Legislature(2019 - 2020)BUTROVICH 205
03/17/2020 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB88 | |
| Confirmation Hearing(s) | |
| SJR14 | |
| SB188 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 88 | TELECONFERENCED | |
| += | HB 83 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| *+ | SB 188 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SJR 14 | TELECONFERENCED | |
SB 188-LOTTERY: PUB. CORP; FUND; UNLAWFUL SALE
4:08:36 PM
CHAIR REVAK reconvened the meeting and announced the
consideration of SENATE BILL NO. 188, "An Act establishing the
Alaska Lottery Corporation; relating to the powers, duties, and
laws applicable to the Alaska Lottery Corporation; establishing
a lottery profits fund as an account of the general fund;
establishing the crime of unlawful sale of a lottery ticket; and
providing for an effective date."
4:10:08 PM
GREGORY SAMORAJSKI, Senior Development Executive, Department of
Commerce, Community and Economic Development (DCCED), Anchorage,
Alaska, began a PowerPoint, "A Proposal to Create an Alaska
State Lottery Corporation." He reviewed slide 2, Lottery
History:
• New Hampshire 1964
• Instant Scratch-Off Tickets 1970
• Multi-State Draw Games
• Powerball 1988
• Mega Millions 1996
• 45 States Currently Operate Lotteries
The modern lotteries began in New Hampshire with a draw-type
game. Draw-type games are ones where draws are taken from an urn
and the players match the numbers to their tickets to win.
He said states who participate in Powerball lotteries pool their
resources to produce large prizes. He related that 43 of the 45
states that currently operate lotteries offer draw and instant
game lotteries. If Alaska were to adopt a lottery, it would
become the 46th state to do so.
4:12:17 PM
MR. SAMORAJSKI reviewed slide 3, Lotteries are a Significant
Revenue Source:
• Total National Sales $85.6 Billion in 2018
He said that of the $85.6 billion in 2018, $23.4 billion has
been returned to the state general funds or education funds.
4:12:54 PM
MR. SAMORAJSKI reviewed slide 4, No Longer Just Your
Grandfather's Lottery!
Traditional Games 2018 Revenues in $Billions
• Power Ball, Mega Millions $8.3 All States
• Other Draw Games $15.5 -All States
• Instant Scratch-Offs $49.6 All States Except ND
and WY
• Total Traditional $73.4
• Total All Games $85.6
He said the vast majority of the $73.4 billion was from
scratch-off tickets.
New Games 2018 Revenues in $Billions
• Monitor Games Like Keno $4.4 19 States Plus DC
• Video Lottery Terminals $6.9 8 States: DE, MD,
NY, OH, OR, RI, SD, WV
He noted that these games are typically played in bars or
restaurants.
4:14:34 PM
MR. SAMORAJSKI reviewed slide 5, Revenue Breakdown Example:
• Prize Money 60%
• Retailer Commissions 6%
• Gaming Contractor 10%
• Administration 4%
• Transfer to General Fund 20%
4:15:49 PM
MR. SAMORAJSKI reviewed slide 6, How Are States Like Alaska
Doing 2018 Results:
Revenues in $Million/State Share $Million/% Return
• Wyoming $28.70/$5.0/17.45%
• North Dakota $31.30/$8.0/25.6%
• South Dakota $278.80/$124.7/44.7%
• Montana $56.6/$10.7/18.9%
• Maine $294.10/$63.0/21.4%
• Idaho $265.10/$53.5/20.2%
He explained that slide 6 lists the states whose populations are
similar in size to Alaska. It lists the total amount of revenue
generated by the state's lottery, then the portion of revenue
allocated to the state, and finally the percentage of total
revenue the state receives. For example, Wyoming generated
$28.70 million in total revenue. The state's share was $5.0
million, which represents 17.45 percent of the total revenue
generated by the lottery. States that allow scratch-off games,
such as Montana and Maine, generate more revenue. South Dakota
has video lottery terminals, so its revenue is substantially
higher, he said.
4:17:27 PM
CHAIR REVAK asked what video lottery terminals entail.
MR. SAMORAJSKI replied these terminals allow games such as
blackjack or poker. He said he was not advocating for Alaska to
offer video lottery terminals, but it is something the state may
wish to consider.
CHAIR REVAK noted South Dakota's return to the state was 44.7
percent, which is higher than all the others. He asked if it has
anything to do with tourism.
MR. SAMORAJSKI answered that 44.7 percent represents the net
earnings from video lottery terminals. The winning percentage
for players is much higher, he said.
SENATOR KAWASAKI observed that in North Dakota, $30 million in
revenue returned $8 million to the state.
MR. SAMORAJSKI agreed and added that the ratio of total revenue
to net revenue is typically 20-30 percent.
4:20:39 PM
SENATOR KAWASAKI asked if nonresidents play and win lotteries
while on vacation in North Dakota. If so, the winnings were not
necessarily money won by residents of North Dakota.
MR. SAMORAJSKI agreed that anyone physically in the state could
play the state lottery games.
SENATOR KAWASAKI asked if the figures on slide 6 include
earnings from tribal gaming because Wyoming, North Dakota, South
Dakota, and Montana permit that.
MR. SAMORAJSKI answered no.
4:21:54 PM
MR. SAMORAJSKI reviewed slide 7, Potential Revenues for Alaska:
With Draw Games Only - $6.5 Million
• Add Instant Scratch-Off Tickets - $35 Million
• Add Video Lottery Terminals and Monitor Games -
$135 Million
He explained that the Department of Revenue developed these
revenue estimates based on other states' results and scaled
for Alaska's population.
The point of the slide is to illustrate that at least offering
scratch-off tickets will be necessary for a lottery to provide a
significant source of revenue.
MR. SAMORAJSKI reviewed slide 8, Senate Bill 188:
New Alaska State Lottery Corporation
• Directors Appointed by the Governor
• Broad Authority
• Select Games
• Promulgate Regulations
• Choose Retailers and Contractors
This slide shows that under a corporate structure, the state
would delegate most of the authority to operate the lottery to a
state lottery corporation that, in turn, might hire contractors
and retailers to run the lottery.
4:24:24 PM
MR. SAMORAJSKI reviewed slide 9, Possible Implementation
Schedule:
• Legislative Approval this Session
• Board Directors Appointed Summer 2020
• Executive Director Hired by Fall 2020
• Organization Year FY 21 Including:
• Hire Consultant and Gaming Contractor
• Appoint Retailers
• Background Checks
• FY 22 Break Even
• FY 23 Transfers to the General Fund
He said the idea would be to create a special sub-fund in the
general fund (GF) to deposit the lottery earnings and the
legislature would decide on appropriations from that sub-fund.
4:25:39 PM
MR. SAMORAJSKI reviewed slide 9, Appropriations Potential
Request:
• FY 21 - $3 Million Capital Appropriation Request
with Additional Authority to Borrow Funds
• FY 22 Break Even
• FY 23 and Beyond Payments to the State General
Fund
He estimated that startup costs would be a minimum of $3
million. After the break-even year, the legislature would not
need to appropriate any additional funds, he said.
4:26:27 PM
SENATOR KAWASAKI said he was agnostic to the idea of commercial
gaming in Alaska. Besides the potential revenue, he asked if the
administration examined the societal losses or downsides of
gambling.
MR. SAMORAJSKI said they found the problems are more a result of
casinos than state lottery games. He acknowledged that video
lotteries have not been around very long.
4:29:12 PM
BISHOP WOOSLEY, Director, Arkansas Lottery; President, North
American Association of State & Provincial Lotteries (NASPL),
Little Rock, Arkansas, spoke in support of SB 188. He stated
that the NASPL consists of 53 North American lotteries; it
advocates on behalf of the lottery industry. The association
primarily promotes responsible gambling and provides statistical
information to states. He characterized the NASPL as an
educational organization; it will work with the legislature and
the administration while Alaska considers whether to create a
lottery in the state.
CHAIR REVAK asked if there have been societal detriments or
negative impacts from the lottery industry in Arkansas.
MR. WOOSLEY answered no. He explained that Arkansas has had a
lottery for over 10 years. Arkansas has found that the core
demographic of players who play every day are ones who earn from
$25,000-$30,000 annually and those who earn $75,000 annually.
There is no evidence that it has created societal issues. He
said Arkansas is one of the newer lotteries and it brought some
form and structure to the organization and to responsible
gambling within the state. Prior to creating lotteries, the
state had two rasinos in the state, which are entities that
combine racing and casinos. At the time, there was very little
money directed towards problem gambling and little awareness of
programs that were available. Once state lotteries came online,
Arkansas highlighted the national problem gambling helpline and
made programs available to help people address their problem
gambling issues. He said anytime gambling is present, there will
be some people who play more than they should, but these people
can get help. Arkansas is a heavy instant game lottery state,
but thus far there is no evidence of a societal issue with
instant scratch-off tickets.
4:33:25 PM
SENATOR COGHILL asked if setting up a lottery by commission is a
common structure.
MR. WOOSLEY answered that most lotteries use a commission-based
structure, but some use a corporate, state agency, or quasi-
state agency based structure. Arkansas initially was formed
using a commission, but it no longer uses that structure.
SENATOR COGHILL related his understanding that Alaska is
considering a quasi-state corporation rather than a corporation.
He asked how to distinguish between residents and nonresidents
participating in lotteries. Alaska only has about 350,000 adults
and is also almost like an island since it is separated from the
Lower 48. He wondered if nonresidents must participate for it to
be worthwhile for Alaska to operate a lottery.
MR. WOOSLEY responded that Arkansas has seven border states, so
it has a tourism industry. He related his understanding that
Alaska has a seasonal tourism industry. He pointed out that
Wyoming and Montana are smaller states that have established a
market for a lottery. He opined that people in Alaska are
probably already involved in gaming, so there is a market in
Alaska.
4:37:00 PM
SENATOR KAWASAKI asked if the gambling hotline in Arkansas is
funded via revenues from legal gaming or from the general fund.
MR. WOOSLEY answered that the hotline is funded by the state and
other gaming entities in the state. Since the hotline is
national, he said he was not aware of the exact costs. Arkansas
receives and posts a monthly report that includes the number and
nature of the call, if the call was referred for assistance, and
any follow-up. The state website has 10 years of reporting
listed. He offered his view that all gaming entities nationwide
fund the hotline, including lotteries, casinos, or other
gambling organizations. He said Arkansas also provides a list of
other resources available, such as the National Association of
Problem Gambling. Arkansas has a certification that shows the
process, from the creation of the games, any advertising or
marketing, and how the games are sold in retail. Many states are
moving towards that model. He characterized Arkansas as self-
policing; it uses self-imposed guidelines to avoid marketing
games that problem gamblers would find attractive.
4:39:48 PM
DAVID BARTON, Director, New Mexico Lottery, Albuquerque, New
Mexico, said he has been involved with lotteries since 2001,
beginning with his work in South Carolina. He worked with Mr.
Woosley when Arkansas began its lottery. He also served for 15-
16 years as a staff attorney for the South Carolina Senate,
drafting legislation. He opined that SB 188 is a forward-
thinking piece of legislation and that it is important to get it
right from the start. He offered his view that Alaskans could be
proud of the proposed lottery structure, noting that the bill
provides that revenues could be used to fund programs in the
state addressing domestic violence prevention, drug abuse
prevention, foster care, seniors, or homelessness. It also helps
promote the lottery since people can see where the money is
spent. He mentioned that Powerball sales nationwide are down
about 30 percent. It is also important to have a good scratch-
off product along with online games to create a good portfolio.
He predicted that a multi-jurisdictional organization would
likely sell games internationally. He explained that New Mexico
also has tribal casinos and fraternal organizations that sell
lottery products.
4:42:58 PM
SENATOR COGHILL acknowledged that he personally struggles with
this. He asked how many New Mexico residents are winners. He
expressed concern that Alaska could receive revenue, but the
state's residents might not be lottery winners.
MR. BARTON answered that 95 percent of scratch games will be
residents. He related his experience in New Mexico, including
that residents are not usually Powerball winners. However, there
are a few winners, he said. Since players must wait a few days
after playing Powerball to find out if they have won, many
people prefer scratch games. He reported that New Mexico has not
had any problems with lottery gaming, and that most of the
problems arise from casinos.
4:45:58 PM
KEVIN COCHRAN, Government Affairs Manager, Draft Kings, Inc.,
Boston, Massachusetts, spoke in support of mobile sports
wagering. He said Draft Kings, Inc. was founded in 2012 as a
daily fantasy sports company, with the goal of bringing sports
fans closer to the games they love. Since then, Draft Kings,
Inc. has evolved into an international sports entertainment
company with more than 10 million customers throughout the
world. In May 2018, the U.S. Supreme Court invalidated the
Professional and Amateur Sports Protection Act of 1992 or PASPA.
This paved the way for states to legalize sports wagering within
their borders. In August 2018, Draft Kings, Inc. made history by
being the first company to offer a mobile sports wagering app
outside of Nevada by launching the app in New Jersey.
4:47:19 PM
MR. COCHRAN spoke in support of bringing a competitive, fully
mobile sports wagering market to Alaska.
He stated that Draft King supports a legal framework that
protects consumers, will generate maximum revenue for the state,
and stamp out the pervasive illegal market. He estimated that
138,000 people bet over $348 million in illegal wagers each year
through illegal online offshore websites.
MR. COCHRAN explained that mobile sports betting allows
customers to place bets from their mobile phones. He said New
Jersey has established itself as the leader in states that have
chosen to regulate sports wagers. Over $3.2 billion in wagers
have been placed since 2018, with over 85 percent of the bets
placed via online platforms. Mississippi chose to limit its
wagers to on casino premises, which led to less wagers, he said.
Alaska should consider building a strong and effective
regulatory regime that has competitive pricing, includes a
mobile device market, and allows multiple operators to serve a
market.
He said Draft King, Inc. takes seriously issues such as underage
wagering and problem gambling and encourages consumer
protections. His organization uses "know your customer"
technology to ensure underage individuals cannot create accounts
or place wagers. The verification process uses multiple vendors,
working with leading companies to monitor and detect user
locations using cell phone location data, Wi-Fi triangulation
and other technology. The organization provides safeguards for
users that allow customers to set their own deposits and play
limits and to self-exclude from participation. Users have their
entire transaction history available at any time, including all
bets they have placed, their winnings and losses, and a summary
of their plays over the last month, three months, year, or their
lifetime.
MR. COCHRAN suggested that if Alaska wants to protect its
consumers, shutter offshore illegal sports betting markets, and
provide the state with additional revenue streams, it is best
achieved through a competitive, fully mobile sports wager
market.
CHAIR REVAK reminded those online to limit testimony to two
minutes.
4:54:20 PM
CHAIR REVAK opened public testimony on SB 188.
4:54:36 PM
KEVIN MCKINLEY, Member, Alaska Shriners; Member, Alaska
Charitable Gaming Association, Fairbanks, Alaska, said the
Alaska Shriners help children with medical bills and help fund
travel so they make it to their hospital appointments. He
questioned the unintended consequences of the bill, such that it
would greatly reduce revenue for charities. The Alaska Shriners
help approximately 200 children through the proceeds of
charitable gaming. He asked what effect lotteries in other
states has had on charitable gaming.
CHAIR REVAK said the committee will keep the question in mind.
4:57:00 PM
SANDY POWERS, President, Alaska Charitable Gaming Alliance,
Anchorage, Alaska, spoke in opposition to SB 188. She said she
also owns and operates Big Valley Bingo, which raises money for
charities. She said her organization opened in 2017, employs 20
Alaskans, and represents 15 charities. In its first two years it
has contributed over $570,000 to the Mat-Su Valley community,
donating to local charities. She said the alliance thought it
should have had a seat at the table earlier in the legislative
process. She expressed concern with the expansion of gambling in
Alaska. Much of the revenue will go outside Alaska and an
estimated $100 million in revenues will not fix the state's $1.5
billion budget gap. Many states rank low economically, including
New Mexico, which ranks forty-fifth in the nation. States with
legalized gambling suffer from increased crime and drugs.
Further, under the bill, a gaming corporation could make changes
without legislative oversight. She explained that charitable
gaming was created to raise money for nonprofit organizations.
The state has nearly 1,100 charities that benefit from the $35
million raised annually from charitable gaming. Over 1,000
Alaskans work in the charitable gaming industry. She said the
alliance has nonprofit support from the Alaska Police and Fire
Chaplains, the Fraternal Order of State Troopers, and the Alaska
Peace Officers Association. She noted that she also submitted
written testimony.
CHAIR REVAK suggested people submit written testimony at
[email protected].
5:01:04 PM
DAVID LAMBERT, Owner, Tab Wizard of Alaska, Fairbanks,
Fairbanks, Alaska, said he is a gaming operator who raises funds
for about 25 organizations. He explained that scratch-off
tickets are pull tabs. Currently, $35 million goes to charities
from pull tab sales and charitable gaming in Alaska. He offered
his view that the only way to raise $35-40 million in scratch-
off tickets will be to take away funds from charities. He
suggested that the legislature set up a task force to
investigate lotteries.
5:02:14 PM
LES BURNAL, National Director, Stop Predatory Gambling,
Washington, D.C., spoke in opposition to SB 188. He stated that
his organization is a nonprofit organization comprised of a
national social reform network of individuals and organizations
across the country. Many people gamble because they are broke
and desperate. Even though saving money leads to wealth, more
than two-thirds of Alaskan citizens do not have any savings,
according to GoBankingRates.com. He provided other statistics to
illustrate the number of Alaskans that would be vulnerable to
gambling. He offered his view that commercialized gambling is
America's biggest and most neglected problem. In 2018, Americans
lost $118 billion of personal wealth to government-sanctioned
gambling. Alaska's citizens have not suffered those types of
financial losses because it has not legalized gambling. He urged
members to avoid "the scheme" before them today.
5:06:11 PM
MAC MEINERS, Owner, Rippie World, Anchorage, Alaska, stated that
he has worked in charitable gaming for over 20 years. He asked
the committee to think about how to proceed. He recommended
limiting lotteries in Alaska to scratch-off tickets and figuring
out how to include charities as beneficiaries. He said he does
not want to see charitable gaming go away since he funds 26
charities through Rippie World.
5:08:20 PM
CHAIR REVAK, after first determining no one else wished to
testify, closed public testimony on SB 188.
[SB 188 was held in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 188 Sectional Analysis v. A 2.17.20.pdf |
SSTA 3/17/2020 3:30:00 PM |
SB 188 |
| SB 188 Transmittal Letter 2.11.2020.pdf |
SSTA 3/17/2020 3:30:00 PM |
SB 188 |
| Craig Johnson Personnel Board.pdf |
SSTA 3/17/2020 3:30:00 PM |
Consideration of Governor's Appointee |
| Daniel LaSota GOV appointee AK Public Offices Commission.pdf |
SSTA 3/17/2020 3:30:00 PM |
Consideration of Governor's Appointee |
| Hardy Van Z. Larence GOV appointee AK Public Offices Commission 3.16.20.pdf |
SSTA 3/17/2020 3:30:00 PM |
Consideration of Governor's Appointee-Public Offices Commission |
| HB 83 CS workdraft 31-LS0635.S.pdf |
SSTA 3/17/2020 3:30:00 PM |
HB 83 |
| SB 188 Oppsoe Heesch 3.17.2020.pdf |
SSTA 3/17/2020 3:30:00 PM |
SB 188 |
| SB 188 Oppose ACGA 3.16.2020.pdf |
SSTA 3/17/2020 3:30:00 PM |
SB 188 |
| SB 188 DK Support 3.16.2020.pdf |
SSTA 3/17/2020 3:30:00 PM |
SB 188 |
| SB 188 DOR Presentation 3.17.2020.pdf |
SSTA 3/17/2020 3:30:00 PM |
SB 188 |
| SB 188 DOR White Paper 3.17.2020.pdf |
SSTA 3/17/2020 3:30:00 PM |
SB 188 |
| SB 88 CS verson 31-LS0284.S 3.17.2020.pdf |
SSTA 3/17/2020 3:30:00 PM |
SB 88 |