Legislature(2005 - 2006)BELTZ 211

04/14/2005 01:30 PM Senate LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 61 GAMING: CALCUTTA POOLS & CRANE CLASSICS TELECONFERENCED
Heard & Held
*+ SB 149 PROTECTION OF PERSONAL INFORMATION TELECONFERENCED
Heard & Held
*+ SB 148 INFORMATION SECURITY TELECONFERENCED
Heard & Held
*+ SB 175 DISPENSING OPTICIANS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 108 INSURANCE TELECONFERENCED
Moved CSSB 108(L&C) Out of Committee
+= SB 157 REG. COST CHARGES: UTILITIES/PIPELINES TELECONFERENCED
Moved SB 157 Out of Committee
     CSHB 61(FIN)-GAMING: CALCUTTA POOLS &  CRANE CLASSICS                                                                  
                                                                                                                                
CHAIR   CON  BUNDE   announced  CSHB   61(FIN)  to   be  up   for                                                               
consideration.                                                                                                                  
                                                                                                                                
SHALON  SZYMANSKI, staff  to Representative  McGuire, sponsor  of                                                               
CSHB 61(FIN), explained that under  current state law, there is a                                                               
very narrow  and specific list  of allowable games of  chance and                                                               
skill  for charitable  purposes. HB  61 adds  Calcutta pools  and                                                               
crane classics  to this  list. Calcutta pools  have been  held in                                                               
the past and have been shown to  be a very effective way to raise                                                               
money for charities across the  state. With Calcutta pools, prior                                                               
to a tournament,  teams are auctioned off and people  will bid on                                                               
the team that  they think will win. All the  money that is raised                                                               
in the auction is  placed into a pot. The person  who is the high                                                               
bidder for  the winning team  gets a predetermined  percentage of                                                               
that  pot  and  the  remaining money  goes  to  the  organization                                                               
holding the permit.  The bill is limited to  sporting events that                                                               
are held within the State of Alaska only.                                                                                       
                                                                                                                                
MS. SZYMANSKI explained  that 30 percent of the pot  has to go to                                                               
the charity, but  the organization holding the  permit can choose                                                               
to donate more.                                                                                                                 
                                                                                                                                
CHAIR BUNDE asked if other monies could be added to the pool.                                                                   
                                                                                                                                
MS.  SZYMANSKI  replied  only the  money  that  the  organization                                                               
raised in the auction.                                                                                                          
                                                                                                                                
SENATOR  BEN STEVENS  said  he has  been  involved with  Calcutta                                                               
pools a number  of times and asked  why the minimum is  set at 30                                                               
percent.                                                                                                                        
                                                                                                                                
MS. SZYMANSKI  replied that the  Department of  Revenue suggested                                                               
setting up Calcutta  pools similar to pulltabs,  which use thirty                                                               
percent as a minimum.                                                                                                           
                                                                                                                                
SENATOR BEN  STEVENS said most  of the pools he  has participated                                                               
in have a  50/50 distribution. Many times the  teams get together                                                               
and make a contribution, which makes the pot go up considerably.                                                                
                                                                                                                                
3:00:08 PM                                                                                                                    
He asked if the sponsor would  support an increase to the minimum                                                               
of the distribution stating, "Thirty percent is not enough."                                                                    
                                                                                                                                
MS.  SZYMANSKI  replied  that  she  would have  to  talk  to  the                                                               
sponsor,  but didn't  think she  would have  a problem  since she                                                               
brought the bill forward for charitable purposes.                                                                               
                                                                                                                                
SENATOR BEN STEVENS said he would  work with the sponsor to raise                                                               
the distribution.                                                                                                               
                                                                                                                                
SENATOR SEEKINS  asked if the number  of pools for each  event is                                                               
limited.                                                                                                                        
                                                                                                                                
MS. SZYMANSKI replied  that the bill did not  limit each sporting                                                               
event  to  one  Calcutta  pool,  but  she  thought  it  would  be                                                               
something to look into.                                                                                                         
                                                                                                                                
SENATOR SEEKINS said that most pools  he's seen have been at golf                                                               
tournaments and no  one else besides the people  who were putting                                                               
it on were involved.                                                                                                            
                                                                                                                                
3:04:19 PM                                                                                                                    
CHAIR   BUNDE  asked   Ms.  Szymanski   to  define   a  qualified                                                               
organization.                                                                                                                   
                                                                                                                                
MS. SZYMANSKI replied  that a qualified organization  is one that                                                               
obtains its permit through the  Department of Revenue and uses it                                                               
for charitable purposes, like non-profit scholarships.                                                                          
                                                                                                                                
3:05:39 PM                                                                                                                    
SENATOR BEN STEVENS  said some charities auction  off the numbers                                                               
of  the participants  -  like  in the  Iditarod.  The bid  number                                                               
depends on  who gets to  ride in  what basket. The  difference is                                                               
that in the Iditarod, the  participant doesn't split the pot; the                                                               
award is to ride  in the basket. In a Calcutta  pool, one bids on                                                               
the team number  and the team that wins, wins  the pot and splits                                                               
it with the charity.                                                                                                            
                                                                                                                                
3:06:58 PM                                                                                                                    
SENATOR SEEKINS  commented that  he learned  in the  pulltab wars                                                               
that Alaska  is a not-for-profit corporation  gambling state and,                                                               
"To refer  to these  things as charitable  gaming is  an absolute                                                               
mischaracterization, Mr. Chairman."                                                                                             
                                                                                                                                
CHAIR  BUNDE  agreed  and  insisted on  having  a  definition  of                                                               
qualified charitable organization.                                                                                              
                                                                                                                                
SENATOR  ELLIS  said,  "It's  not near  enough  benefit  for  the                                                               
charities - the 30 percent."                                                                                                    
                                                                                                                                
CHAIR BUNDE said  current law limits a  municipality or qualified                                                               
organization  to a  maximum  of  $1 million  each  year in  prize                                                               
activities  and he  wondered if  the sponsor  would entertain  an                                                               
increase in the amount a municipality could raise.                                                                              
                                                                                                                                
MS.  SZYMANSKI replied  that that  idea has  been brought  to the                                                               
sponsor's attention in  the past and she chose to  stay away from                                                               
it, because she didn't want to  complicate the bill any more than                                                               
what it  already was. However,  she offered  to bring it  up with                                                               
Representative McGuire again. She added:                                                                                        
                                                                                                                              
     You will find that this  bill also has many limitations                                                                    
     on  how a  Calcutta  pool  can be  run.  First of  all,                                                                    
     Calcutta pools  can be  held only  at a  sporting event                                                                    
     held  within the  State of  Alaska. The  Calcutta pools                                                                    
     cannot  be   held  for  elementary,   secondary,  post-                                                                    
     secondary  or youth  organization  sporting events  and                                                                    
     all participants must be at  least 18 years of age. And                                                                    
     Calcutta pools  can only  be held  in auctions;  and in                                                                    
     order to even hold  this auction, organizations must go                                                                    
     through the Department of Revenue to obtain a permit.                                                                      
                                                                                                                                
     In addition to obtaining this  permit, a report must be                                                                    
     filed with  the department after the  Calcutta is held.                                                                    
     A Calcutta  pool must be  conducted by a  permittee; an                                                                    
     operator cannot be  hired to run a  Calcutta pool. This                                                                    
     will  insure that  the  permittee  oversees the  entire                                                                    
     event. And,  finally, no  less than  30 percent  of the                                                                    
     money raised during the auction  must go to the charity                                                                    
     though this is up to  the charity holding the permit to                                                                    
     decide of it wants to give more than 30 percent....                                                                        
                                                                                                                                
CHAIR BUNDE said he also wanted  a definition of "team" and asked                                                               
if a jockey and a horse would be a team.                                                                                        
                                                                                                                                
MS. SZYMANSKI guessed  that would be considered  a team. Calcutta                                                               
pools were  actually started  with horse  races. She  agreed that                                                               
defining team would be important.                                                                                               
                                                                                                                                
CHAIR BUNDE  added that he  wanted the  percentage to be  part of                                                               
the gross, not of the net.                                                                                                      
                                                                                                                                
LARRY  MEYERS,  Deputy  Director,  Tax  Division,  Department  of                                                               
Revenue, clarified  that qualified  organizations are  defined in                                                               
statute  already  and that  the  current  30  percent is  on  the                                                               
percentage of gross.                                                                                                            
                                                                                                                                
3:13:31 PM                                                                                                                    
CHAIR BUNDE asked if all  1,200 qualified organizations in Alaska                                                               
suddenly  decided  they wanted  to  do  a Calcutta,  what  fiscal                                                               
impact would that have on the department.                                                                                       
                                                                                                                                
MR.  MEYERS   replied  that  the  department   doesn't  have  any                                                               
experience with  this type of  gaming activity, but if  all 1,200                                                               
applied for permits  and filed reports, that would be  a lot more                                                               
work than the department currently has before it.                                                                               
                                                                                                                                
CHAIR BUNDE  asked what he  thought of creating a  percentage for                                                               
the state to cover the cost of regulation.                                                                                      
                                                                                                                                
MR. MEYERS responded, "We always welcome any help we can get."                                                                  
                                                                                                                                
3:14:10 PM                                                                                                                    
SENATOR BEN  STEVENS asked  if any  qualified organization  for a                                                               
gaming permit can run a Calcutta pool.                                                                                          
                                                                                                                                
MR. MEYERS replied yes.                                                                                                         
                                                                                                                                
SENATOR BEN STEVENS  asked, "Even if that entity  is not managing                                                               
their own sporting event?"                                                                                                      
                                                                                                                                
MR. MEYERS  replied the bill  provides that the  participants bid                                                               
at  an auction.  The  intent he  has  seen in  the  past at  golf                                                               
tournaments, for  instance, is  there would  be a  banquet before                                                               
the event and  the teams would be auctioned  before tee-off time.                                                               
The bill clarifies the type of auction.                                                                                         
                                                                                                                                
3:15:56 PM                                                                                                                    
SENATOR BEN  STEVENS remarked that his  son's hockey organization                                                               
has a  charitable gaming permit  and one of the  most competitive                                                               
things  he  has  witnessed  is  the  annual  state  youth  hockey                                                               
tournament.                                                                                                                     
                                                                                                                                
CHAIR BUNDE reminded him that  kids' teams and school and college                                                               
teams are not allowed.                                                                                                          
                                                                                                                                
SENATOR  BEN STEVENS  said he  is talking  about the  parents. He                                                               
wanted  to  tighten up  the  eligibility  section and  require  a                                                               
qualified gaming permit holder to apply for each specific event.                                                                
                                                                                                                                
3:17:31 PM                                                                                                                    
MR. MEYERS  agreed and  added that he  envisions that  each event                                                               
would need a permit sanctioned by the department.                                                                               
                                                                                                                                
CHAIR  BUNDE asked  what the  department would  do if  two people                                                               
applied for the same permit.                                                                                                    
                                                                                                                                
MR.  MEYERS replied  that he  would  look for  guidance from  the                                                               
committee on  that, but he  thought that only the  entity hosting                                                               
the event should be able to have a permit.                                                                                      
                                                                                                                                
CHAIR  BUNDE  noted  that  both   Nome  and  Anchorage  host  the                                                               
Iditarod.                                                                                                                       
                                                                                                                                
SENATOR SEEKINS  envisioned that the Iditarod  Committee, not the                                                               
cities of  Nome and Anchorage, would  be able to have  a Calcutta                                                               
pool.                                                                                                                           
                                                                                                                                
3:18:39 PM                                                                                                                    
SENATOR SEEKINS said he thought  only the event sponsor should be                                                               
eligible to  hold a Calcutta pool  if it had a  gaming permit and                                                               
he wanted only one pool per event.                                                                                              
                                                                                                                                
SENATOR ELLIS  commented that allowing Calcutta  pools could have                                                               
the biggest impact since pulltabs  and asked why only three other                                                               
states have them.                                                                                                               
                                                                                                                                
MR. MEYERS pointed  out that those three are  western states with                                                               
small populations.                                                                                                              
                                                                                                                                
3:22:45 PM                                                                                                                    
CHAIR BUNDE  brought up the fiscal  note and said he  didn't want                                                               
to cost the state money. He supported the user pay notion.                                                                      
                                                                                                                                
MR. MEYERS said he would look at that issue.                                                                                    
                                                                                                                                
SENATOR BEN  STEVENS commented that  only two states  don't allow                                                               
organized gaming and  Alaska is one of them. "They  can go to the                                                               
bookie  and bet  on the  sporting event  that they  want and  not                                                               
share the profits with the charity."                                                                                            
                                                                                                                                
VICKI   OTTE,  Executive   Director,   ANCSA  CEO's   Association                                                               
supported  HB 61.  She is  an avid  golfer and  is a  very strong                                                               
supporter   and  board   member   of  quite   a  few   non-profit                                                               
organizations in this state. she said:                                                                                          
                                                                                                                                
     As you  all know,  in this day  and age,  raising money                                                                    
     for  non-profit organizations  that  benefit people  in                                                                    
     need is  very difficult. However,  there is a  group of                                                                    
     people in the  state that love to play golf  as many of                                                                    
     you do  and they play  in golf tournaments and  like to                                                                    
     give  money to  charities. At  any golf  course on  any                                                                    
     given day  during the  summer, of  course, there  is at                                                                    
     least one tournament being held....                                                                                        
                                                                                                                                
     There  was one  premier  golf classic  that ceased  its                                                                    
     Calcutta event in 2001 when  it came to their attention                                                                    
     that  a  Calcutta event  was  not  legal. At  least  it                                                                    
     wasn't clear that they were  legal until we had a legal                                                                    
     opinion done  by the  state. Up  until that  time, this                                                                    
     event was ceased  it raised $800,000 that  was given to                                                                    
     various charities.  Ceasing the Calcutta  decreased the                                                                    
     proceeds to those charities significantly.                                                                                 
                                                                                                                                
     People in  organizations like to  give money,  but they                                                                    
     also like  to have fun doing  it. Golf is a  sport that                                                                    
     is  becoming  more  and more  popular  in  this  state.                                                                    
     Calcuttas are a time-honored  method of charitable fund                                                                    
     raising uniquely  suited to golfing events.  They raise                                                                    
     substantial amounts  of money, as I  mentioned earlier,                                                                    
     and present no  more harm to the public  than any other                                                                    
     charitable  activities  including pulltabs,  rat  races                                                                    
     and  other  classics,  which are  already  legal  under                                                                    
     state law.  I speak in support  of HB 61 and  urge that                                                                    
      you consider passing this bill. As you know, revenue                                                                      
     generated helps cease the burdens that you all have in                                                                     
     funding programs that benefit people in need.                                                                              
                                                                                                                                
MS.  OTTE related  that there  are premier  golf classics  in the                                                               
Anchorage  and  Fairbanks  areas that  receive  big  sponsorships                                                               
because of Calcutta  pools. She thought if  proceeds were limited                                                               
to 50 percent, even though all  of them give 50 percent now, that                                                               
it might diminish the number of sponsors.                                                                                       
                                                                                                                                
3:27:43 PM                                                                                                                    
JEFF BARNHART,  Head Professional, Palmer Golf  Course, supported                                                               
HB 61. He said he helps  administer golf tournaments for 30 to 50                                                               
different  organizations throughout  a summer  and a  majority of                                                               
them are conducted  to raise money for charities  like Rotary and                                                               
Boys and  Girls Clubs.  He is continuously  asked how  more money                                                               
can be  raised and Calcutta  pools have been very  successful for                                                               
many  years  for raising  money.  He  thought every  organization                                                               
would agree to  pay a fee to  the state to support  a fiscal note                                                               
for administration of the regulations.                                                                                          
                                                                                                                                
CHAIR  BUNDE thanked  everyone  for their  comments  and said  he                                                               
would hold  HB 61 for  another hearing and adjourned  the meeting                                                               
at 3:33:40 PM.                                                                                                                
                                                                                                                                
                                                                                                                                

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