $400 million from charitable
gaming, with operators earning $161 million, over 40 percent of
the total. Vendor relationships contributed just under 14
percent. He argued that the 35 percent cap for manufacturer game
charges would double costs compared to the current 30 percent
(including a proposed 27 percent limit plus 3 percent tax). He
recommended limiting electronic pull tabs in bars to four,
reducing vendor compensation to 15 percent instead of the
proposed 20 percent, and learning from other states to avoid
mistakes, stressing that Alaska's charitable gaming model has
been highly successful and should not be disrupted.
2:20:58 PM
DAVID LAMBERT, Owner, Lotto Alaska, Fairbanks, Alaska, testified
by invitation on SB 170 and read the following:
[Original punctuation provided.]
I have been deeply involved in charitable gaming in
Alaska for over 35 years, encompassing roles as a
permittee, vendor, and operator. I hold the
distinction of having held a State of Alaska operator
license longer than anyone else in the state. Through
my operations, I currently contract with over 140 non-
profit organizations, representing more than 13.5
percent of all active charitable gaming permits in
Alaska. Furthermore, over 12.5 percent of all
charitable gaming proceeds provided to nonprofits in
the state have come through my efforts.
I share this extensive background to emphasize my
comprehensive understanding of charitable gaming and
its significant impact on nonprofit permittees. I am
writing to express my support for the proposed
legislation, recognizing that while it may not be
perfect, it represents a necessary step forward. As
you deliberate, I urge you to prioritize the best
interests of Alaska's nonprofits.
Nonprofits in our state are facing an unprecedented
reliance on charitable gaming funding. Historically,
most of the revenue has been generated through paper
pull-tab sales. However, the demographic that
traditionally purchased these paper pull-tabs is
aging, and we are seeing a significant decline in
sales. From 2023 to 2024, our paper pull-tab sales as
an operator decreased by 19 percent. The self-directed
nonprofits with their own pull-tab stores, including
fraternal experienced an even steeper decline of over
30 percent during the same period. Tragically, many of
these self-directed stores have been forced to close
due to economic unsustainability.
2:23:20 PM
MR. LAMBERT continued with his testimony of SB 170:
Consider that a dollar pull-tab cost one dollar 35
years ago, and it remains one dollar today. In
contrast, operations cost has risen sharply. The cost
of paper pull-tabs has increased from less than a
penny apiece to over six cents during that same
timeframe. Wages have more than tripled since 1990,
and rents have more than doubled. These rising costs
indicate that paper pull-tabs are likely to become
obsolete due to economic pressures alone. Therefore,
if a price percentage is to be imposed on electronic
pull-tabs, a similar price percentage must also be
applied to paper pull-tabs to ensure fairness. For
instance, our AMVETS games, once factoring in game
costs and state tax, cost about 36 percent of the idea
net. Just a few years ago the same AMVETS game was
only 18 percent of the ideal net. That's 100 percent
increase. In our North Pole store, the additional 5.5
percent sales tax further erodes proceeds, leaving
insufficient funds for operating costs.
Drawing on my experience as the primary member in
charge of charitable gaming permits for the Alaska Dog
Mushers Association and the Fairbanks Junior Dog
Musher Association in the early 1990s, I understand
the operational dynamics involved when permittees
utilize various vendor locations and charitable gaming
operators. Having transitioned to an operator 26 years
ago, I have been actively involved in legislative and
regulatory changes throughout the years.
It is crucial to recognize the necessity of
modernizing the charitable gaming industry. The
fundamental question before you are whether this
legislation will primarily protect the nonprofits and
ensure their continued access to crucial funding, or
if it will disproportionately benefit pull-tab
distributors and large bingo halls. Distributors
appear to be advocating for tablets exclusively, a
strategy that statistics from other states suggest is
insufficient to significantly reduce paper pull-tab
sales. Without a cap on the price of paper pull-tabs,
their current pricing trend will render them obsolete
regardless. Representatives of large bingo halls are
also lobbying for tablets only, seemingly to eliminate
competition from fraternal and self-directed
nonprofits and to integrate pull-tab play seamlessly
with their existing electronic bingo offerings. This
approach is not in the best interest of the nonprofits
who depend heavily on charitable gaming revenue.
2:26:46 PM
MR. LAMBERT continued with his testimony of SB 170:
There should be no restrictions on the type of
electronic pull-tab units permitted. They all serve
the same fundamental purpose; the only difference lies
in screen size. Just as the Apple II Plus, the
cutting-edge technology when the charitable gaming
laws were initially written in 1990, is now outdated,
so too will any arbitrary limitation on screen size
become irrelevant. We utilize various screen sizes in
our daily lives phones, laptops, desktop computers
all serving similar functions. The proposed limitation
to tablets only should be removed. The passage of this
legislation is vital for nonprofits. I would strongly
prefer to see this legislation move out of committee
for further consideration, allowing for necessary
corrections along the way, rather than risking delays.
Please remember your primary responsibility is to
protect the funding source for the nonprofits, not
solely the interests of pull-tab distributors or large
bingo halls.
Furthermore, this legislation includes updated
language that aims to modernize and clarify the
charitable gaming laws for 2025. In 1990, all
operations were paper based, whereas current state
reporting requirements mandate online submissions.
Existing legislation, requiring contract submissions
via certified mail, is now impractical as the
department no longer processes certified mail in a
meaningful way, with all systems moving towards
electronic processing. It is time to move forward and
permit E-TABS without arbitrary restrictions on screen
size. If you believe such restrictions are justified,
I will challenge you to limit your own staff to
tablets only, discarding all larger monitors.
2:29:33 PM
MR. LAMBERT continued with his testimony of SB 170:
A second critical issue within the legislation,
perhaps more appropriately addressed by the Finance
Committee, concerns the lack of accountability this
legislation would create for vendors. The current
system requires vendors to pay for all paper pull-tabs
upfront. Because the nonprofits are paid upfront
vendors are not required to submit state reports, have
an operating bond nor are they required to have a CPA
review. This established practice ensures financial
responsibility and should be maintained for electronic
pull-tabs. However, the proposed legislation would
eliminate upfront costs for vendors, grant them access
to unlimited pull-tabs, and allow them to remit
payment to nonprofits at their discretion, with no
clear timelines or safeguards.
In contrast, operators are currently required to
maintain a bond, purchase pull-tabs upfront, provide
monthly reports to nonprofits, submit extensive
quarterly reports to the Department of Revenue's
Charitable Gaming Division, and undergo an annual CPA
review. The section of the proposed that alters the
relationship between vendors and permittees should be
removed, maintaining the same requirements for
electronic pull-tabs as are currently in place for
paper pull-tabs. As currently drafted, this aspect of
the legislation is not workable. While some
manufacturers suggest that these issues can be
resolved through regulation after passage, there is no
clear understanding of how a workable system would be
implemented.
The current language essentially proposes giving bars
unlimited access to electronic pull-tabs at no upfront
cost, with the hope that nonprofits will eventually be
paid, even without a system for them to track what
they are owed or for the state to ensure
accountability through mandatory reporting. Most bar
owners lack the accounting expertise to manage
charitable gaming finances effectively.
2:31:41 PM
MR. LAMBERT continued with his testimony of SB 170:
Requiring vendors to pay for the games upfront, as is
the current practice, would eliminate the need for
this complex and potentially flawed system. If this
provision proceeds, a minimum requirement should
include mandatory monthly and quarterly reports, an
annual CPA review, and mandatory suspension of the
liquor license for non-compliance. As mentioned, this
matter likely warrants more detailed discussion within
the Finance Committee.
Charitable gaming in Alaska was established with the
primary goal of benefiting nonprofits. Please remember
that this guiding principle should remain central to
any updated legislation, ensuring continued funding
for these vital organizations. With many other funding
sources diminishing, I am receiving numerous daily
inquiries from nonprofits seeking assistance with
operating their charitable gaming permits. The
existing laws can be complex, and we must avoid making
decisions that would limit their fundraising capacity
based on the preferences of a few. The proposed
limitation to tablets only is likely to be the most
contentious aspect of this legislation. Unless
significant changes are made, I would still urge you
to move this legislation out of committee, as the
nonprofits are in urgent need of an updated framework.
2:33:50 PM
SANDY POWERS, Owner, Big Valley Bingo, Wasilla, Alaska,
testified by invitation on SB 170 and agreed that a 35 percent
distributor/manufacturer share is excessive, advocating for a 27
percent cap plus a 3 percent state tax, aligning with the
Minnesota tablet model. She opposed large slot-machine-style
cabinets, favoring smaller, successful electronic tablets. She
expressed concern about deleting [AS 05.15.115(c)] in Section
49, which would obscure operator transparency. She emphasized
strict limits on pull tab locations serving alcohol to protect
standalone stores and maintain competitive balance.
2:38:12 PM
MARY MAGNUSON, Vice President, Government Affairs, Arrow
International, Cleveland, Ohio, testified by invitation on SB
170 and stated that Arrow, a nearly 60-year-old company serving
only the charitable gaming industry, supports electronic pull
tabs based on experience from 12 other states, that have boosted
charity revenues and sustainability. She said Arrow purchased
Whaler Casino Supply in 2023 to invest in Alaska, grow the
company, and support their employees. She emphasized Arrow is
not creating a monopoly and allows distributors to buy from
multiple manufacturers. She raised concern with provisions found
in SB 170 on page 10, line 19-26, prohibiting manufacturers or
their relatives from holding distributor interests, arguing the
provisions would unfairly restrict their operations and harm
charitable gaming in Alaska.
2:43:14 PM
MS. MAGNUSON argued that SB 170 is problematic because it
singles out Arrow based on misinformation, requiring divestment
of Whaler Casino Supply despite a multi-million-dollar
investment and two years of stable operations. She said
independent legal review found the provision likely
unconstitutional, violating equal protection and the Fifth
Amendment by effectively taking private property without just
compensation. She emphasized that Arrow's investment benefits
employees and the business, and that prohibiting manufacturer
ownership of distributors would send a negative message to
future investors in Alaska.
2:47:44 PM
MS. MAGNUSON urged careful review of the provision, suggesting
two remedies: either remove the provision entirely to resolve
constitutional and fairness issues or make the provision
prospective, applying only to future acquisitions, thereby
protecting Arrow's existing investment while complying with U.S.
and Alaska constitutional requirements.
2:48:40 PM
CHAIR BJORKMAN asked if there are other states that do not allow
manufacturers to own distributors.
2:48:47 PM
MS. MAGNUSON answered there are two, Minnesota and North Dakota.
She said in North Dakota and Minnesota, regulators have
suggested eliminating distributors from electronic pull tab
distribution, allowing manufacturers to handle distribution
directly. While paper products still require distributors,
electronic products enable a different structure, and both
states have considered combining manufacturer and distributor
roles.
2:49:50 PM
CHAIR BJORKMAN asked if there is value in provisions that
protect Alaska owned distributors.
2:49:59 PM
MS. MAGNUSON answered that there is no issue with manufacturers
owning or being required to use distributors, though the problem
lies in prohibiting ownership. She said the main concern is that
SB 170 applies retroactively, forcing Arrow to divest after
already investing heavily in purchasing the Whaler.
2:51:07 PM
CHAIR BJORKMAN stated that the priority is maximizing value for
charities and protecting Alaska-based businesses. He
acknowledged tension between out-of-state manufacturers and
local distributors, noting the intent of SB 170 is to prevent
monopolies and ensure fair economic choices. He expressed
willingness to explore solutions that protect Alaska's interests
while maintaining a fair regulatory structure for charitable
gaming.
2:53:37 PM
SENATOR DUNBAR stated that SB 170 does not violate state or
federal equal protection provisions, as it falls under rational
basis review and regulates commerce. He noted that similar
restrictions on vertical integration exist in industries like
cannabis to prevent monopolies. He said he was unaware of
Arrow's purchase of the Whaler until the hearing and emphasized
that it does not affect the committee's work. He added that he's
not sure if he supports the provision, stating that claims of
equal protection violations are a misreading of the law.
2:55:31 PM
MS. MAGNUSON replied that the letter from Holland and Hart
argues the issue is not about the state's authority to regulate
but that the law appears to single out one company for special
treatment, warranting a higher level of judicial scrutiny,
especially since it would affect an existing investment. She
clarified that Arrow does not intend to eliminate distributors
and values their role in the industry, but SB 170 would force
the company to divest its ownership of Whaler, causing
significant financial harm. She said this would reduce, not
increase, competition in Alaska by leaving only two distributors
instead of three.
2:58:16 PM
SENATOR GRAY-JACKSON asked if divesting ownership of Whaler is
her only concern.
2:58:30 PM
MS. MAGNUSON replied that Arrow cannot support SB 170 as written
due to major concerns, especially the ownership restriction.
Other issues include the requirement to sell to all distributors
without exceptions for exclusive games and the limitation to
tablet-only devices, which she said restricts charities' choice.
She noted that while SB 170 contains positive elements, several
provisions need improvement.
2:59:47 PM
CHAIR BJORKMAN asked whether Arrow has a position on the
proposed 35 percent cap for the share payable to manufacturers
and whether the company supports lowering that cap.
3:00:06 PM
MS. MAGNUSON replied that Arrow can accept the 35 percent cap
proposed in SB 170, noting that the effective rate is closer to
27 percent once the 3 percent state tax and local taxes are
included. She emphasized that early implementation requires
substantial upfront investment in equipment and software, making
lower caps difficult initially. Minnesota's recent 25 percent
cap came after 13 years of market maturity and was intended to
offset high charity taxes, which are much greater than in
Alaska.
3:03:09 PM
CHAIR BJORKMAN asked how the flow of money works for electronic
pull tabs in Minnesotaspecifically, how bars receive the games,
collect revenue, and return funds to charities and on what
timeline.
3:03:46 PM
MS. MAGNUSON replied that in Minnesota and North Dakota,
charities are responsible for operating pull tabs, while bars
handle day-to-day management. She said charities provide the
starting bank, and bars use it to accept payments and pay
prizes. Electronic systems allow charities to track transactions
in real time through a portal. Charities must collect the money
within about five days or once $2,000 is reached. She said in
North Dakota, machines have locked bill acceptors, so bars only
pay prizes. While theft occasionally occurs, electronic tracking
makes identifying and resolving losses much easier.
3:07:38 PM
CHAIR BJORKMAN emphasized the importance of clear electronic
point-of-sale systems and that charitable nonprofits need
support from electronic gaming. He said the goal is to advance a
widely supported bill while avoiding provisions for cabinet-
style machines resembling slot machines, which many oppose. SB
170 was crafted to reflect input and successful models from
other states. He acknowledged industry concerns about
monopolistic control and stressed the need to refine details in
future hearings to ensure a workable, durable bill with broad
support.
[CHAIR BJORKMAN held SB 170 in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB170 Public Testimony-Letter-Bill Breslo 04.22.25.pdf |
SL&C 4/28/2025 1:30:00 PM |
SB 170 |
| SB156 Public Testimony-Email-Harry Moore 04.14.25.pdf |
SL&C 4/28/2025 1:30:00 PM |
SB 156 |
| SB156 Draft Proposed CS ver N.pdf |
SL&C 4/28/2025 1:30:00 PM |
SB 156 |