HOUSE BILL 44 3 "An Act providing that a political use is not an authorized use of charitable gaming proceeds; prohibiting the contribution of charitable gaming proceeds to candidates for certain public offices, their campaign organizations, or to political groups; providing that a political group is not a qualified organization for purposes of charitable gaming; relating to what is a qualified organization for the purpose of charitable gaming permitting; and providing for an effective date." Representative Martin provided background information on the HB 44. He stated that the legislation was introduced in order to remove politics from gambling. He pointed out that Alaska was the only state which allowed a political party and candidates to have their own permits. He provided the Committee with a handout titled "Spenard Lawyer-Protector, Promoter and Profiteer of Gam(bl)ing". [Attachment #1]. TOM ANDERSON, STAFF TO REPRESENTATIVE TERRY MARTIN, explained that the legislation would disallow and prohibit any political group or organization from holding a charitable gaming permit. Although, those entities could legally hold a raffle permit. The proceeds then received from the raffle could be distributed to a political entity or organization. He continued that an additional element of the legislation would prohibit any permit holders from distributing their money for political use. He stated that language was defined as: ".....benefiting persons through aiding candidates for public office or groups that support candidates for public office". Mr. Anderson clarified the technical differences between the House State Affairs and the House Judiciary version of the original legislation. He said that the language was more definitive clarifying when a group would go through the Division of Charitable Gaming rather than Alaska Public Offices Commission (APOC). The group at that time would itemize the source of revenue from which the contribution originated. Representative Mulder asked if the interpretation would make it mandatory to include each contribution made to a political fund within an organization regardless of the dollar amount. Representative Martin summarized that the $100 dollar limit would exist regardless of the donator. Representative Mulder summarized Subsection (11) which would 4 require disclosure of contributions and also sources of income, locations and the individuals from which funds were disbursed. Representative Brown voiced a conflict of interest with the legislation in that she was a member of the House Democratic Campaign Committee. Representative Mulder disclosed his conflict of interest. Representative Brown pointed out that the language on Page 3, Line 4, requires that "all" donations or contributions by permittees be identified. She asserted that the $100 dollar exemption did not exist in the language of the current proposed legislation. Representative Mulder agreed. Representative Brown interjected that the public understood that if their donation is under $100, their name would not be disclosed. She requested that policy be kept consistent. Representative Therriault ascertained that tracking should be reported on all donations. Representative Brown asked if a personal source of income would be tracked through the proposed legislation. Representative Martin stated that vendors and operators should be tracked regardless of the donation. Representative Brown emphasized that the language did not separate the vendors in their capacity as individuals from contributing personal funds. She asked how the legislation would differ from the current APOC requirements. Representative Martin responded that everyone should be responsible to report even if the funds were taken from their personal pocket. Mr. Anderson reiterated that the House Judiciary Committee recommended that accounts be disclosed regardless of the source they are contributed from. The intent of that language would prevent any co-mingling of distributed proceeds. He suggested further amending the language to clarify any pull tab or bingo permittee must disclose from which account they are making contributions. That clarification would then address the concern to guarantee that funds given were not distributed from those raised for charitable gaming. Representative Brown asked the moral difference between pull tabs and raffles. Mr. Anderson specified that Section 4 itemizes the types of games from which a permittee can apply. (Tape HFC 95-45, Side 2). Representative Martin thought that raffle money could be used for political contributions, although that was not his 5 original intent. Mr. Anderson stated that a political entity could have a charitable gaming permit under type (B), in order to hold a raffle. If the entity has a gaming permit, then funds earned from a raffle can be donated within a year to those on the list. A non political entity legally could not donate to a political organization or candidate, regardless whether or not the money was earned by a raffle. Representative Brown questioned the language on Page 4, Line 7, "other than raffles". Mr. Anderson replied, that language referenced a political entity holding a permit. Representative Mulder considered that language to apply to all individuals and not just a political entity. Representative Kohring supported eliminating gambling and raffling. Mr. Anderson replied that during the House Judiciary Committee proceedings, testimony by both parties indicated that raffles generated a less significant amount of income, and often times are not a substantial portion of the operations. Mr. Anderson pointed out that the language from that version of the legislation was a compromise. Committee members discussed results from district surveys regarding gambling contributions. Mr. Anderson pointed out that in raffles, the donor knows where the money will go, whereas, in a pull tab situation, the player does not know where the proceeds go. Representative Therriault agreed. He stated that raising money should affect a political philosophy process. With pull tabs, there is no link between the flow of money and the understanding that you are supporting a particular philosophy. Representative Kelly echoed Representative Therriault's concern. DENNIS POFHARD, DIRECTOR, DIVISION OF CHARITABLE GAMING, DEPARTMENT OF REVENUE, stated that the Division is neutral on the proposed legislation, although they have questions on the requirements of the reports. He asked for further clarification of the Legislative intent. The Department's first concern results from past budget cuts, which has left the Division with fewer field audits and investigations. The requirement of an additional report affecting more than one thousand permittees to file, will need further processing creating an additional burden to the Division. He stated that responsibility would potentially take away from the enforcement ability. Consequently, Mr. Pofhard urged fully funding the Division's FY96 Operating Budget request in order to adequately address the legislative concern. Representative Mulder referenced subsection (11) Page 3, asking if all collected funds would be required to be reported to APOC. Mr. Pofhard stated it would. 6 Representative Mulder thought that information would provide APOC a clearer understanding of where those funds were going. He understood that the information required to be gathered from subsection (11) was currently also required by the APOC report. He asked if there would be difficultly in distinguishing between pull tab and raffle reports. Mr. Pofhard replied that would not be a problem for the Division. Discussion followed regarding a report shared between Representative Brown and Representative Martin. The Department offered to provide that report to the Committee at a later date. Representative Mulder asked if the Division had information available on the amount of contributions given to campaigns other than political. Mr. Pofhard explained that to date the Division has had no reason to track that information. The permittee would be required to report income as submitted to the Division. He added that it would be more organized to have the reports in the Division rather that receiving that info from APOC. He emphasized that there would be 1200-1300 reports filed each year resulting from the passage of the legislation. The information would be imputed, tracked, and then a determination would be made if that information was useful. APOC reports are currently used to track the prohibitive uses of proceeds for lobbying. He stated that the State could use the APOC reports for tracking the political contributions. Representative Brown asked if it was required that a pull tab operator disclose information on where the proceeds were to be dispersed. Mr. Pofhard explained the distinction, when a raffle ticket is printed, it is required that the permit be referenced. However, in a vendor or operator pull tab place of business, normally the only way to tell whose game you are playing would be displayed by a permit hanging on the wall. That information is not posted directly on the tab played. Representative Brown questioned why the gross receipts have increased dramatically, whereas, the net proceeds have not. Mr. Pofhard speculated that the percentages have not changed. He added, that pull tabs were legalized in 1988, and that the net proceeds result from the amount of money returned to the charities. Representative Brown inquired where the net profit would be listed. JEFF PRATHER, CHIEF OF AUDIT AND EXAMS, DIVISION OF CHARITABLE GAMING, DEPARTMENT OF REVENUE, replied those figures would not show up anywhere. Most operators do not disclose the profits to the Department although those 7 figures are usually deducted from the expense column. Representative Martin asked if the legislation would prohibit lobbyists from receiving funds from receipts generated by pull tabs. PAT SMUTZ, LEGISLATIVE DIRECTOR, ALASKA STATE AFL-CIO, JUNEAU, stated that his organization does have a pull tab permit and a raffle permit. The raffle permit is used for generating funds for lobbying purposes. (Tape Change, HFC 95-46, Side 1). Representative Brown questioned the distinction of funds being used for the public process. Representative Martin reiterated that Alaska is the only State in the Nation which allows gaming money to be used for political candidates. He stressed that use of those funds was fuel for corruption and that money should be given to charities. HB 44 was HELD in Committee for further consideration.