Legislature(2021 - 2022)BELTZ 105 (TSBldg)

05/03/2021 01:30 PM LABOR & COMMERCE

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

Document Name Date/Time Subjects
SB 130 Sponsor Statement.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Sectional Analysis Version A.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Fiscal Note 2476.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Supporting Document - AK Electronic Pulltabs Overview.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Supporting Document - Legal Opinion on Class III Gaming.pdf SFIN 5/12/2021 9:00:00 AM
SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Scott Henneman, Grover Gaming.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Jeremy Conkling.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Darwin Biwer.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Ray Hout.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Joshua Lewis.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Support - Ken Koelsch.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter of Opposition - John and Sandy Powers.pdf SL&C 5/3/2021 1:30:00 PM
SB 130
SB 130 Letter Opposition - Lisa Ally.pdf SL&C 5/3/2021 1:30:00 PM
SB 130