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.