The Alabama House Economic Development and Tourism committee Wednesday approved an ambitious proposal to legalize gambling in Alabama.
The package, approved on a voice vote, could come to the floor of the Alabama House of Representatives on Thursday.
HB 151, sponsored by Rep. Chris Blackshear, R-Smiths Station, is a constitutional amendment that would give Alabamians their first vote on the issue since 1999, when a lottery-for-education amendment was defeated. HB 152, also sponsored by Blackshear, would authorize casinos, create a state lottery, authorize sports wagering, and set tax rates, distribution of revenues and enforcement policies.
Alabama’s constitution bans lotteries and gambling, though local amendments have allowed some level of gaming, mostly electronic bingo. Alabama is the last state east of the Mississippi without a lottery. Past attempts to establish a lottery and bring casino-type gaming to the state have foundered amid industry disputes and divisions within the House Republican caucus.
“It’s always been my belief that a holistic approach is the only way we’re ever going to be able to tackle it and make a lottery part of that very convoluted and difficult process,” Blackshear said.
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The legislation would allow up to seven casino licenses, plus a potential compact with Poarch Creek Indians for three casinos. There would be no cap on the number of sports betting licenses awarded.
The bidding process for casinos licenses would be limited to “suitable” applicants, determined by the commission on 13 factors to be considered, including reputation, experience and financial stability; past and present compliance and being involved in litigation involving business practices as a dependent.
The bill would also authorize the negotiation of a compact with the Poarch Band of Creek Indians for a casino in northeast Alabama and to regulate its existing casinos in Atmore, Montgomery and Wetumpka.
No more than seven licenses for casinos would be granted, each requiring a $5 million fee and an initial investment of $35 million, with construction starting within a year of obtaining a license. The legislation would also establish an Alabama Gaming Commission and a gaming enforcement division within it, tasked with overseeing all gaming activities and combating unlawful gaming and related activities.
Licensees of gaming establishments would be subject to a 24% tax on revenues from casino-style gaming activities, while sports wagering would have a 17% tax. The legislation would create two trust funds for the proceeds from gambling in the ETF: the Lottery for Education Fund for lottery revenues and the Gaming Trust Fund for casino and sports betting revenues.
Supporters and opponents of Alabama gambling bill make case at public hearing
The proposed gambling legislation would give lawmakers discretion on how to spend the revenue, though it provides suggestions. Lottery revenue could be allocated for postsecondary scholarships. Revenue from casinos and sports wagering would go to a variety of programs, including funding for law enforcement, mental health and “rural health care,” which includes language that resembles Medicaid expansion.
Rep. Chip Brown, R-Hollinger’s Island, offered an amendment to each bill.
Brown’s amendment to HB 151 would allow all courts in Alabama, including appellate courts, to hear matters related to gambling.
An amendment to HB 152 changed a few things. It added fraternal societies, or 501(C)(10) nonprofits, to tax-exempt parties. The amendment changed a provision stating the deputy or executive director of the commission would be allowed to have up to 1% in vested interest in gaming establishments, down to 0%. A commission may be removed by their appointing authority, but the amendment requires “cause.”
The amendment would also prevent casino licenses for Houston and Lowndes counties to be transferred to another county if a license is not issued in the first five years or if it has been inactive for five years.
The amendment also struck a provision banning people who sell lottery tickets to play the lottery at all, even when they weren’t working. Blackshear said they may have gone “a little bit too far.”
The previous version of the bill provided that lottery retailers would receive a “cashing bonus,” or 1% of the cashed amount. The amendment increased that to 7% of the sales of lottery tickets sold by the lottery retailer.
The amendment also says the 10% of sports wagering revenue allocated to law enforcement in the original bill — which has to go through county commissions — can only be used to augment and not replace funding already allocated to sheriffs’ departments. County commissions must also distribute the funds within 30 days of receipt, to be spent at the sheriff’s discretion.
Rep. Allen Treadaway, R-Morris, said he was concerned with some parts of the bill and is working on a couple amendments to be introduced on the House floor. He said that there is language in the bill that “could possibly” allow illegal operations to continue for a few years. Treadaway also said the bidding process needs to be open.
“I can’t get past the fact that people will be rewarded, who have continued to operate for years illegally and made millions. Open it up. Open the bid and open it up,” he said.
After the hearing, Treadaway told reporters he’s concerned that the bill does not provide for checks and balances in the law enforcement division of the commission, which would be overseen by the executive director. Treadaway did not note specific concerns, but said there needs to be a merit system for hiring. He said if the bill passes in its current form, there won’t be a guarantee that framework will be developed.
Blackshear said at a public hearing on the two bills on Tuesday that it could bring in between $935.6 million and $1.214 billion. According to HB 152’s fiscal note, $315 million to $492.2 million would come from casinos; $15 million to 42.5 million from sports wagering; $305.6 million to $379.4 million from the lottery. Blackshear said another $300 million would come from a potential compact with the Poarch Band of Creek Indians.
The two bills are expected to come to a House vote on Thursday. If approved, the bills would move to the Senate.
