Legislature(2005 - 2006)CAPITOL 17

03/17/2006 03:15 PM LABOR & COMMERCE


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 227 ALASKA SMALL LOANS ACT TELECONFERENCED
Scheduled But Not Heard
+= HB 477 CHARITABLE GAMING TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 51 EMPLOYER ASSN FOR WORKERS' COMP INS TELECONFERENCED
Moved CSHB 51(L&C) Out of Committee
<Bill Hearing Rescheduled from 3/15/06>
HB 477-CHARITABLE GAMING                                                                                                      
                                                                                                                                
3:33:50 PM                                                                                                                    
                                                                                                                                
ACTING  CHAIR KOTT  announced that  the first  order of  business                                                               
would  be HOUSE  BILL NO.  477,  "An Act  relating to  charitable                                                               
gaming."                                                                                                                        
                                                                                                                                
REPRESENTATIVE  LYNN  moved  to   adopt  CSHB  477,  Version  24-                                                               
LS1696\G,  Luckhaupt, 3/3/06,  as  the working  document.   There                                                               
being no objection, Version G was before the committee.                                                                         
                                                                                                                                
3:34:26 PM                                                                                                                    
                                                                                                                                
MIKE  O'HARE,   Staff  to   Representative  Kott,   Alaska  State                                                               
Legislature, speaking on behalf  of the sponsor, paraphrased from                                                               
the following written testimony [original punctuation provided]:                                                                
                                                                                                                                
     This bill  is an  effort to  ensure that  crimes within                                                                    
     the  charitable gaming  community are  investigated and                                                                    
     prosecuted fully and passionately.                                                                                         
                                                                                                                                
     Many of  these charities  effected by these  crimes are                                                                    
     discouraged by  the results of investigations  and lack                                                                    
     of prosecutions of these cases in the past.                                                                                
                                                                                                                                
     HB 477 changes Alaska  Statute 05.15.010, requiring the                                                                    
     Department of  Public Safety  to investigate  theft and                                                                    
     the Attorney General to prosecute these crimes.                                                                            
                                                                                                                                
     This   requirement   will  hopefully   deter   criminal                                                                    
     activity associated with charitable  gaming and keep it                                                                    
     clean,  and  all  of  the   charities  will  get  their                                                                    
     rightful share of the proceeds.                                                                                            
                                                                                                                                
     HB 477 also adds  provisions to the existing charitable                                                                    
     gaming  statutes AS  05.15 that  will enable  permitted                                                                    
     charitable  gaming   organizations  and   operators  to                                                                    
     present  to the  state biennial  instead of  the annual                                                                    
     reports currently required by law.                                                                                         
                                                                                                                                
     Currently  both the  State  and  gaming operators  must                                                                    
     expend considerable resources  each December to process                                                                    
     and prepare permits.                                                                                                       
                                                                                                                                
     Changing  to  biennial  reporting  will  be  much  more                                                                    
     efficient  for  everyone.     The  permittee  currently                                                                    
     expends considerable  resources to prepare  each annual                                                                    
     permit application.                                                                                                        
                                                                                                                                
     The State spends  considerable resources examining each                                                                    
     permit application.  The  State loses neither revenues,                                                                    
     nor enforcement capability with this change.                                                                               
                                                                                                                                
     HB  477 also  amends  AS 05.15.090  to  include in  the                                                                    
     department's  detailed report  containing a  summary of                                                                    
     all  reports  required  of  permittees  and  operators.                                                                    
     This  report must  also include  information concerning                                                                    
     any  investigations or  prosecutions undertaken  by the                                                                    
     department of  Public Safety or  the Department  of Law                                                                    
     as required under amended AS 05.15.010.                                                                                    
                                                                                                                                
     HB 477 also removes  the Alaska Administrative Code AAC                                                                    
     160.580(e)                                                                                                                 
                                                                                                                                
     This  code  refers to  the  allowable  number of  bingo                                                                    
     games and  limitations on the number  of bingo sessions                                                                    
     as well as a one hour break between bingo sessions.                                                                        
                                                                                                                                
     This  section was  originally  enacted  to prevent  the                                                                    
     "Bingo  Wars",  where   competing  organizations  would                                                                    
     raise pay-outs in order to compete with other games.                                                                       
                                                                                                                                
     This  60 minute  break is  inconvenient, expensive  and                                                                    
     inefficient                                                                                                                
                                                                                                                                
     Players must sit and wait for an hour                                                                                      
     Bingo is a social event in many communities                                                                                
     This  mandatory  halt  disrupts   the  process  as  the                                                                    
     stoppage is  in no  way connected  to the  schedules of                                                                    
     the people that gather together to play.                                                                                   
                                                                                                                                
     Removing this  section will  allow operators  to adjust                                                                    
     to the tempo and schedules of their customers.                                                                             
                                                                                                                                
     With regard  to the  Hour break  - utilities  are being                                                                    
     run..the lights and  the heat are still  on, staff must                                                                    
     wait while still getting paid, etc                                                                                         
                                                                                                                                
     The  removal   of  this   section  will   increase  the                                                                    
     enjoyment for  those participants  in bingo  and reduce                                                                    
     the costs  associated with providing the  service.  Any                                                                    
     reduction of  costs would benefit those  charities that                                                                    
     deserve the proceeds.                                                                                                      
                                                                                                                                
MR. O'HARE then informed the  committee of the three fiscal notes                                                               
from  the   following  departments:     Department   of  Revenue,                                                               
Department of Public Safety, and the Department of Law.                                                                         
                                                                                                                                
3:38:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN related his  belief that changing from annual                                                               
reports  to biennial  reports means  that it  will take  twice as                                                               
long to determine whether something improper is occurring.                                                                      
                                                                                                                                
MR. O'HARE related his understanding  that the permittees will be                                                               
required to submit an annual  summary report to the Department of                                                               
Revenue (DOR).                                                                                                                  
                                                                                                                                
REPRESENTATIVE  CRAWFORD turned  to  the elimination  of the  60-                                                               
minute  time-out, which  will result  in more  gambling and  more                                                               
revenues  for the  operators.   He  expressed  his opposition  to                                                               
anything that expands gambling.                                                                                                 
                                                                                                                                
ACTING  CHAIR  KOTT  offered  his  understanding  that  currently                                                               
operators  can  expand the  number  of  sessions and  games,  and                                                               
therefore  he didn't  believe  this change  would  cause a  great                                                               
degree of expansion.                                                                                                            
                                                                                                                                
3:42:35 PM                                                                                                                    
                                                                                                                                
JEFF  PRATHER,   Gaming  Group,  Juneau  Office,   Tax  Division,                                                               
Department of  Revenue, explained  that the sessions  are limited                                                               
to 35 games  or $5,000 in payouts.   There can be no  more than 4                                                               
sessions in a 24-hour period.                                                                                                   
                                                                                                                                
ACTING CHAIR KOTT surmised then that  no matter the length of the                                                               
break  between sessions,  the gambling  can't be  expanded beyond                                                               
the aforementioned restrictions.                                                                                                
                                                                                                                                
REPRESENTATIVE  CRAWFORD  related   his  understanding  that  the                                                               
elimination of the  60-minute time-out allows the use  of a bingo                                                               
gaming machine.  He inquired as to the pros and cons of such.                                                                   
                                                                                                                                
MR. PRATHER said that he  didn't know anything about bingo gaming                                                               
machines being  available between sessions.   Mr. Prather related                                                               
his  understanding   that  there   are  electronic   bingo  paper                                                               
machines,  which are  machines for  which one  can have  numerous                                                               
cards that the machine can track.                                                                                               
                                                                                                                                
LARRY  MEYERS,  Deputy  Director,  Tax  Division,  Department  of                                                               
Revenue, explained  that the traditional  game of bingo  is often                                                               
played  with paper,  and  therefore the  hour  break would  allow                                                               
closure of the  game before the next game.   However, electronics                                                               
has sped  up the  process such  that a  player can  purchase more                                                               
games with  electronic bingo  paper.   Mr. Meyers  mentioned that                                                               
there has  been some  effort to  bring in  new types  of machines                                                               
that would allow continuous play.                                                                                               
                                                                                                                                
ACTING  CHAIR KOTT  asked if  those machines  allowing continuous                                                               
play would have to be approved by the department.                                                                               
                                                                                                                                
MR.  MEYERS replied  yes.   He  informed the  committee that  the                                                               
department is  constantly seeing  new types  of products  that it                                                               
must  review  in  order  to   determine  whether  they  meet  the                                                               
intention and the purpose of the gaming statutes.                                                                               
                                                                                                                                
ACTING  CHAIR KOTT  opined that  with technology,  bingo sessions                                                               
have become shorter over the  years.  However, the aforementioned                                                               
restrictions remain.                                                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG related his  understanding that Section 9                                                               
only  annuls   15  AAC  160.580(e),   and  therefore   the  other                                                               
aforementioned restrictions will remain in regulation.                                                                          
                                                                                                                                
3:50:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  reiterated his concern regarding  the change                                                               
from the annual to biennial report.                                                                                             
                                                                                                                                
MR. MEYERS said  that annual reports make the job  easier for the                                                               
department,  although it's  more  paperwork.   With the  biennial                                                               
report,  the  department  will  have  to  rely  on  reports  from                                                               
permittees and  any action  against an  operator or  his/her bond                                                               
will have  to wait until the  final report is filed,  which could                                                               
take up to  two years.  The aforementioned  makes the regulator's                                                               
job a bit more difficult, especially  if there is a complaint.  A                                                               
similar situation will  exist with the report  from the certified                                                               
public accountants  (CPAs).  Therefore,  the biennial  report may                                                               
result  in the  department and  other law  enforcement not  being                                                               
able to act in as timely a fashion when there are problems.                                                                     
                                                                                                                                
3:54:18 PM                                                                                                                    
                                                                                                                                
ROBERT LOESCHER, Vice President, Juneau  ANB Camp 2, informed the                                                               
committee that  ANB Camp  2 has  charitable gaming  permits under                                                               
which it  operates in Juneau.   Mr. Loescher related  support for                                                               
HB  477.   In  regard  to  biennial  reports, he  explained  that                                                               
currently during the last week  of December the charitable gaming                                                               
entities have to re-file the  entity's permit application and put                                                               
together  the year-end  report.    For charitable  organizations,                                                               
which   consist   of   volunteers,  the   aforementioned   is   a                                                               
"pressurized time."  The department  receives all the reports and                                                               
applications at once,  which he indicated places  pressure on the                                                               
department as  well.  Therefore,  biennial report  was suggested.                                                               
He  highlighted  that  the  biennial  reports  don't  negate  the                                                               
quarterly reports  the department receives from  every charitable                                                               
gaming organization  nor does it  eliminate the 1 percent  fee to                                                               
the state.  In fact, the fees  would be paid two years in advance                                                               
under  the current  legislation.   The impact  on the  department                                                               
would also  be lessened by staggering  the year in which  the re-                                                               
filing  would  occur  for  the applicant.    In  conclusion,  Mr.                                                               
Loescher  opined  that  this legislation  would  help  charitable                                                               
gaming by keeping the costs  down while maintaining the quarterly                                                               
reporting and  the 1  percent annual  fee as  well as  the permit                                                               
application fee two years in advance.                                                                                           
                                                                                                                                
3:58:00 PM                                                                                                                    
                                                                                                                                
ACTING CHAIR KOTT  asked if the quarterly reports  are similar to                                                               
the full reports.                                                                                                               
                                                                                                                                
MR.  LOESCHER explained  that the  quarterly report  includes all                                                               
the aspects  found in  an annual summary  report.   The quarterly                                                               
report delineates the  revenues gained and the  activities of the                                                               
charity  during that  quarter.   The  annual report  is merely  a                                                               
summary of  the four quarter reports.   He opined that  under the                                                               
biennial report, the department will  have more time to deal with                                                               
the reporting  from the charities  than under the  current yearly                                                               
reporting scenario.   Mr. Loescher  viewed this legislation  as a                                                               
benefit to the state.                                                                                                           
                                                                                                                                
ACTING  CHAIR  KOTT   surmised  then  that  under   HB  477,  the                                                               
charitable gaming entities would  submit a two-year report, which                                                               
would be a compilation of the  previous eight quarters.  If there                                                               
was an  anomaly in  that quarterly  report, the  department could                                                               
analyze and review it.                                                                                                          
                                                                                                                                
MR. LOESCHER confirmed Acting Chair Kott's understanding.                                                                       
                                                                                                                                
REPRESENTATIVE LYNN questioned why  the annual report is required                                                               
if the quarterly reports are the same.                                                                                          
                                                                                                                                
MR.  LOESCHER  explained  that the  annual  report  combines  the                                                               
quarterly reports in a summary  and is helpful for the department                                                               
in regard to reporting to  the legislature about how much revenue                                                               
it's making.                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  commented that  he would  like to  talk with                                                               
the administration about these reporting requirements later.                                                                    
                                                                                                                                
4:01:33 PM                                                                                                                    
                                                                                                                                
MR. LOESCHER  noted that he  worked with the sponsor's  staff and                                                               
the department  in regard to  the necessary  conforming statutory                                                               
changes, which are encompassed in Version  G.  He then went on to                                                               
relate  the difficulty  in  investigating  theft or  embezzlement                                                               
within charitable gaming as well  as the difficulty in being able                                                               
to  prosecute the  perpetrators and  recover losses.   Therefore,                                                               
the law  should include provisions  that allow  charitable gaming                                                               
officials to go  the Department of Public Safety  (DPS) and local                                                               
law   enforcement  for   investigation   and  prosecution,   when                                                               
appropriate.   As a  result of the  inability to  investigate and                                                               
prosecute cases, fidelity bond coverage  is very limited and thus                                                               
the entity may only recover partially  or not at all.  Therefore,                                                               
Mr. Loescher  requested that the legislature  provide a provision                                                               
in the  bill that would  allow DPS  and local law  enforcement to                                                               
investigate, and  when appropriate, prosecute cases  of theft and                                                               
embezzlement.                                                                                                                   
                                                                                                                                
MR. LOESCHER,  in response  to Acting  Chair Kott,  recalled that                                                               
recently a key employee of  ANB who managed the gaming operations                                                               
embezzled over  $50,000.  All  relevant information was  given to                                                               
local law enforcement, but to date  there has been no action from                                                               
local law enforcement or the  state.  Moreover, the fidelity bond                                                               
company has  only been  willing to offer  a small  amount against                                                               
the  loss.   Mr.  Loescher surmised  that  local law  enforcement                                                               
hasn't taken  any action  because this  type of  crime is  a "low                                                               
priority."   Furthermore,  there  is nothing  in current  statute                                                               
that  provides DPS,  the attorney  general's office,  or district                                                               
attorney authority to become involved.                                                                                          
                                                                                                                                
ACTING CHAIR  KOTT asked if this  type of crime would  fall under                                                               
the jurisdiction of the state or local authorities.                                                                             
                                                                                                                                
MR. LOESCHER opined  that it falls under the  jurisdiction of the                                                               
state because  charities are  enabled, authorized,  and permitted                                                               
by state statute.                                                                                                               
                                                                                                                                
ACTING CHAIR KOTT  inquired as to how many of  these offenses Mr.                                                               
Loescher  is aware.   He  expressed interest  in determining  how                                                               
many cases  would be turned over  to DPS to investigate  in order                                                               
to  determine  the amount  of  time  this  would require  of  the                                                               
departments.   This  legislation, he  highlighted, mandates  that                                                               
DPS investigate these  cases and the Department  of Law prosecute                                                               
the offenders.                                                                                                                  
                                                                                                                                
MR. LOESCHER estimated  that perhaps there would be  two to three                                                               
such cases  in a five-  to seven-year  period.  However,  when it                                                               
happens  a lot  of money  is usually  involved.   He related  his                                                               
understanding   that  the   charities  are   willing  to   gather                                                               
information for the  local police, but these cases  don't seem to                                                               
proceed past  the local  law enforcement  level.   Those involved                                                               
haven't found  any way to  sue, which is  why the state  is being                                                               
requested  to  assist  the  charities   dealing  with  theft  and                                                               
embezzlement.                                                                                                                   
                                                                                                                                
4:11:58 PM                                                                                                                    
                                                                                                                                
MR. LOESCHER reiterated the difficulties  with regard to the one-                                                               
hour break that  in charitable gaming include  incurring the cost                                                               
of the facility  and the employees during that  break.  Moreover,                                                               
it's an inconvenience to the  customers.  Furthermore, the reason                                                               
to have  this regulation has  diminished.  Mr.  Loescher recalled                                                               
that  the one-hour  break was  a rule  that was  the result  of a                                                               
departmental  task force  several years  ago and  thus he  opined                                                               
that the department  wouldn't be easily convinced  to delete this                                                               
rule.  Therefore, the legislature is being asked to do so.                                                                      
                                                                                                                                
4:17:47 PM                                                                                                                    
                                                                                                                                
STEPHEN BORCHERDING, General Manager, Gold Cache Bingo,                                                                         
Anchorage, Alaska, paraphrased from the following written                                                                       
testimony and verbal additions [original punctuation provided]:                                                                 
                                                                                                                                
     I am writing  this letter to express  my concerns about                                                                    
     HB  477 and  ask that  you reconsider  its introduction                                                                    
     and/or your support  for this bill.  I  can not foresee                                                                    
     any  significant  benefit  to   the  charities  or  the                                                                    
     regulators  of   this  industry  in  its   three  basic                                                                    
     sections.  My concerns are as follows:                                                                                     
                                                                                                                                
     Public Safety Requirement                                                                                                
                                                                                                                                
     The Department  of Revenue is already  tasked with, and                                                                    
     is  required  to  investigate  any  complaints  by  the                                                                    
     industry  or  its  consumers.    HB  477  requires  all                                                                    
     complaints of  theft or embezzlement  to be  handled by                                                                    
     the Department  of Public  Safety, and  would eliminate                                                                    
     the investigative  powers and duties of  the Department                                                                    
     of Revenue,  specifically the gaming unit,  with regard                                                                    
     to theft.                                                                                                                  
                                                                                                                                
     Theft   and   embezzlement   are  already   under   the                                                                    
     jurisdiction  of  public  safety.   The  department  of                                                                    
     revenue does not have  jurisdiction over these criminal                                                                    
     acts, but it  does have the ability  to investigate the                                                                    
     claims, build  cases, utilize  its judgment  and, based                                                                    
     on its expertise in this  area, present its findings to                                                                    
     the proper authorities.  Under  HB 477 any complaint of                                                                    
     theft or  embezzlement, whether justified or  not, will                                                                    
     be immediately  turned over to  a department  that does                                                                    
     not  have the  expertise or  the resources  to properly                                                                    
     investigate these claims.                                                                                                  
                                                                                                                                
     Additionally,  section   5  of  HB  477   provides  for                                                                    
     essentially    a    "blotter   report"    of    ongoing                                                                    
     investigations.     Since   the  power   of  reasonable                                                                    
     judgment by  the Department of Revenue  is removed, any                                                                    
     and   all   complaints,   justified   or   not,   about                                                                    
     organizations, individuals, or  operations will show up                                                                    
     on  this report.   Ongoing  operations and  individuals                                                                    
     may   be  victimized   by  erroneous   complaints,  bad                                                                    
     publicity, or unscrupulous competitors.                                                                                    
                                                                                                                                
     I  am  a  huge  proponent of  keeping  gaming  free  of                                                                    
     corruption, so  I believe in keeping  the investigative                                                                    
     powers in the hands of the experts.                                                                                        
                                                                                                                                
     Biennial Reporting                                                                                                       
                                                                                                                                
     The industry  itself, for  the most  part, has  made it                                                                    
     clear   that  we   are  not   in  favor   of  loosening                                                                    
     regulations  or  restrictions.    We  have  continually                                                                    
     shown  through our  actions that  we  not only  support                                                                    
     tighter  regulations, we  actually help  the Department                                                                    
     of Revenue draft  and implement them.  HB  477 not only                                                                    
     loosens some restrictions, it  may actually promote, or                                                                    
     open  the door  to  large scale  corruption.   Biennial                                                                    
     reporting  creates  holes in  the  system  that may  be                                                                    
     exploited.                                                                                                                 
                                                                                                                                
     According to  the Department  of Revenue,  the majority                                                                    
     of  issues investigated  by the  Gaming Unit  are as  a                                                                    
     direct result  of current reporting requirements.   The                                                                    
     Gaming Unit's  investigations or audits of  reports are                                                                    
     the  best   tool  they   have  for   deterring  illegal                                                                    
     activity.   More importantly,  according to  the Gaming                                                                    
     Unit  these  reports are  used  quite  often to  assist                                                                    
     permittees with  their various gaming activities.   The                                                                    
     Gaming Unit routinely uses its  reports to help educate                                                                    
     permittees on  the rules and regulations,  resulting in                                                                    
     a cleaner and more profitable industry.                                                                                    
                                                                                                                                
     In addition, HB 477 does  not make provisions or change                                                                    
     other Statutes  that may also  be affected  by biennial                                                                    
     reporting:   Licensing,  operator  contracts, odd  year                                                                    
     applications,   reports  by   self   directed  or   MBP                                                                    
     organizations, biennial  State gaming reports,  as well                                                                    
     as the formidable amount of  regulations that will have                                                                    
     to be re-written.                                                                                                          
                                                                                                                                
     The  proponents   of  this  bill  have   insisted  that                                                                    
     biennial  reporting  will  relieve  the  Department  of                                                                    
     Revenue  of some  of its  burden.   The bill,  however,                                                                    
     only seems  to apply to  operators.  There are  only 22                                                                    
     operators  in   Alaska,  and  there  are   1,200  total                                                                    
     permittees.   I do  not see  the significant  relief of                                                                    
     burden.   In fact,  this legislation would  create more                                                                    
     of a  burden, according  to the Department  of Revenue.                                                                    
     And  one of  the  things  that was  brought  up on  the                                                                    
     previous testimony  was that quarterly reports  are the                                                                    
     same  as  the annual  report,  that  is not  completely                                                                    
     true.   The  annual report  is an  audited report  by a                                                                    
     CPA, the  quarterly reports  are not.   So,  the annual                                                                    
     report may show differences  that the quarterly reports                                                                    
     ... may not show.                                                                                                          
                                                                                                                                
     I  do  not  believe   this  section  will  relieve  the                                                                    
     Department of Revenue of any  of its work load and will                                                                    
     more than likely create  additional work, especially in                                                                    
     the area  of auditing.  It  will open up an  avenue for                                                                    
     large scale  corruption, especially in the  hands of an                                                                    
     unscrupulous   operator   and   it  will   hinder   the                                                                    
     department's  ability to  assist struggling  charities.                                                                    
     And  that's one  of the  parts of  the department  that                                                                    
     these reports help ....   The Department of Revenue has                                                                    
     done  a  wonderful  job  of  helping  those  charities,                                                                    
     through reading  their reports, to  be able to  stay in                                                                    
     compliance and  become profitable.   The other  thing I                                                                    
     would like to  address on that section is  that not all                                                                    
     charities are required or permits  are required to file                                                                    
     quarterly  reports,  as  was   stated  earlier.    Only                                                                    
     permittees that have hit ...  $50,000 a quarter are the                                                                    
     only  ones  that are  required  by  law  to turn  in  a                                                                    
     quarterly report.  If they  don't do $50,000 or if they                                                                    
     don't report,  now we're talking about  two years where                                                                    
     a charity would  not have to report  because they could                                                                    
     just  simply  claim that  we  weren't  doing $50,000  a                                                                    
     quarter whether they were or  were not.  So, a two-year                                                                    
     scenario  opens  up several  holes  that  I'm not  very                                                                    
     comfortable with being in this industry.                                                                                   
                                                                                                                                
     One Hour Session Break                                                                                                   
                                                                                                                                
     First  of  all  this  is  not  a  statute.    It  is  a                                                                    
     regulation.     And  this  particular   regulation  was                                                                    
     introduced and adopted at the  request of the industry.                                                                    
     (An  example  of  our  commitment  to  self-regulating)                                                                    
     This  regulation  was  put  in  place  to  prevent  the                                                                    
     exploitation  of the  Bingo session  payout limitations                                                                    
     of $5,000 per session.                                                                                                     
                                                                                                                                
     Bingo  halls,   in  the  past  would   routinely  offer                                                                    
     $10,000, $15,000,  $20,000 or  more sessions  and claim                                                                    
     that  they were  simply running  sessions concurrently.                                                                    
     In addition  to side  stepping the  spirit of  the law,                                                                    
     these   concurrent   sessions   created   an   auditing                                                                    
     nightmare  for  the non-profits  and  the  State.   The                                                                    
     competition  to offer  these large  scale sessions  and                                                                    
     the  inevitable price  wars  that  resulted from  them,                                                                    
     nearly destroyed Bingo operations in Anchorage.                                                                            
                                                                                                                                
     It is  my understanding that  this section of  the bill                                                                    
     was included  under the auspices that  remote community                                                                    
     Bingo halls suffer because players  do not want to wait                                                                    
     around for  an hour to play  again.  In the  16 years I                                                                    
     have been in this  industry and throughout my extensive                                                                    
     travels to  various villages and remote  bingo halls, I                                                                    
     have never heard this complaint.   If anything, I would                                                                    
     feel  that the  one-hour break  between sessions  gives                                                                    
     you an  opportunity to make more  money, either through                                                                    
     your snack  bar sales, vending, pull-tab  sales, and so                                                                    
     on and so forth.                                                                                                           
                                                                                                                                
     The proponents  of HB 477 and  specifically section [9]                                                                    
     are pushing another  agenda that opens the  door for an                                                                    
     unprecedented  expansion of  Gaming.   If this  section                                                                    
     passes, it will  move us one step closer to  the use of                                                                    
     Class  II electronic  bingo  machines, (SLOT  MACHINES)                                                                    
     that could  be played under the  umbrella of concurrent                                                                    
     Bingo sessions, 24  hours a day, 7 days a  week.  It is                                                                    
     my  understanding  that  machines of  this  nature  are                                                                    
     already in Alaska,  warehoused and ready to  go and the                                                                    
     Department  of Revenue  has been  continually pressured                                                                    
     to approve their  use.  Section 9  moves these machines                                                                    
     a little closer to the  warehouse exit door.  PLEASE DO                                                                    
     NOT BE FOOLED BY THE RHETORIC.                                                                                             
                                                                                                                                
     My  opinions on  this bill  were formed  after numerous                                                                    
     conversations with my peers and  others in the industry                                                                    
     and as a result of  my extensive experience in Alaska's                                                                    
     Charitable  Gaming   Industry.    Although  I   do  not                                                                    
     represent  all of  the organizations.   I  do, however,                                                                    
     represent  and speak  on behalf  of the  several native                                                                    
     non-profit   organizations  that   I  am   tasked  with                                                                    
     managing.                                                                                                                  
                                                                                                                                
     Please  help  stop  HB  477.   I  thank  you  for  your                                                                    
     consideration.                                                                                                             
                                                                                                                                
4:26:42 PM                                                                                                                    
                                                                                                                                
JACK POWERS paraphrased from the following written testimony:                                                                   
                                                                                                                                
     I  want  to  start  by  saying  that  I  support  Steve                                                                    
     Borcherding's    testimony   100%.       Between    his                                                                    
     organization  and   mine  we  probably   represent  the                                                                    
     largest MBP and  operator in Alaska.   On that subject,                                                                    
     I would be  interested to find out  from the Department                                                                    
     of Revenue  exactly out of  the 22  operators--how many                                                                    
     large operators  exist in the  state?  By large  I mean                                                                    
     operators  that are  fully  bonded  and have  contracts                                                                    
     with over  four permittees.   I would venture  to guess                                                                    
     that there are very few.                                                                                                   
                                                                                                                                
     But  back to  HB 477;  as  far as  involving the  State                                                                    
     Troopers  at the  front end  of gaming  investigations.                                                                    
     This  bill,  in essence,  would  make  it possible  for                                                                    
     anyone to  claim anything and  the troopers  would have                                                                    
     to investigate.   They would have no choice.   A simple                                                                    
     phone call from an  "anonymous" caller would require an                                                                    
     investigation  if this  passes,  regardless of  whether                                                                    
     the claim seems credible or not.                                                                                           
                                                                                                                                
     Not  to  mention that  the  key  regulator involved  in                                                                    
     gaming, the Department  of Revenue, may not  even be in                                                                    
     the  loop before  an investigation  is  initiated by  a                                                                    
     secret call  or email to  troopers.  The  Department of                                                                    
     Revenue are the  experts in gaming.  On  the other hand                                                                    
     the  State Troopers  are not  as informed  about gaming                                                                    
     laws  and individuals  in the  gaming  industry as  the                                                                    
     department--so it  seems that  this bill puts  the cart                                                                    
     before the horse.                                                                                                          
                                                                                                                                
     Moreover,  the bill  supposedly  intends  to 'clean  up                                                                    
     gaming'  with these  provisions, but  then at  the same                                                                    
     time loosens all the  reporting requirements upon which                                                                    
     prosecution would depend.  There  is nothing to stop an                                                                    
     unscrupulous   individual    from   intentionally   not                                                                    
     reporting  via  quarterly  reports and  then  have  two                                                                    
     years before the department could catch any mistakes.                                                                      
                                                                                                                                
     Some are  saying that  the annual  audits are  just too                                                                    
     time  consuming  and   expensive  for  most  charities.                                                                    
     Well,  they   would  be  just  as   expensive  if  done                                                                    
     "biannually" rather  than annually.  The  auditor would                                                                    
     charge by  the amount  of work, so  two years  worth of                                                                    
     audits would cost twice as much.                                                                                           
                                                                                                                                
     Also, I  see removing the  hour break in  between bingo                                                                    
     sessions as a mistake in  many ways.  Bingo players use                                                                    
     that hour  in various  ways--they grab  a bite  to eat,                                                                    
     play pull-tabs or socialize with  friends.  Without the                                                                    
     hour break  I can see business  running bingo non-stop,                                                                    
     24 hours a day.  It  opens the door to setting up bingo                                                                    
      machines which could be set up anywhere.  I can see                                                                       
      bingo machines set up next to pull-tab kiosks in the                                                                      
     middle of the mall.                                                                                                        
                                                                                                                                
      While I appreciate the intent of HB 477, because of                                                                       
     the manner in which it is written, it will create more                                                                     
     issues that it will solve.                                                                                                 
                                                                                                                                
MR. POWERS then turned to  Mr. Loescher's testimony and said that                                                               
he doesn't know  of any operator who hasn't  received the permit,                                                               
even a  temporary one,  to operate.   With  regard to  the annual                                                               
report, Mr. Powers  characterized it as easy since  it's merely a                                                               
compilation  of  the quarterly  reports.    Moreover, the  annual                                                               
report isn't due  until March, which provides plenty  of time for                                                               
CPA  review.   He mentioned  that the  annual report,  unlike the                                                               
quarterly  report,  must be  accompanied  by  an independent  CPA                                                               
review.   In conclusion, Mr.  Powers opined that running  a full-                                                               
scale   operation  such   as  bingo   hall  necessitates   having                                                               
independent operators,  comptrollers, and cameras in  the ceiling                                                               
as it's a fairly large business.                                                                                                
                                                                                                                                
4:34:00 PM                                                                                                                    
                                                                                                                                
ACTING CHAIR KOTT  inquired as to how one could  have bingo games                                                               
24  hours a  day 7  days  a week  under  HB 477  when there  will                                                               
continue  to exist  restrictions  with regard  to  the number  of                                                               
sessions, prizes, and games that can be played.                                                                                 
                                                                                                                                
MR. POWERS  replied that  up to  35 bingo  games per  session and                                                               
four sessions  a day are allowed.   Therefore, if one  offered 35                                                               
blackouts/cover alls, which can last  up to an hour, could result                                                               
in play for 35 hours.   In response to comments regarding the age                                                               
of  the clientele  at  bingo  halls, Mr.  Powers  related that  a                                                               
younger  crowd is  coming  on  Friday and  Saturday  nights.   He                                                               
asked, "Wouldn't you  rather have young people sitting  in a nice                                                               
clean, drug-free bingo hall with  no alcohol than being up around                                                               
the corner at a bar?"                                                                                                           
                                                                                                                                
4:37:17 PM                                                                                                                    
                                                                                                                                
GREGORY   PETERSON,  General   Manager,   Alaska  Indoor   Sports                                                               
Distributing,  related his  belief that  the Gaming  Unit does  a                                                               
great  job enforcing  the  rules and  regulations  of the  gaming                                                               
industry, and therefore  no change is necessary.   Therefore, any                                                               
mandate to review or investigate  should remain within the Gaming                                                               
Unit.    Furthermore, the  Department  of  Revenue should  review                                                               
licenses and  permittees on an  annual basis because this  is one                                                               
of  the  few cases  in  which  the  Gaming  Unit can  review  for                                                               
compliance.  He  characterized it as a "good  solid process" that                                                               
shouldn't   change.     Mr.   Peterson   highlighted  that   this                                                               
legislation only  covers operators,  of which  there are  only 22                                                               
while there are 1,200 permittees.   With regard to the reporting,                                                               
he opined that  the quarterly reports are very  general for which                                                               
there is  no reconciliation process  or bank  statements provided                                                               
whereas annual  reports require a  more rigorous process  that is                                                               
more  than a  compilation  of quarterly  reports.   Mr.  Peterson                                                               
opined that  he doesn't want to  "go backwards."  He  stated that                                                               
the  gaming  industry  has  always   been  in  favor  of  tighter                                                               
regulations, while this  legislation loosens existing regulations                                                               
from which the gaming industry  wouldn't benefit.  He then turned                                                               
to the  proposal to  remove the  one-hour break  between sessions                                                               
and characterized  it as creating  a "loophole" to  expand gaming                                                               
in the  state.  Furthermore, in  the 10 years he  has worked with                                                               
the permittees across  the state he said that he  has never heard                                                               
any  complaints about  the one-hour  break.   In conclusion,  Mr.                                                               
Peterson urged the committee not to pass HB 477 from committee.                                                                 
                                                                                                                                
4:41:24 PM                                                                                                                    
                                                                                                                                
LIEUTENANT  JAMES  HELGOE,  Division of  Alaska  State  Troopers,                                                               
Department of  Public Safety, directed the  committee's attention                                                               
to the new language in Section 1  of HB 477, which is of concern.                                                               
As written, it  would make the Division of  Alaska State Troopers                                                               
the investigating  agency for  all thefts  and embezzlement  by a                                                               
permittee, operator,  employee, or  consumer regardless  of local                                                               
police  jurisdiction   or  the  credibility  of   the  complaint.                                                               
Therefore, DPS, he  related, believes it would be  better to have                                                               
existing local law enforcement agencies  along with Department of                                                               
Revenue  task   force  to   investigate  such   alleged  criminal                                                               
misconduct.   The Department of  Public Safety  would investigate                                                               
when asked and when there is no local law enforcement agency.                                                                   
                                                                                                                                
4:43:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ROKEBERG  inquired   as  to   whether  a   local                                                               
jurisdiction can enforce state law.                                                                                             
                                                                                                                                
LIEUTENANT  HELGOE replied  that local  law enforcement  agencies                                                               
enforce state statute on a regular basis.                                                                                       
                                                                                                                                
4:43:46 PM                                                                                                                    
                                                                                                                                
ACTING CHAIR KOTT  noted that there was no quorum  to take action                                                               
on  the  legislation.    He  then  closed  public  testimony  and                                                               
announced that HB 477 would be held over.                                                                                       
                                                                                                                                
4:45:22 PM                                                                                                                    
                                                                                                                                

Document Name Date/Time Subjects