CS FOR SENATE BILL NO. 76(JUD): An Act requiring regulations relating to pull-tabs adopted by the Department of Commerce and Economic Development to be consistent with the North American Gaming Regulators Association standards on pull-tabs; allowing permittees to contract with vendors to sell pull-tabs on behalf of the permittee; restricting the purchase of pull-tabs by certain persons; requiring the sale of pull-tabs by vendors to be solely by a pull-tab ticket dispensing machine; requiring receipts before certain prizes may be paid; prohibiting distributors from supplying pull-tabs to vendors; relating to registration of vendors; requiring the licensing of out-of-state manufacturers; allowing public or nonprofit broadcasting stations to sell pull-tabs at more than one location; preventing persons with certain convictions from being involved in charitable gaming activities as a permittee, licensee, vendor, person responsible for an activity, fund raiser or consultant of a licensee, or employee in a managerial or supervisory capacity and providing exceptions for certain persons whose convictions are at least 10 years old; relating to multiple-beneficiary charitable gaming permits and door prizes for charitable gaming; requiring Department of Commerce and Economic Development approval of contracts between charitable gaming permittees and operators before gaming may occur; limiting the amount of authorized expenses to a percentage of adjusted gross income for a charitable gaming activity; relating to the reporting and payment of a percentage of the adjusted gross income by operators to permittees; requiring Department of Commerce and Economic Development approval of contracts between permittees and operators; allowing the commissioner of commerce and economic development to issue orders prohibiting violations of state gaming laws; relating to the authority of the commissioner of commerce and economic development to suspend or revoke a permit, license, or registration; relating to the uses to which charitable gaming proceeds may be put; relating to `political uses' and `political organizations' as those terms are used in the charitable gaming statutes; and providing for an effective date. REPRESENTATIVE BRIAN PORTER announced that public testimony would be heard on CSSB 67(JUD) until 8:00 p.m. The following individuals testified via teleconference: JIM STUKEY, Craig, said he did not wish to testify. JANET STRICKLAND, Chamber of Commerce, Dillingham, said that there were portions of the bill that needed closer examination. She voiced her concern especially in regard to the lobbying exclusion. JOE MCGILL, President, BBHMC, Dillingham, said he had just received the bill and, in general, voiced his support. He said that the bill would need some changes. Christophor Napoli, Beaver Round-up, Dillingham, voiced his support of the bill. He was concerned about the lobbying exclusion. Representative Porter read the sponsor statement by Senator Drue Pearce, sponsor of CSSB 76(FIN) (copy on file). PAUL FUHS, Commissioner, Department of Commerce & Economic Development, said he had some documents to read for the committee. First, he said he had a letter from the Governor in support of SB 76. Although the Governor does not believe gaming is a positive influence on society, he believed if it existed, the money should be going to charities. He was in support of the increase percent of profit going to charities, prohibiting the use of proceeds for campaigns contributions and for lobbyists. The Governor felt that gambling should not be involved in government. He also supported the provision that operator licenses could not be held by convicted felons. He also supported the provisions that allowed the charity to be its own vendor providing more profits for the charity. Commissioner Fuhs said that radio ads by Alaskans for Less Gaming had been heard. He said that after inquiry, Higgins Corp. was found to be producing these ads. He stated that Mark Higgins is a major lobbyist for the gaming industry in Alaska and was opposed to SB 76. Mr. Higgins represents the group that is the largest distributor of pull tabs in Alaska and the largest operator in Alaska. He felt the ads misrepresented the legislation. Commissioner Fuhs said that Mr. Higgins operates a political consulting firm for Alaska Bingo Management and manages the political campaigns of current legislators. He felt this was a perfect example of why gambling needed to be eliminated from government. He also provided a copy of the financial statement of the Alaska Charitable Gaming Association. This organization is a group of gaming operators who have set themselves up as a non-profit organization. The state has denied a permit to them. Its financial statement shows that 75 percent of its proceeds paid lobbyist Mark Higgins. The rest of the money went for campaign contributions. The only charitable contribution was made to the YMCA for $200. He felt this made a strong case for excluding campaign contributions from gaming proceeds. Commissioner Fuhs said another provision of the bill required the department to approve contracts between charities and operators to prevent abuses of the charities. He also said the department supported provisions that required out of state pull tab distributors to be licensed with the state of Alaska, and action by the Senate Finance adding $381.0 to the Department of Revenue budget to provide increased auditing and enforcement of the pull tab industry. He stated he was calling on the common decency of Alaskans to support this legislation that gets gambling out of government. ALLEN SANDERSON, Alaska Independent Blind, Anchorage, testified in support of the bill. He pointed out that any charity that used their proceeds for lobbying would lose their non-profit status. He voiced his concern over the disbursement of pull tab machines. He felt that the machines were hard to maintain and distribute, and would rather have the machines as an option. ROGER CUNNINGHAM, Wasilla, testified in support of the bill. He said he was a member of the gaming industry and made his living by selling pull tabs and bingo supplies to non- profits and charities across the state. He objected to Commissioner Fuhs' comments toward the entire gaming industry. He felt his business improved when charities and non-profits did well. His experience with vending machines proved them unprofitable because of break-downs. He pointed out that a pull tab vending machine had not been perfected that worked well for paper pull tab. He also said that the machines were expensive and should not come out of the charities' profits. He felt that the machines did not improve accountability and was a needless expense. Representative Porter pointed out that the pull tab machine was not an electronic device. He said it was a machine that holds pull tabs, would hopefully provide greater control, and less opportunity for insider information. JOHN LOPEZ, Anchorage, asked if self-directed permittees would be subject to the same percentages that operators would. Representative Porter answered affirmatively and informed those on teleconference that information was being provided by John Hanson, Jr., Gaming Manager, Department of Commerce & Economic Development. Mr. Lopez felt that SB 67 would restrict gaming more than it would enhance it. He voiced his opposition to the vendor provision and multiple location provision for public broadcasting. RICK KOCH, Barrow, voiced his opposition to SB 67 in its present form. He felt the bill had moved too quickly and was opposed to its effects on political organizations. He expressed his appreciation to the people who had worked on this bill and recognized it as a tough issue. GREG WAKEFIELD, Anchorage, voiced his support of changes in gaming legislation but was opposed to SB 76 in its current form. He also felt the legislation had been rushed, and the agreements had been made behind closed doors and without the public process. He felt this bill would hurt the political process and saw it as an anti-party bill. He encouraged further study of the legislation and asked for more hearings. Representative Porter pointed out that this issue had been before the legislature since 1991 and has had at least 43 committee hearings. He felt that the charge that this legislation was being rushed might be an over statement. WILL PETERSON, General Manager, KBBI, Homer; Vice-Chairman of Alaska Public Radio Network; Chairman of APRN's committee, and person in charge of KBBI's gaming permit, testified in support of SB 76. He said that since PBS had taken approximately 30 percent cuts to their operating budget from the state, there has been a search for ways to increase funding. He said that if SB 76 was passed, it would clarify gaming and allow PBS to set up an endowment from the proceeds. ELSIE O'BRYAN, Mid-Valley Seniors, Houston, testified in support of SB 76 as a way to clean up gaming legislation. She felt this legislation would clear up the distribution of money after allowable expenses to the operators and the charities. End SFC-93 #48, Side 2 Begin SFC-93 #54, Side 1 WILDRED LAMOREUX, representing area blind readers, Anchorage, voiced his appreciation of the work done on this legislation and supported SB 76. His concern was with the gaming machines. BRUCE SMITH, KUAC, Fairbanks, said that he had sent a letter in support of SB 76. He spoke of cuts taken by public broadcasting and the need for finding new funding. He felt SB 76 clarified gaming intent for public broadcasting. TUESDAY SMITH, operator in Fairbanks, said that she had not had time to review SB 76. She felt that the legislation was being pushed through and unstable for the operators. She would encourage change in the gaming laws but felt 30 percent for charities was too high. KENT HARTZBERG, Executive Director, Boniface Bingo, Anchorage, previously an auditor for the State of Alaska for gaming and felt he had both regulatory and hands-on experience of gaming activities. He supported SB 76 but recommended a few changes to the bill. He said that there was no need in Sec. 4 to limit the number of permittees that can participate in the gaming activity. The more permittees that can be involved in a joint venture or use of the same location can benefit all the permittees involved. By limiting the number of permittees, he felt it provided the operators with an unfair advantage. He said that Sec. 5 should be expanded to exclude anyone with a felony conviction or conviction of theft or dishonesty from participating in any gaming activity. He felt the integrity of charitable gaming should be held to the highest possible standards. In Sec. 24 retail outlets could charge the charities for the privilege of selling pull tabs. He felt this would not benefit charities, and that third party vendor situation causes accounting problems. RANDI SMITH, Women's Resource & Crisis Center, Kenai, testified in support of SB 76, and agreed with the 30/70 split for charities. PAT VINCENT, Executive Officer, Kenai Peninsula Builders Assoc., testified in support of SB 76. JACK POWERS, licensed operator, Anchorage, testified that he was opposed to SB 76. He said he was especially opposed to the pull tab machines which could give easier access to minors. Since he only received the bill several hours ago, he asked for another hearing in order to study the bill and offer amendments. ROB RAWLS, General Manager, Public Radio KOTZ, Kotzebue, testified in support of SB 76. He said that public broadcasting was in the state of crisis because of state funding cuts. He was not in support of gaming but these cuts have forced public radio to look to gaming for funding. He pointed out that KOTZ offered not just a radio station but the only communication, some life and death situations, for many of the NW communities. He felt that public broadcasting was one of the few things that united all of Alaska and urged the passage of SB 76. G. GORDON PILE, Anchorage, testified in opposition to SB 76. He felt the bill was prejudiced against political groups. BILL BISHOP, Executive Committeeman, American Legion, Kodiak, testified in support of SB 76. He said that the pull tab machines should be an option since he had experience with their disrepair. MYRNA MAYNARD, Anchorage, testified in opposition to SB 76. She particularly objected to vending machines in bars. She voiced her support of politics being involved with gaming, but was unsure if public broadcasting should run a statewide game. She said that if in fact the issue was keeping politics out of gaming, then charities should keep all of the proceeds. JIM FISK, Bayside Fire Department, Kodiak, spoke in support of SB 76. He was in favor of banning operators of gaming in Alaska. ALYCE A. HANLEY, Anchorage, voiced her opinion that political candidates were not charitable organizations, and felt it was appropriate that SB 76 eliminated them from gaming. She voiced her concern with the criminal element involved in the gaming industry. GARY LANGILLE, President, Kodiak liquor license, Kodiak, spoke in support of SB 76. He felt that he would clean up gaming, and also was pleased with a larger percent going to charities. He stated that machines were bulky, expensive and a maintenance problem, especially in rural Alaska. BEVERLY A. MATTHEWS, Anchorage, spoke in opposition to not being able to contribute to political candidates and hoped the political portion of the bill would be made more clear. DICK STOFFEL, general contractor, Wasilla, nature tour guide, and district chair of the Republican party, spoke in opposition to gambling in general. He felt that gambling did not solve economic problems, but rather uses people's weaknesses and covers up problems. He felt creativity should be used in financial tight times. JOSEPH W. ALBRECHT, Vice President of Local Anchorage Fire Fighters Union, Anchorage, testified in support of gaming reform. He was also in support of helping public broadcasting. He was in opposition to Sec. 14, line 2 which restricted funds for lobbying. He explained that two years earlier the fire fighters had used money from charitable gaming to lobby in Juneau for needed funds. He spoke in support of gaming reform. SENATOR DRUE PEARCE asked for confirmation that he came to Juneau to lobby as a citizen and not a registered lobbyist. Mr. Albrecht answered affirmatively. Senator Pearce suggested that the bill could be amended by excluding "registered" lobbyists, therefore allowing ordinary citizens to lobby on their special interests. CORAL SEYMOUR, Peninsula Oilers Baseball Club, Kenai, said he had not had a chance to read SB 76 but asked the legislature not to adjourn early since there was so much legislation left to do. DEBBIE SCHNABEL, management consultant, Haines, spoke in support of SB 76. She believed it clarified issues and would help organizations with larger revenues. She was in support of the unique opportunity the bill would provide public broadcasting. BEN BENEDIKTSSON, President, Retire Officers Assoc., Anchorage, spoke in opposition to SB 76. He objected to the section on dispensing machines on page 3 of the bill and felt the cost, maintenance, and repair of the machines needed more study. He felt charitable gaming should be left as is. JIM PEOT, distributor, Anchorage, said that he was in the middle of this issue since he sells to operators and charities. He said that felons should not be involved in charitable gaming. However, misdemeanors should not eliminate a person for a lifetime. He felt vending machines should be optional because they would complicate the situation. In general, he spoke in support of SB 76. Ski Olsonaski, private citizen, asked the legislature to extend the effective date for at least one year to allow a transition period for operators. She was concerned that it would put some new operators out of business. The following individuals testified in Juneau: RICH MCCLEAR, Chairman of the Board-APRN and Manager-KCAW, Sitka, testified in person. He said that since 1986, public broadcasting had taken a 32 percent cut in state funds. Other countries have used forms of on-the-air radio gaming. Public radio in Alaska thought that might be a good way to raise money. In 1990, HB 587 was passed by the legislature which allowed an on-the-air radio game. So far, APR has not been able to make a game fit the existing laws. The amendment to SB 76 to sell pull tabs in multiple locations would allow the radio game. He said that this was not a lottery, that it was pull tab game but because there are stations all over the state, pull tabs must be sold in several locations at the same time. The pull tab sale is then followed by a raffle. APR will not have an operator but will operate the game itself. One hundred percent of the net proceeds will go to the charity which is public broadcasting. Those proceeds will be placed in an endowment which after ten years could make public broadcasting self sufficient. ANN DOOLEY, Crisis Center, Juneau, testified in support of SB 76. She saw this legislation providing an opportunity for other non-profits to start their own businesses. She preferred that the vending machines be optional rather than mandatory. She said that her organization had been able to operate successfully under a 60-40 percent split. JOHN HANSEN, JR., Gaming Manager, Department of Commerce & Economic Development, said under existing statutes there is a prohibition against convicted felons of certain crimes for five years. Crimes that are a five-year prohibition are crimes of violence such as murder. Crimes that impose prohibition for life are such crimes as theft. This legislation allows the department some discretion on specific misdemeanor crimes, and also increases the ban for other felons from five to ten years. Co-chair Pearce voiced her support that the department would have some leeway in regard to individuals who have committed misdemeanor crimes. RON PAGENKOPF, treasurer of Juneau Soccer Club, and member of Juneau Youth Activities Co-op (5 permittees), testified in support of SB 76. He said that this bill would allow his organization to work under one permit, requiring one report to the state instead of five (in regard to quarterlies--5 reports instead of 21), benefiting the state by less paper to process. It would allow uninterrupted play of games, simplify accounting procedures, making the auditing process more efficient. He said his organization would like the pull tab machines to be an option. Personally, he said he supported political parties being removed from charitable gaming. He felt the integrity in the gaming industry was improving and although he did not agree with the entire bill, he felt it had more benefits than drawbacks. ADJOURNMENT The meeting was adjourned at approximately 8:05 p.m.