FISCAL NOTE

Senate Bill 319 as passed the Senate proposes a constitutional amendment, which if ratified, would establish the Alabama Education Lottery (lottery) to allow lottery games in the state, including multistate lotteries but excluding video lotteries and video lottery terminals. This bill creates the Alabama Education Lottery Corporation to administer the lottery and provides for its duties, powers, authority, and composition in be established by general law.

The amount of net revenue generated from the operation of the lottery is estimated to be between $194 million to $279 million annually, after the payment of:

(1) operating expenses of the lottery,

(2) prizes, and

(3) grants to aid compulsive gambling programs.

This bill provides for the distribution of net lottery proceeds to deposited into the Lottery Trust Fund, created by this constitutional amendment in the State Treasury. This bill further provides that proceeds in the Lottery Trust Fund shall be appropriated through an independent supplemental appropriation bill for education purposes and a postsecondary scholarship program.

This bill further requires the first $15 million of unclaimed lottery prize money to be annually distributed to the Department of Agriculture and Industries for agricultural grant programs, as established by general law, and requires any remaining unclaimed prize money be used for the postsecondary scholarships provided above.

Further the constitutional amendment proposed by this bill provides for the operation of casino-style games, sports wagering, bingo, charitable bingo, and raffles in the state. This bill creates the seven-member Alabama Gaming Commission to regulate and supervise gaming and provides for the powers and duties of the commission.

This bill would provide for the deposit of the following into the Gaming Trust Fund, established by this bill within the State Treasury:

(1) a minimum of $105 million in license fees every 10 years from the issuance of licenses through a competitive bid process for covered locations operating casino-style games and sports wagering, as provided by this bill,

(2) an estimated $269 million to $403 million annually from the 20% state tax levied by this bill on net gaming revenues and sports wagering generated at each covered location in the state and which may be adjusted by up to 2% every five years, up to 30% maximum,

(3) fines and penalties collected by the commission, as provided by the bill, and

(4) revenue-sharing payments received due to the execution of a compact with the Poarch Band of Creek Indians by the Governor, as authorized by the bill.

This bill also provides that proceeds in the Gaming Trust Fund shall be appropriated by general law as follows:

1) For information technology infrastructure, with the first $750 million for development and expansion of broadband,

2) For the provision of health care services, including rural health care, and

3) For the provision of mental health services.

This bill further provides that when the portion distributed from the Gaming Trust Fund to the development and expansion of broadband cumulatively reaches $750 million, the proceeds shall be appropriated by general law for capital or other nonrecurring expenses, health care services, information technology, infrastructure, mental health care services, and grant programs awarded to municipalities and counties that do not have a gaming facility within their corporate limits or police jurisdiction.

Additionally, this bill would levy the following taxes on winnings over $1,000 from lotteries, bingo, casino-style games, and sports wagering and exempt those winnings from any state income taxes owed. This provision would decrease potential receipts to the Education Trust Fund (ETF) by an undetermined amount, which would be offset by the following:

(1) a 5% withholdings tax to be credited to the ETF for dual enrollment programs, and

(2) a 2% withholdings tax to be deposited into a special fund, as provided by general law, to be administered by the Alabama Transportation and Improvement Program-II (ATRIP-II) Committee to be used as follows:

a. 50% for grants for maintenance, repair, or construction of bridges in the state with priority given to bridges meeting certain criteria, and

b. 50% for grants for maintenance, repair, or construction of county bridges.

In addition, this bill could increase the obligations of the State General Fund by an estimated $115,000 if a special session is held to enact general laws to implement this constitutional amendment, as provided by this bill. In addition, this bill will increase the proclamation expenses of the Governor, paid from the State General Fund, by an estimated $100,000 for the fiscal year ending September 30, 2023.