FISCAL NOTE

Senate Bill 319 as substituted and reported by the Committee on Economic Development and Tourism 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 and operate 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, and

(2) all prizes.

This bill provides for the distribution of net lottery proceeds to deposited into the Alabama Education Lottery Trust Fund, created by this constitutional amendment in the State Treasury. This bill further provides that proceeds deposited in the preceding Fiscal Year in the Alabama Education Lottery Trust Fund shall be appropriated through an independent supplemental appropriation bill as follows:

(1) up to 0.5% for programs to address problem gambling, and

(2) the remaining proceeds for a scholarship or other program to support educational attainment or fulfillment of the state’s workforce needs.

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 Gambling Regulatory Commission to regulate and supervise gambling, approve Alabama Education Lottery games, and provide for the powers and duties of the commission.

This bill requires the deposit of the following revenues provided for by this bill into the Alabama Gambling Trust Fund, established by this bill within the State Treasury:

(1) an estimated $298 million to $422 million annually from the 23% state tax levied by this bill on the net gambling revenues generated at each licensed location in the state;

(2) an estimated $10 million annually from the 23% state tax levied by this bill on each person or entity conducting online sports betting;

(3) an undetermined amount of license fees from the issuance of licenses to a casino operator, through a competitive bid process as determined by the commission to allow the casino operator to conduct and operate casino-style games and sports betting;

(4) fines and penalties collected by the commission; and

(5) 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 provides that the 23% tax rates on net gambling revenues and online sports betting may be amended by general law, upon recommendation of the commission, but shall not exceed 30%.

This bill also provides that proceeds deposited in the preceding fiscal year in the Alabama Gambling Trust Fund shall be appropriated by an independent supplemental appropriation bill as follows:

- Up to 0.5% for programs to address problem gambling

- 2.5% to the county commissions of the state, excluding the county commissions who are receiving a distribution from casino-style games being operated in their county, to be distributed as follows:

* 50% to be distributed equally to the eligible county commissions

* 50% to be distributed on a per capita basis to the eligible county commissions

- 2.5% to the governing bodies of the municipalities of the state, excluding the governing bodies are who receiving a distribution from casino-style games being operated within its municipality or police jurisdiction, to be distributed as follows:

* 25% to be distributed equally to the eligible governing bodies of the municipalities

* 75% to be distributed on a per capita basis to the eligible governing bodies of the municipalities

- 2.5% to the county commission for each county in which casino-style games are being operated, to be distributed based on the proportion of revenue generated in the county

- 2.5% to the governing bodies of the municipalities, for each municipality or police jurisdiction in which casino-style games are being operated, to be distributed based on the proportion of revenue generated in the municipalities or police jurisdictions, or to the county commission, if the casino-style games are not operated within a municipality

- 40% distributed for the additional provision of enhanced healthcare services

- Remaining proceeds to be appropriated and may be used for capital or other non-recurring expenses that serve a public purpose.

Additionally, if the Legislature determines that any amount in either the Alabama Education Lottery Trust Fund or the Alabama Gambling Trust Fund are not needed for the purposes specified above, the Legislature, by joint resolution, may have those funds deposited into a special trust fund, established by this bill in the State Treasury. This bill further provides that the earnings on the assets of this special trust fund shall be deposited into the State General Fund.

This bill allows the Legislature, by general law, to provide for the payment of a state tax on the proceeds from a lottery prize or gambling wager in lieu of any state or local income tax.

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.