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In Case You Missed It

Experts weigh-in on lottery

Bill Britt

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By Bill Britt
Alabama Political Reporter

Soon after taking office, Gov. Kay Ivey disbanded the Alabama Gaming Task Force along with other commissions authorized by former Gov. Robert Bentley. Ivey’s administration saw the gaming committee as another way to toss a thorny issue on an ever-growing trash heap of legislative avoidance. According to several members speaking on background, the task force was never going to offer a concrete recommendation but merely a laundry list of options. Over the next several months, The Alabama Political Reporter will publish a series of interviews with lottery experts to understand how to best implement a lottery.

APR will not seek moral justification for a lottery or gambling, as the state already has gaming at three large casinos operated by the Poarch Band of Creek Indians and a couple of smaller operations in Macon and Greene Counties.

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APR aims to offer some of the hard-won wisdom gained by those who have established lotteries in other states, as well as industry specialists who understand the most efficient ways to practice it.

Recently, APR spoke with Charles McIntyre, the executive director of the New Hampshire Lottery Commission and current leader of The North American Association of State and Provincial Lotteries and with Rose Hudson, President/CEO of the Louisiana Lottery Corporation.

“Most lotteries are started because there is either a need for revenues or there’s a need to stop something that’s not okay,” said McIntyre, who served as a state prosecutor before heading New Hampshire’s 50-year-old lottery.

There is little doubt Alabama’s government needs more revenue as the state struggles to pay for essential services. There is another problem: tribal gaming operated under federal regulations is exempt from paying taxes. Add to that the confusion, and some would say dishonesty brought on by former Gov. Bob Riley’s bingo wars, and the problem grows even larger.

On two separate occasions, McIntyre testified before the task force sharing his insight on gaming and what New Hampshire learned over its five decades of operating a successful statewide lottery. McIntyre advises the state be clear on oversight and accountability. His ideas are shared by Hudson, who believes, “The structure of the lottery is, first and foremost, the most important thing.”

Hudson and McIntyre agree the legislative process must be transparent to give voters confidence, while not yielding to temptation to kill the lottery through overly detailed constitutional amendments.

To enact a lottery, the state Legislature must pass legislation that allows the people to vote to amend the state’s 1901 Constitution, which currently outlaws games of chance. Section 65 states, “The legislature shall have no power to authorize lotteries or gift enterprises for any purposes, and shall pass laws to prohibit the sale in this state of lottery or gift enterprise tickets, or tickets in any scheme in the nature of a lottery; and all acts, or parts of acts heretofore passed by the Legislature of this state, authorizing a lottery or lotteries, and all acts amendatory thereof, or supplemental thereto, are hereby avoided.”

During the 2016 Legislative Session, Sen. Jim McClendon, R-Springville, offered a 27-word bill that would have amended Section 65 to remove the prohibition on a lottery. However, after weeks of wrangling, special interests killed the legislation by adding paragraphs of so-called clarification which divided lawmakers.

Hudson recalls a similar experience in Louisiana when she worked for the state Legislature during the process that led to authorizing the state’s lottery.

“I was working for the Legislature when the lottery passed, so it’s kind of interesting watching from another perspective,” said Hudson. “It was this kind of perfect storm of legislative will that moved it through the process without the bill becoming tainted, without it becoming amended, you know, to do all kinds of nefarious stuff that can happen during a legislative session.” Both Hudson and McIntyre agree that passing a clean constitutional amendment is the key to a lottery’s passage in each state.

Like Alabama, the States of New Hampshire and Louisiana required a vote of the people to start the process toward offering a statewide lottery.

“I loved the way it happened here [in New Hampshire],” said McIntyre. “It was very local, controlled, very grassroots, which is pretty typical for New Hampshire.”

Once a constitutional amendment passed authorizing a lottery, “each city and town had the opportunity to say yes or no to it,” said McIntyre. “And most, the vast majority said it was okay. So for us, it’s been, you know, five decades of operations. It’s just a part of the universe for us now.”

In New Hampshire, all lottery proceeds go to education. Before a lottery was enacted, each school district was responsible for funding its local schools without aid from state government. Since its start, New Hampshire’s lottery has contributed $1.7 billion to education.

Hudson says, in practice, Louisiana’s lottery revenues went to schools, but it was not new money added to the education budget. There was a lot of debate in the Louisiana Legislature on where the funds should go. “There were so many calls on that money during debate and the hearings. And it happens it every state, you know, anything from general funds to education to the elderly, veterans, etc. They could not come to a consensus on the dedication,” Hudson added. Eventually, Louisiana lawmakers passed legislation dedicating lottery funds to education, something Hudson believed should have been part of the original enabling bill. “States that have started lotteries after us really learned, lessons from their older brothers and sisters,” said Hudson.

Both Hudson and McIntyre agree that a lottery’s governance is of utmost concern, not only to make sure there is a regulated system which operates beyond reproach, but also has the flexibility to change with the times.

“If the state passes a lottery the first thing is to do is hire someone who knows what they’re doing, who’s done it before,” says McIntyre. He believes there should also be, “[S]ignificant oversight in the Legislative body, whether it’s a joint committee or another specific group of the Legislature, to make sure that they’re doing everything right.”

Like McIntyre, Hudson thinks setting parameters is essential to long-term success. “The structure of the lottery is, first and foremost, the most important thing,” says Hudson. “I think one of the things that Louisiana did right was setting our lottery up with a corporate structure, with the appropriate checks and balances.” Louisiana’s lottery corporation presents its budget to a joint legislative committee once a year, and its books are audited by the legislative auditor. “They don’t deal with our budget like a state agency in terms of combing through it and making amendments,” said Hudson. “It’s an up or down vote.” Hudson says she uses the presentation as a “kind of a state of the lottery opportunity.”

She also has to receive legislative approval to add new games, but it’s a very streamlined process. “If we are going to initiate any new online games, so let’s say, there’s a multi-state game called Win for Life, if we wanted to launch, or join that, we would have to go to the oversight committees.”

In New Hampshire, the lottery is audited seven months out of the year. “Auditors visit my building, go through all of our books, everything we spent,” said McIntyre. “People need to know the operation is legit.”

McIntyre and Hudson said they enjoyed coming to Alabama and offering what they learned over the years.

“Lotteries are borne out of the sensibilities and the sensitivities of every state, so they’re crafted each differently because they reflect the people of each state,” said McIntyre. “So, what works one place, doesn’t work another place,” but he believes there are good models Alabama can draw on for the best practices. Hudson also sees the wisdom in learning from others examples and finding what works best for that state.

Passing a clean constitutional amendment, setting appropriate oversight and understanding the types of games that work well with the state are all important factors that lead to success.

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House passes General Fund Budget

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

The Alabama House of Representatives passed the state General Fund Budget on Tuesday.

The General Fund Budget for the 2019 fiscal year is Senate Bill 178. It is sponsored by Sen. Trip Pittman, R-Montrose. State Rep. Steve Clouse, R-Ozark, carried the budget on the House floor. Clouse chairs the House Ways and Means General Fund Committee.

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Clouse said, “Last year we monetized the BP settlement money and held over $97 million to this year.”

Clouse said that the state is still trying to come up with a solution to the federal lawsuit over the state prisons. The Governor’s Office has made some progress after she took over from Gov. Robert Bentley. The supplemental we just passed added $30 million to prisons.

The budget adds $50 million to the Department of Corrections.

Clouse said that the budget increased the money for prisons by $55,680,000 and includes $4.8 million to buy the privately-owned prison facility in Perry County.

Clouse said that the budget raises funding for the judicial system and raises the appropriation for the Forensic Sciences to $11.7 million.

The House passed a committee substitute so the Senate is either going to have to concur with the changes made by the House or a conference committee will have to be appointed. Clouse told reporters that he hoped that it did not have to go to conference.

Clouse said that the budget had added $860,000 to hire more Juvenile Probation Officers. After talking to officials with the court system that was cut in half in the amendment. The amendment also includes some wording the arbiters in the court lawsuit think we need.

The state General Fund Budget, SB178, passed 98-1.

Both budgets have now passed the Alabama House of Representatives.

The 2019 fiscal year begins on Oct. 1, 2018.

In addition to the SGF, the House also passed a supplemental appropriation for the current 2018 budget year. SB175 is also sponsored by Pittman and was carried by Clouse on the floor of the House.

SB175 includes $30 million in additional 2018 money for the Department of Corrections. The Departmental Emergency Fund, the Examiners of Public Accounts, the Insurance Department and Forensic Sciences received additional money.

Clouse said, “We knew dealing with the federal lawsuit was going to be expensive. We are adding $80 million to the Department of Corrections.”

State Representative Johnny Mack Morrow, R-Red Bay, said that state Department of Forensics was cut from $14 million to $9 million. “Why are we adding money for DA and courts if we don’t have money for forensics to provide evidence? if there is any agency in law enforcement or the court system that should be funded it is Forensics.”

The supplemental 2018 appropriation passed 80 to 1.

The House also passed SB203. It was sponsored by Pittman and was carried in the House by State Rep. Ken Johnson, R-Moulton. It raises securities and registration fees for agents and investment advisors. It increases the filing fees for certain management investment companies. Johnson said that those fees had not been adjusted since 2009.

The House also passed SB176, which is an annual appropriation for the Coalition Against Domestic Violence. The bill requires that the agency have an operations plan, audited financial statement, and quarterly and end of year reports. SB176 is sponsored by Pittman and was carried on the House floor by State Rep. Elaine Beech, D-Chatham.

The House passed Senate Bill 185 which gives state employees a cost of living increase in the 2019 budget beginning on October 1. It was sponsored by Sen. Clyde Chambliss, R-Prattville and was being carried on the House floor by state Rep. Dimitri Polizos, R-Montgomery.

Polizos said that this was the first raise for non-education state employees in nine years. It is a 3 percent raise.

SB185 passed 101-0.

Senate Bill 215 gives retired state employees a one time bonus check. SB215 is sponsored by Senator Gerald Dial, R-Lineville, and was carried on the House floor by state Rep. Kerry Rich, R-Guntersville.

Rich said that retired employees will get a bonus $1  for every month that they worked for the state. For employees who retired with 25 years of service that will be a $300 one time bonus. A 20-year retiree would get $240 and a 35-year employee would get $420.

SB215 passed the House 87-0.

The House passed Senate Bill 231, which is the appropriation bill increase amount to the Emergency Forest Fire and Insect and Disease Fund. SB231 is sponsored by Sen. Steve Livingston, R-Scottsboro, and was carried on the House floor by state Rep. Kyle South, R-Fayette.

State Rep. Elaine Beech, D-Chathom, said, “Thank you for bringing this bill my district is full of trees and you never know when a forest fire will hit.

SB231 passed 87-2.

The state of Alabama is unique among the states in that most of the money is earmarked for specific purposes allowing the Legislature little year-to-year flexibility in moving funds around.

The SGF includes appropriations for the Alabama Medicaid Agency, the courts, the Alabama Law Enforcement Agency, the Alabama Department of Corrections, mental health, and most state agencies that are no education related. The Alabama Department of Transportation gets their funding mostly from state fuel taxes.

The Legislature also gives ALEA a portion of the gas taxes. K-12 education, the two year college system, and all the universities get their state support from the education trust fund (ETF) budget. There are also billions of dollars in revenue that are earmarked for a variety of purposes that does not show up in the SGF or ETF budgets.

Examples of that include the Public Service Commission, which collects utility taxes from the industries that it regulates. The PSC is supported entirely by its own revenue streams and contributes $13 million to the SGF. The Secretary of State’s Office is entirely funded by its corporate filing and other fees and gets no SGF appropriation.

Clouse warned reporters that part of the reason this budget had so much money was due to the BP oil spill settlement that provided money for the 2018 budget and $97 million for the 2019 budget. Clouse said they elected to make a $13 million repayment to the Alabama Trust fund that was not due until 2020 but that is all that was held over for 2020.

Clouse predicted that the Legislature will have to make some hard decisions about revenue in next year’s session.

 

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Day Care bill delayed for second time on Senate floor, may be back Thursday

Sam Mattison

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By Samuel Mattison
Alabama Political Reporter

The day care bill, which would license certain day care centers in Alabama, was once again delayed on the state Senate floor after one lawmaker requested more information.

Its brief appearance Tuesday ended with state Sen. Gerald Dial, R-Lineville, saying a compromise had not yet been worked out with the bill’s detractors.

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Alabama’s Senate has been hesitant to act on the legislation because of complaints of state Sen. Shay Shelnutt, R-Trussville, who has been an opponent of the bill since its introduction last year. The bill’s delay on Tuesday marks the second time its been taken off the Senate’s agenda.

The bill has had a rocky time in this year’s session, but the bill’s sponsor state Rep. Pebblin Warren, D-Tuskegee, said she is still confident about its passage out of the Legislature.

Warren, D-Tuskegee, filed the bill this session with the support of influential lawmakers including Gov. Kay Ivey, who told reporters last year that she though all day cares should be licensed.

Mainly sparked by the death of 5-year-old boy in the care of a unlicensed day care worker, the bill had great momentum coming into this year’ session.

Despite the growing support from lawmakers, Religious groups had concerns that the bill would increase state-sponsored reach into religious day cares in churches and non-profit groups.

Spearheading the dissenters was Alabama Citizens Action Program, a conservative religious-based PAC.

Warren, proponents, and ALCAP announced a compromise to the bill while it was still in the Alabama House.

Announced by ALCAP originally, the new bill was a weaker version in that it did not require that all day cares in the state be regulated. Instead, religious-based day cares would only need to be registered if they received federal funds. At a Senate committee meeting in February, Warren said a similar requirement was about to come from federal law in Congress.

The bill moved through the House in a overwhelming vote in favor of the proposal and passed unanimously out of a Senate committee a few weeks ago.

Warren, speaking to reporters after its passage from the House, said she was unsure if the bill would encounter resistance in the upper chamber.

It was the Senate that killed the daycare bill last year amid a cramped last day where senators took the bill off the floor. The bill may face similar complications this year, as lawmakers seem to be preparing to adjourn within a few weeks.

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In Case You Missed It

Fantasy sports bill fails on Senate floor

Sam Mattison

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By Samuel Mattison
Alabama Political Reporter

Would-be Fantasy Sports players in Alabama will have to wait to legally play in the state following a Senate vote on Tuesday.

The Alabama Senate decisively killed a bill to exempt fantasy sports from the state’s prohibition on gambling.

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Not even entertaining a debate on the Senate floor, the proposal was killed during a vote for the Budget Isolation Resolution, which is usually a formality vote preluding a debate.

Fantasy sports are contests where participants select players from real teams to compete on fantasy teams using the real-world players’ stats.

Since 2016, the practice has been illegal in Alabama following a legal decision by the Attorney General’s Office that categorized it as gambling.

The bill’s sponsor, state Sen. Paul Sanford, R-Huntsville, predicted the bill’s failure during a committee meeting two weeks ago, where the bill passed unanimously.

Sen. Paul Sanford speaks to reporters after a Senate Committee meeting on Feb. 28, 2018. (Samuel Mattison/APR)

Speaking to reporter’s after the committee meeting, Sanford said the decision to file the bill was mainly a philosophical belief that the practice shouldn’t be illegal.

Sanford, a fantasy sports player before its ban, said that fantasy sports are a way to bring people closer together and not a means to win money. The Huntsville senator is not seeking re-election.

The bill’s failure in the Senate follows its trajectory last year too. A similar version of the bill, also sponsored by Sanford, failed in the Senate during the final days of the 2017 Legislative Session.

Since Sanford is retiring, it is unclear if the bill will even come back next session, or if it will even have a Senate sponsor.

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Experts weigh-in on lottery

by Bill Britt Read Time: 7 min
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