HOUSE BILL NO. 128 "An Act relating to charitable gaming online ticket sales and activities." 2:07:42 PM REPRESENTATIVE ZACH FIELDS, SPONSOR, appreciated the opportunity to introduce his bill to the committee. He explained the purpose of HB 128. The bill made one simple change - it made regulations that allowed for the sale of charitable gaming raffle tickets online and in-person during the pandemic permanent. Passage of the bill was needed to ensure Alaska's many non-profits could continue to raise money into the future. Time was of the essence, as some of the non-profits were currently planning events during the ongoing pandemic. A local business owner had suggested the bill because the sort of raffles online were necessary to raise funds for the Anchorage Duck Race which benefited Excel Alaska and many other non-profits. Representative Fields continued that while the concept was proposed to him by an Anchorage business owner, charitable raffles occurred throughout the state. He provided several examples including the Great Alaska Duck Race in Anchorage, the Kuskokwim Ice Classic in Bethel, and the Nenana Ice Classic. He noted some of the beneficiaries of the raffles including the American Cancer Society, KUAC Radio in Fairbanks, and the Public Library. The Fairbanks Chamber of Commerce had a rubber ducky race, and many sportsman's groups used raffles to raise money. Representative Fields noted that the raffles not only benefited individual groups but also put more money into Alaskan communities for management and conservation. He mentioned that the Kenai River Sportfishing Association (KRSA) was one of the many groups that purchased raffle tickets and was an example that illustrated why it was important to extend the regulations. He detailed that in the current year KRSA sold tickets online in addition to in-person. Even though the raffle tickets were available in-person at many sporting goods stores like Cabela's, they sold the majority of tickets online. As a result he thought that the rules needed to remain in place for Alaska's charities to survive during a pandemic. Representative Fields also suggested that by putting the regulations in place permanently, the state would raise more money for very important functions longer term. It made sense to make online raffle sales permanent. He was available for questions. Representative LeBon spoke with the Fairbanks Chamber of Commerce who supported the bill. He also spoke with one of the pull tab operators in his district who had sold tickets online which boosted his business and indirectly benefited non-profits. He wondered if a provision was included that would ensure that tickets were sold to eligible Alaskans. He wondered how to address the issue. Representative Fields reported that the bill simply made permanent the same framework put in place by the governor which contained the requirement. 2:11:00 PM Representative Rasmussen asked if there was a reason why the state would not want people from outside of Alaska to purchase raffle tickets that benefited Alaskan non-profits. Representative Fields responded that it was a topic of conversation he had had with some groups. He believed the issue would be addressed to everyone's satisfaction as the bill progressed. Representative Wool asked if pull tab activity was allowed online. Representative Fields indicated that pull tabs would not be sold online. He invited his staff to respond in more detail. The Department of Revenue (DOR) was also available online. TRISTAN WALSH, STAFF, REPRESENTATIVE ZACK FIELDS, answered that the language that was adopted followed HB 76 [Legislation which passed in 2021 regarding extending the Covid 19 disaster emergency] that was put forward by the Department of Law and in the bill before the other body. The Department of Revenue might be able to speak to the reason pull tabs were not included in the original bill. 2:12:26 PM COLLEEN GLOVER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE (via teleconference), explained that the initial language that went into the emergency declaration, including some of the public health orders, were geared towards online games, raffles, derbies, and classics. Pull tabs were not included. It would open up several issues about electronic pull tabs and other issues that required a larger discussion. The division wanted to limit it to something easy to manage at the time. Representative Wool did not personally support online pull tabs and was glad it was not included. He did not see charitable gaming in the bill. He thought the bill related to raffles or lotteries. Representative Fields responded that it was a different section in statute, AS 05.15.690. Vendors were not affected by the bill. The underlying statute differentiated between the types of charitable gaming operators. Co-Chair Merrick indicated that the committee would be hearing from invited testimony. 2:14:14 PM JASON MOTYKA, OWNER, 49TH STATE BREWING COMPANY, ANCHORAGE (via teleconference), introduced himself and reported having businesses in Anchorage and Denali Park. He was the treasure of the downtown community council and volunteered with Excel Alaska and other non-profits throughout the state. He relayed that at the start of the pandemic his organization supported a number of non-profits that had events at his facilities to try to raise money for various organizations. It became apparent that all of the organizations and their fundraising efforts would likely come to a halt which occurred. He reached out to Representative Fields and Senator Begich to see if there was anything the council could do to keep the events going and expand them. They quickly facilitated businesses being able to operate during the pandemic. He increased sales significantly and expand the operation throughout the state. The effort was tremendous success which brought in a significant number of non-profits into a race held in Downtown Anchorage. He reported that over $100,000 was raised for organizations to utilize. Mr. Motyka continued that the idea of changing the rule permanently was important given the uncertainty of what would happen to public events. He also pointed out that Alaska needed to adapt to rules that other states had in place. Online gaming platforms were being built across the country. The technology was more secure and accurate for tracking gaming transactions than was currently required. As technology advanced and Alaskan organizations understood how to use the platforms to reach a greater audience, fundraising would change. He thought it was important to distinguish between pull tabs and the events currently being discussed. He argued that it opened up different problems if pull tabs were included. The bill provided tremendous benefits to organizations which allowed the state to track changes more accurately into the future. Mr. Motyka agreed with Representative Rasmussen's idea of selling to people outside of Alaska. It was important to note that when the race in Anchorage was started originally, the idea was to sell tickets to tourists because of the number of visitors Alaska had each year. He agreed with the prospect of using tourist dollars to help support Alaska's non-profits. He thanked the committee. 2:17:57 PM Representative Rasmussen thought that as long as the non-profits benefitting from internet raffle ticket sales were Alaskan, tickets should be available for anyone inside and outside of Alaska. Representative Wool commented that certain raffles were limited by the number of tickets available. He asked whether restrictions being eased would result in a decrease in foot traffic because of the fundraisers being conducted online. He wondered about the potential impacts of moving things to an online platform. Mr. Motyka thought the old way of selling, tracking, and keeping raffle tickets was inefficient. The reality was that people wanted to get together to socialize and participate in events. However, he thought the technology aspect created far more efficiency for organizations for in-person and online events. He argued that at some point organizations would need the tools to keep up with the rest of the country in terms of the use of online platforms for charitable fundraising efforts. 2:21:28 PM JAMIE KLAES, MARKETING DIRECTOR, ALASKA EXCEL, ANCHORAGE (via teleconference),explained that her employer was a non- profit organization in Anchorage located on the Alaska Pacific University Campus. Alaska Excel provided educational opportunities to rural students in grades 7-12 and typically served about 600 students per year. It did not make sense to her to sell online tickets to people outside of Alaska. The current regulations allowed non- residents to purchase tickets if they were in Alaska. The current regulations also allowed people to buy tickets over the phone from the Lower 48. She mentioned the Alaska Airmen's Association giving away an airplane every year. She indicated that nine times out of ten the winner was someone from the Lower 48. Ms. Klaes relayed her support for HB 128, as there were many benefits to conducting charitable gaming online. Her organization hosted the Great Alaska Duck Race in 2019. They sold paper tickets per the regulations and generated approximately $30,000. In 2020, her organization hosted the event again. Because of the regulation changes, they sold tickets online and generated over $100,000 and included 10 additional non-profits from across the state who also benefited from the proceeds. Alaska Excel expanded its reach and collaborated with organizations as far as Utqiagvik which would not have happened without being online. She noted that the Great Alaska Duck Race event took a substantial amount of time and energy to host. She suggested that if it was limited to selling paper tickets again, her organization would have to take a serious look at whether it was worth the effort. Ms. Klaes reported that eleven other states allowed for online gaming. The American Gaming Association indicated that in the United States it was a $240 billion business and employed 1.7 million individuals. She argued that paper tickets were limiting the ability to generate revenue. They were more difficult to keep track of and were more time- consuming. She found from using the online ticket system compared to paper tickets, it was easier to track, it took less time, and data collection was streamlined. With the temporary change in the prior year, Alaska Excel was able to include Alaskans from all across the state. She thought rural communities felt more connected to events happening in Anchorage and Fairbanks. She spoke about growing up in rural Alaska and feeling isolated from events taking place in other parts of the state. She reiterated her support for HB 128. 2:24:59 PM Representative LeBon referred to Section 2 of the bill that asked for verification of the legal age of the purchaser and their physical presence in the state. He asked how to protect the non-profit organizations from exposure if a ticket was sold to an underaged person or a person in an unapproved location. Representative Fields responded that the language could be tweaked to ensure that non-profits did not face an impossible burden. Other states had adopted such language. He agreed with the notion of accepting someone's money even if they were not from or in Alaska. Representative Rasmussen would appreciate the opportunity to put forth an amendment to allow for out-of-state ticket purchasing. Representative Fields would look forward to working with her on an amendment. 2:26:57 PM MICHELLE DEWITT, DIRECTOR, BETHEL COMMUNITY SERVICE FOUNDATION, BETHEL (via teleconference), reported that her organization sponsored the Kuskokwim Ice Classic and fully supported the bill. She elaborated that the ice classic was a small event highly localized in Bethel. Alaskans tended to be familiar with the Nenana Ice Classic, a similar contest. The Kuskokwim Ice Classic was a contest where customers guessed the month, day, and time of breakup of the Kuskokwim River and had a very high regional presence, especially along the Kuskokwim. The revenues from the contest were dedicated to non-profit groups that provided services in the community of Bethel and along the river from Aniak to Kwigillingok. Most groups were youth groups such as the local youth dance group, the local swim program, and the youth violence prevention group. In pre-Covid times, youth groups would sell tickets in stores to earn money for their clubs or groups. Ms. Dewitt reported that over the years the foundation had received feedback about purchasing guesses online. There was a high demand for online purchasing. She had to turn folks away in terms of guessing online. People wanted to be able to participate and have access on their own timeline. She argued that online purchasing allowed for keeping the control for submitting guesses online in the hands of customers instead of relying on a volunteer to write down and submit a significant amount of data on a guess accurately. Ms. Dewitt reported that in the prior year, due to the pandemic, the ice classic had to pivot at the last minute to phone sales only. It escalated the need to move to an online format. Implementing the ice classic by phone as the only sales strategy was an enormous burden. It had significant inefficiencies with a high risk for errors. There was also a huge decrease in sales. She reviewed the cumbersome process of a phone sale providing the detailed information collected from the caller by the volunteer answering the call. She noted that the volunteers worked from home which meant the organization had to collect all of the forms associated with ticket sales, sort them, and conducted a fail-safe check. She reported that the process occurred over 6000 times in the prior year. She reiterated that the antiquated process currently being used did not make sense based on the technology that was available. Ms. Dewitt opined that HB 128 offered a solution for the issue. It would allow customers to participate in online sales, keep people safer, reach more customers, and allow for built-in efficiencies with the utilization of current technologies. She highly supported the bill. She addressed some of the questions regarding Alaska-based sales versus sales outside of the state. She had hired an attorney 5 years prior to closely examine the statute and provide some advice. The guidance she received was that much of the burden was on the customer to meet the requirements. She would also support an amendment that would clarify the issue taking the vagueness out of whether a person had to be an Alaskan in Alaska. She urged members to support the bill. Co-Chair Merrick would be hearing the bill again in another meeting. HB 128 was HEARD and HELD in committee for further consideration. 2:34:28 PM AT EASE 2:35:55 PM RECONVENED