FISCAL NOTE

Senate Bill 294 as introduced would implement the provisions of the constitutional amendment proposed by Senate Bill 293 of the 2022 Regular Session by establishing the Alabama Education Lottery and Gambling Commission as the state agency responsible for supervising the Alabama Education Lottery, bingo, charitable bingo and raffles, sports wagering, and casino-style games in the state. This bill provides that the newly created 9-member Board of Directors would be compensated like members of the legislature, at an estimated cost of $486,000 annually.

This bill authorizes the Board to appoint an executive director who will also employ personnel and set up contracts to provide for the provisions of this bill. Further, the commission shall establish a Gaming Enforcement Division to investigate violations of lottery, gaming, and betting violations, and to enforce the general laws and rules of the commission. This bill also authorizes The Gaming Enforcement Division to employ retired state or local law enforcement officers without modifying their state or local retirement benefits.

In addition, this bill authorizes: (1) a $100,000 non-refundable license and application fee for management service providers to conduct internet sports betting, which would also be deposited into the Alabama Gambling Trust Fund dependent on the number of management service providers hired by each licensed operator (2) a nominal license fee, the amount to be determined by the Commission, to be collected from charitable bingo and raffle operators, which would also be deposited into the Alabama Gambling Trust Fund, the amount dependent upon the number of charitable bingo and raffle operators applying for a license and the amount of the license fee set by the Commission; (3) a license fee, to be determined by the commission, for management service providers that provide management services to licensed operators to be deposited into the Alabama Gambling Trust Fund; and (4) a lottery retailer license fee to be determined by the commission also to be deposited in the Alabama Gambling Trust Fund.

This bill levies a 20% tax on net gaming revenues for the covered location, which, would be distributed as follows: (1) 95% to the Gaming Trust Fund; (2) 3% to the county commission of a county in which an operator is licensed; and (3) 2% to the governing body of the municipality in which an operator is located or to the county commission of the county in which the operator is licensed, if located within the police jurisdiction.

Once operational, and after the payment of reasonable expenses of the Gaming Commission, receipts in the Alabama Gambling Trust Fund, shall be appropriated by the Legislature in an independent supplemental bill as follows:

1. 30% to the Department of Mental Health;

2. 20% for statewide development and expansion of broadband;

3. 20% for rural healthcare services;

4. 15% for grants to municipalities and counties that do not have gaming facilities in corporate limits;

5. 10% to prison maintenance and capital improvement; and

6. 5% to state park and historical sites development and improvement.

This bill also levies a 20% tax on net gaming revenues for sports betting, which would be distributed: first to repay the Alabama Trust Fund under the People’s Trust Act; next, to the General Fund Budget Reserve Fund, until the total balance, is at least $100 million; and finally, 80 percent to the State General Fund; and 20 percent to the Alabama Trust Fund.

This bill would authorize the Department of Examiners of Public Accounts to audit or examine the Alabama Education Lottery and Gambling Commission, which could increase administrative obligations of the Department by an undetermined amount dependent upon the number of audits performed.

This bill would require the Attorney General to assist in any action for injunction or prosecution based on the request from the Gaming Enforcement Unit on a violation of a gaming law or rule of the Commission, which could increase the administrative obligations of the Attorney General’s Office by an undetermined amount dependent upon the number of proceedings they provide assistance.

In addition, this bill will increase the obligations of the Alabama Peace Officer’s Standards and Training Commission, by an undetermined amount, to consult on the annual training that should be provided to the Gaming Enforcement Division personnel as training for law enforcement officers to enforce gaming laws and rules.

Further, this bill would authorize the Alabama Department of Economic and Community Affairs to administer the grant programs awarded to municipalities and counties, for infrastructure improvements, that do not have a gaming facility within their corporate limits, which would increase the administrative obligations of ADECA by an undetermined amount, dependent upon the number of applications received and the number of grants awarded.

Finally, this bill establishes civil penalties, in an amount not to exceed $100,000, for violating provisions of this bill or rules adopted by the commission, which would be deposited into the Alabama Gambling Trust Fund. This bill would also establish criminal penalties, ranging from $50,000 to $100,000 fines, related to unlawful lottery activity which could increase receipts to the State General Fund and municipal general funds from fines; increase receipts to the State General Fund, county general funds, municipal general funds, and other funds to which court costs are deposited; and could increase the obligations of the State General Fund, local jails, the district attorneys, the Department of Corrections, the Bureau of Pardons and Paroles, and community corrections programs by an undetermined amount dependent upon the number of persons charged with and convicted of the offenses provided by this bill and the penalties imposed.

As amended and reported by the Committee on Tourism, (1) changes the distribution of proceeds in the Alabama Gambling Trust Fund from 20% for the provision of rural health care services (including the provisions of telemedicine and virtual health care) to 20% for the provision of health care services for the under served population (including rural health services). Further, this bill is amended to provide lottery retailers a 7% commission on the gross sales of lottery tickets which would increase the financial obligations of the commission by an undetermined amount dependent upon retailers gross sales of lottery tickets. Finally, this bill is amended to establish additional criminal penalties ranging from $50 to $500 and civil penalties ranging from $250 to $500.