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The latest gambling bill: a breakdown

The first gambling bill makes it debut on Thursday. Here’s a breakdown of what’s being proposed at this point.

(STOCK PHOTO)

Thursday morning, the first of the long-awaited comprehensive gambling bills – the bill which will create a constitutional amendment – will finally make its debut in the Alabama Legislature. 

The first copies of the constitutional amendment bill, carried by Rep. Chris Blackshear, began to make their rounds Wednesday afternoon. There were few surprises and few specifics in that bill. 

Mostly, the bill does what has long been promised – it proposes to legalize casino gaming at 10 locations, implements a statewide lottery, legalizes sports wagering and creates a gaming commission – complete with a law enforcement agency – to enforce gaming laws. All of this is contingent, of course, on voters approving the amendment at the polls in November. 

While the bill provides very few specifics, Blackshear and Rep. Andy Whitt, who chaired the House gaming committee, provided several additional details during a press conference Wednesday afternoon. 

“From revenue disbursement to regulation to licensing, I’m confident we’ve covered all the bases here. I’m proud of our work, and I look forward to guiding this bill through the legislative process,” Blackshear said. 

For now, here’s what we know: 

What we get

The gambling legislation proposes to legalize 10 casino locations around the state – in Macon County, Greene County, Lowndes County, Mobile County, Houston County, Birmingham, the three current Poarch Band of Creek Indians’ locations and a fourth Poarch Creek location in the northeast part of the state. (The fourth location, and the legalization of Class III games at the tribe’s current locations are all dependent upon the tribe striking a compact with the state of Alabama. Rest assured that the framework for such an agreement is in place and will likely be finalized within weeks of the constitutional amendment being approved by voters in November.)

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Additionally, the bill would create a statewide lottery that would prohibit electronic play and the variety of electronic lottery games, such as online scratch-off games. It would also allow sports wagering, and it appears as if mobile wagering would be allowed. 

Perhaps the most important aspect, however, is that the legislation also creates a gaming commission with an attached law enforcement entity. It’s unclear if future legislation will toughen the penalties for illegal gambling, but that’s probably a safe bet. The new commission would be responsible for licensing, regulating and policing all gaming around the state. If done properly, the policing efforts could effectively leave the state with less gambling than currently exists. 

Taxes

The tax rate for casino net revenue is 24 percent, according to an information sheet provided to media at the press conference. It’s unclear if that’s a blanket tax rate or an average of several rates for different types of games. (For example, many states tax games such as slots at higher rates than table games because casinos have more costs/risk to operate table games. Those states recognize that well-run table games attract a better clientele and mean more revenue for the state – both inside and outside the casino – than other, less skilled games.)

We do know that at least one type of skilled wagering – sports betting – has a different rate. It will be taxed at 17 percent of net revenue. That’s higher than some states, but within the typical range. 

Both rates are somewhat on the high side for a start-up state, even one with a restricted licensing approach. 

Disbursement

The gambling committee expects the combination of lottery, casinos and sports wagering to haul in somewhere between $800 million and just over $1 billion annually, not counting licensing fees. That’s around $300-$400 in casino revenue, $200 million from the lottery, $300 million from the compact with the Poarch Creeks and $10 million from sports wagering. (The sports wagering projection for this state – which is notorious for its illegal sportsbook wagering – seems low, particularly if mobile wagering is allowed.)

All lottery proceeds will go to the Lottery For Education Fund, which will in turn use those funds to pay for a variety of education-related expenses. Mentioned in the information provided Wednesday were school security expenses and a two-year college scholarship program. There was no mention of a scholarship program similar to Georgia’s HOPE scholarship program, which provides scholarships to low-income students with good grades. 

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All gaming revenue will essentially go into a fund for use by the legislature. That fund, named the Gambling Trust Fund, will provide money for mental health care, rural health care, roads and bridges, state retirees bonuses, state parks, cost-of-living raises for state employees and teachers, and other non-recurring expenses. 

Commission

The proposed gaming commission that would be created by the legislation would be comprised of nine members – four appointed by the governor, two from the House Speaker (one of which comes from a list provided by the Minority Leader), two from the Senate President (one from a list provided by the Minority Leader), and one from the Lt. Governor. The commission members would hire an executive director once seated. 

The executive director would then be responsible for hiring a Gaming Enforcement Officer who will oversee the law enforcement aspect of the commission. According to the information provided, that entity will include officers, auditors, investigators and an administrative staff. Exactly how large that staff of officers and workers might be is not spelled out. 

It is apparent, however, that lawmakers want the commission to have as much power as possible to regulate and control gaming in the state. Legislation that increases penalties for illegal gambling from misdemeanors to felonies is almost certain to follow. 

Random details

Licensed casinos under this legislation must agree to spend at least $35 million to build/upgrade facilities within the first year. It’s unclear if that applies to the Poarch Creek facilities. 

The cost of casino licenses will be set by the commission. The legislation simply sets a minimum cost of $5 million, but left the maximum amount open. 

The legislation allows gambling establishments currently operating under local county amendments – such as the dozens of locations in Jefferson and Greene counties – to remain in operation through 2027, so long as they provide the state with information about ownership and the types of games being played. 

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All paper bingo halls and all raffles must register with the gaming commission.

Josh Moon is an investigative reporter and featured columnist at the Alabama Political Reporter with years of political reporting experience in Alabama. You can email him at [email protected] or follow him on Twitter.

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