179073-7:n:08/15/2016:LFO-HP/ccd




SB11
By Senators McClendon, Dial, Smitherman and Singleton
RFD Tourism and Marketing
Rd 1 15-AUG-16


SYNOPSIS:Under existing law, lotteries and gift enterprises are prohibited by Section 65 of the Constitution of Alabama of 1901.
This bill proposes an amendment to Section 65 of the Constitution of Alabama of 1901 to establish an Alabama Lottery and the Alabama Lottery Corporation; to establish the Alabama Education Legacy Fund; to provide for distributions from the Alabama Education Legacy Fund for the costs associated with the Alabama Lottery, Pre-K program, career technical scholarships, public schools, and to the State General Fund; to provide for a bonding authority to issue bonds for Medicaid purposes; to authorize and regulate certain electronic lotteries by the entities currently licensed to conduct pari-mutuel wagering at the four existing racetracks in Mobile County, Macon County, the City of Birmingham in Jefferson County, and Greene County; to levy a state gross receipts tax and a local gross receipts tax on gaming revenue of the racetracks; to levy a tax on vendors of electronic lottery equipment; to provide for the disposition of state gaming tax proceeds to the State General Fund for Medicaid purposes; to create the Alabama Lottery Commission to implement, regulate, and administer electronic lotteries and regulate and supervise the Alabama Lottery and Alabama Lottery Corporation; to authorize and instruct the Governor to negotiate a compact for gaming with the Poarch Band of Creek Indians; to require the Legislature to pass general laws to implement the amendment; and to require that the amendment may not be construed to allow casino games conducted by live human dealers.

A BILL
TO BE ENTITLED
AN ACT

Proposing an amendment to Section 65 of the Constitution of Alabama of 1901, to establish an Alabama Lottery statewide and the Alabama Lottery Corporation; to establish the Alabama Education Legacy Fund; to provide for a bonding authority to issue bonds for Medicaid purposes; to authorize and regulate an electronic lottery by the entities currently licensed to conduct pari-mutuel wagering at the four existing racetracks in Mobile County, Macon County, the City of Birmingham in Jefferson County, and Greene County, where pari-mutuel wagering is currently legal; to levy a state gross receipts tax and a local gross receipts tax on gaming revenue of the racetracks; to levy a tax on vendors of electronic lottery equipment; to provide for the disposition of lottery proceeds and state gaming tax proceeds; to create the Alabama Lottery Commission to implement, regulate, and administer gaming and regulate and supervise the Alabama Lottery and the Alabama Lottery Corporation; to authorize and instruct the Governor to negotiate a compact for gaming with the Poarch Band of Creek Indians; to require the Legislature to pass general laws to implement the amendment; and to require that the amendment may not be construed to allow casino games conducted by live human dealers.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. The following amendment to the Constitution of Alabama of 1901, as amended, is proposed and shall become valid as a part thereof when approved by a majority of the qualified electors voting thereon and in accordance with Sections 284, 285, and 287 of the Constitution of Alabama of 1901, as amended:

PROPOSED AMENDMENT

"Section 65.

"Part I.

"Except as provided in Part II and Part III, the The legislature Legislature shall have no power to authorize lotteries or gift enterprises for any purposes, and shall pass laws to prohibit the sale in this state of lottery or gift enterprise tickets, or tickets in any scheme in the nature of a lottery; and, except as provided in Part II and Part III, all acts, or parts of acts heretofore passed by the legislature of this state, Legislature authorizing a lottery or lotteries, and all acts amendatory thereof, or supplemental thereto, are hereby avoided.

"Part II.

"Section 1. Declarations. The Legislature finds that lotteries have been enacted in many states and the revenues generated from those lotteries have contributed to the benefit of those states. Many Alabamians already participate in other state lotteries. The majority of Alabamians support the establishment of a lottery. Therefore, the purposes of the proposed amendment are fivefold:

"(1) To establish and provide for a fair and honest lottery statewide to generate revenue for public education purposes and the General Fund.

"(2) To authorize and regulate an electronic lottery by the existing racetracks for which gaming is already legal in Alabama.

"(3) To authorize a bonding authority to issue bonds for Medicaid purposes.

"(4) To levy taxes on a electronic lottery at those racetracks to generate revenue for the benefit of the General Fund for Medicaid purposes.

"(5) To authorize the Governor to negotiate a compact for gaming with the Poarch Band of Creek Indians.

"Section 2. Establishment of an Alabama Lottery.

"(a) The Legislature, by general law, shall provide for the establishment, administration, operation, and regulation of an Alabama Lottery consistent with this part and an electronic lottery consistent with Part III.

"(b) There is hereby created the Alabama Education Legacy Fund which shall be funded and administered in accordance with the provisions of this amendment.

"(c) The annual proceeds from the Alabama Lottery shall be deposited into the Alabama Education Legacy Fund and applied in the following priority order: (1) first to the payment of the expenses of administering and operating the Alabama Lottery by the Alabama Lottery Corporation and Alabama Lottery Commission not to exceed fifteen percent of sales, unless otherwise decreased by general law passed by the Legislature; provided however, the payment of all prizes shall be without limitation and without any further appropriation required by law; (2) the amount needed for payment of the amounts due with respect to the bonds authorized by Section 3 of this part; (3) ten million dollars ($10,000,000) to the Department of Early Childhood Education for its Pre-K program; (4) fifteen million dollars ($15,000,000) to the Board of Trustees of the Alabama Community College System for career technical scholarships; (5) seventy-five million dollars ($75,000,000) to public schools, of which one-third shall be allocated for public higher education and two-thirds shall be allocated for public K-12 schools; and (6) any remaining funds shall be applied to the credit of the General Fund.

"(1) Public schools shall be interpreted to include the Alabama School of Math and Science, the Alabama School of Fine Arts, the portion of the Alabama Institute for Deaf and Blind providing appropriate Elementary/Secondary instruction, and may include the Department of Youth Services School District.

"(2) The allocation of proceeds from the Alabama Education Legacy Fund provided in this subsection shall not be used to supplant other Education Trust Fund appropriations.

"(3) Allocations from the Alabama Education Legacy Fund set forth in this subsection shall be appropriated in the annual Education Trust Fund Appropriations Act as a separate line item appropriation. Any amounts appropriated and unexpended at the end of each fiscal year shall be transferred to the credit of the state General Fund.

"(d) The administration of the Alabama Lottery shall be vested in a corporation hereby created and designated the Alabama Lottery Corporation. The duties, powers, authority, and composition of the Alabama Lottery Corporation shall be enumerated in one or more general laws enacted by the Legislature subsequent to and supplemental to this amendment.

"(e) The Alabama Lottery Corporation may enter into reciprocal agreements with other jurisdictions for the operation and promotion of lottery games that are permitted by the commission to be operated, utilized, or conducted.

"(f) The Alabama Lottery Corporation may conduct, employ, include, or utilize only those lotteries approved by the commission. Except as otherwise provided in this amendment, the corporation may not operate, use, or employ, and the commission, directly or indirectly, may not authorize the operation, use, or employment of, any electronic lottery by any entity other than a racetrack.

"(g) The Alabama Lottery Corporation may hire non-state employees.

"Section 3. Bond Authority

"The Legislature shall enact appropriate legislation creating an authority to issue revenue bonds from which the source of payment of the bonds shall be the proceeds from the statewide Alabama lottery. The principal amount of authority obligations shall be in an amount to net eighty-five million dollars ($85,000,000) after all expenses associated with the issuance of the bonds. The proceeds from the bond issuance shall be distributed to the Alabama Medicaid Agency. Bonds issued by the authority shall be solely and exclusively an obligation of the authority and shall not create an obligation or debt of the state. Bonds issued pursuant to this amendment shall be issued for a maturity of 10 years. The Legislature may further enact legislation implementing this section.

"Part III.

"Section 1. Definitions. As used in this amendment, the following words and phrases shall have the following meanings:

"(1) COMMISSION. The Alabama Lottery Commission created by this part.

"(2) ELECTRONIC LOTTERY. Any game to be played utilizing one or more electronic computers and one or more computer terminal devices, equipped with an electronic display device and with keys, buttons, a keyboard or other equipment allowing input or action by an individual player, into which the player inserts coins, currency, vouchers, cards, or tokens as consideration in order for play to be available, and through which terminal device the player may receive free games, coins, cash, tokens, or credits that can be redeemed for cash, annuitized payment over time, a non-cash prize, or nothing, as may be determined wholly or predominately by chance.

"(3) ELECTRONIC LOTTERY TERMINAL. An electronic device that is used for the purpose of playing an electronic lottery.

"(4) ELECTRONIC LOTTERY TERMINAL VENDOR. Any person who manufactures, distributes, supplies, vends, or leases an electronic lottery terminal or equipment necessary to conduct an electronic lottery by a racetrack.

"(5) GAMING GROSS REVENUE. The total amount of money or value in any form received by a racetrack with respect to the playing of any form of electronic lottery, less the total money or value in any form paid as prizes or winnings to the players of the electronic lottery and free play or promotional credits, but before deduction of any expenses incurred in operating the establishment, including, but not limited to, depreciation or leasing costs of physical facilities and equipment, wages and other employment costs, utilities, interest, and taxes. Gaming gross revenue may not be included in a pari-mutuel pool for the purpose of determining any tax levied on pari-mutuel wagering or for any other purpose.

"(6) RACETRACK. A corporation, limited liability company, or other business entity authorized by a local racing commission pursuant to law to operate and conduct pari-mutuel wagering on live or simulcast races upon the ratification of the amendment adding this section, in Mobile County, Macon County, the City of Birmingham in Jefferson County, or Greene County.

"Section 2. Limitation on Electronic Lottery Terminals in Alabama.

"(a) Upon ratification of this amendment, electronic lotteries utilizing electronic lottery terminals may be operated or conducted only by a racetrack and only at a single location approved by the commission in the county in which the racetrack is licensed to operate and conduct pari-mutuel wagering.

"(b) The operation of electronic lotteries by a racetrack is not subject to or prohibited, limited, or impaired by:

"(1) Any otherwise applicable provisions of Article 8, commencing with Section 8-1-150, of Chapter 1 of Title 8 of, or Article 2, commencing with Section 13A-12-20, of Chapter 12 of Title 13A of, the Code of Alabama 1975.

"(2) Any other statute whenever enacted that is inconsistent with this amendment.

"(3) Any judicial order, decision, or opinion issued prior to the operative date of this amendment that would otherwise have the effect of prohibiting, limiting, or impairing the operation of electronic lotteries. This amendment may not be construed to allow casino games conducted by live human dealers.

"(c) Nothing herein shall be deemed to impair, impede, or restrict the operation of charitable bingo conducted pursuant to any validly enacted constitutional amendment authorizing such activity.

"Section 3. Compliance with Federal Law.

"The State of Alabama, acting by and through the adoption of this amendment, and in accordance with 15 U.S.C. 1172, does hereby declare that any and all lottery equipment, materials, paraphernalia, and supplies and any and all electronic lottery terminals, equipment, materials, paraphernalia, and supplies may be transported in interstate commerce into or out of the state without violating that section, or any other applicable federal law, if the electronic lottery terminals, equipment, materials, paraphernalia, and supplies are used, to be used, or have been used in the operation and furtherance of the Alabama Lottery, or if the electronic lottery terminals and equipment, paraphernalia, materials, and supplies are used, to be used, or have been used, in the operation of electronic lotteries by racetracks.

"Section 4. State Gross Receipts Tax and Use of the Proceeds Thereof; Local Gross Receipts Tax.

"(a)(1) A state gross receipts tax of twenty-two percent (22%) is levied on the gaming gross revenue of each racetrack. The Legislature may increase this rate by general law; provided however, this rate shall not exceed forty percent (40%). To the extent a racetrack owns and does not lease electronic lottery terminals and equipment that produces gaming gross revenue, an additional state gross receipts tax of one percent of the gaming gross revenue from the owned electronic lottery terminals and equipment is levied on the equipment.

"(2) The state gross receipts tax on gaming gross revenue for each calendar month shall be paid by each racetrack to the Department of Revenue on or before the 20th day of the next succeeding calendar month.

"(3) A local gross receipts tax of one percent is levied on the gaming gross revenue of each racetrack.

"(4) Except as otherwise provided in subdivision (5), the local gross receipts tax on gaming gross revenue for each calendar month shall be paid to the county in which the racetrack is licensed on or before the 20th day of the next succeeding calendar month. The county shall retain one-half of the amount and shall apportion the remaining half among the municipalities in the county on the basis of the ratio of the population of the municipality to the population of all the municipalities in the county and immediately pay the amounts apportioned to the municipalities.

"(5) The local gross receipts tax on gaming gross revenue of a racetrack operating in a Class 1 or Class 2 municipality for each calendar month shall be paid to the Class 1 or Class 2 municipality on or before the 20th day of the next succeeding calendar month. The municipality shall retain one-half of the revenue, shall pay one-quarter of the revenue to the county in which the municipality is principally located, and shall apportion the remaining one-quarter of the revenue to the municipalities in the county other than the Class 1 or Class 2 municipality on the basis of the ratio of the population of the municipality to the population of all municipalities in the county other than the Class 1 or Class 2 municipality.

"(6) A state electronic lottery terminal vendor tax is levied on electronic lottery terminal vendors conducting business in the state in an amount equal to four percent of the gross revenues collected by the electronic lottery terminal vendor from leases or other revenue sharing arrangements with a racetrack.

"(7) A electronic lottery terminal vendor shall pay the state electronic lottery terminal vendor tax for each calendar month to the Department of Revenue on or before the 20th day of the next succeeding calendar month.

"(8) The state gross receipts tax on gaming gross revenue, the local gross receipts tax on gaming gross revenue, and the state electronic lottery terminal vendor tax shall be in lieu of all other state or local taxes or license fees levied with respect to the operation of electronic lotteries by a racetrack. Notwithstanding the foregoing, a racetrack is liable for all income taxes, franchise taxes, property taxes, lodging taxes, and sales and use taxes on merchandise, food, and beverage generally applicable at uniform rates to all businesses operating in the county in which the racetrack is licensed.

"(9) The proceeds derived from the state gross receipts tax on gaming gross revenues and the electronic lottery terminal vendor tax shall be deposited in the state General Fund for Medicaid purposes.

"Section 5. Alabama Lottery Commission; creation; powers.

"(a) There is hereby created the Alabama Lottery Commission. The commission shall regulate and supervise the operation of the Alabama Lottery and the Alabama Lottery Corporation and shall implement, regulate, administer, supervise, and enforce all laws and rules related to the operation and conduct of electronic lotteries by racetracks. The commission shall cooperate with the Attorney General and local district attorneys in enforcing all laws related to illegal gambling.

"(b) The Alabama Lottery Commission shall consist of five members. The members of the commission shall be appointed as follows:

"(1) One by the Governor.

"(2) One by the Speaker of the House of Representatives.

"(3) One by the President Pro Tempore of the Senate.

"(4) One by the Commissioner of Agriculture and Industries.

"(5) One by the Lieutenant Governor.

"(c) All members shall be appointed with the advice and consent of the Senate. The appointment of the initial members of the commission shall be made by those officials holding office on the effective date of this amendment without the advice and consent of the Senate and shall be made within 60 days of the effective date of this amendment. The appointing authorities shall coordinate their appointments to assure the commission membership is inclusive and reflects the racial, gender, geographic, urban, rural, and economic diversity of the state.

"(1) Members of the commission shall be residents of the State of Alabama, United States citizens, and prominent persons in their businesses or profession. Members may not have been convicted of a felony, and may not be the executive director of or another employee of the commission, an officer of or occupy an official position in any political party, an elected official, or actively engaged in the business of, or have a pecuniary interest in, a racetrack.

"(2) Members shall serve a term of four years and may serve two complete terms and any portion of an initial term of less than four years or any portion of an unexpired term to which appointed. Any vacancy occurring on the commission shall be filled for the unexpired term by the appointing authority as described in this section or as otherwise provided by act of the Legislature. The initial term of office upon the effective date of this amendment shall be two years for the member appointed by the Commissioner of Agriculture and Industries, three years for the member appointed by the Speaker of the House of Representatives, four years for the member appointed by the President Pro Tempore of the Senate, three years for the member appointed by the Lieutenant Governor, and four years for the member appointed by the Governor. Each member of the commission shall serve for the duration of his or her term and until his or her successor is duly appointed and confirmed by the Senate.

"(d) The commission and its members and employees shall be subject to the Ethics Law, Section 36-25-1, et seq., Code of Alabama 1975; the Open Records Act, Section 36-12-40, Code of Alabama 1975; the Open Meetings Act, Section 36-25A-1 et seq., Code of Alabama 1975; and the Administrative Procedure Act, Section 41-22-1, et seq., Code of Alabama 1975.

"(e) In addition to other enforcement powers granted by general law, the commission shall have full power and authority to issue subpoenas and compel the attendance of witnesses at any place within this state, to administer oaths, and to require testimony under oath. Upon failure of a person, without lawful excuse, to obey a subpoena and upon reasonable notice to all persons affected, the commission may apply for relief to the Circuit Court of Montgomery County, Alabama, or the circuit court in which the person subpoenaed resides. Any process or notice may be served in the manner provided for service of process and notices in civil actions. The commission may pay the transportation and other expenses of witnesses as the commission deems reasonable and proper. Any person making a false oath in any matter before the commission shall be guilty of perjury. The commission may appoint hearing examiners who may administer oaths and receive evidence and testimony under oath.

"(f) The commission shall regulate and supervise the conduct and operation of the Alabama Lottery and the Alabama Lottery Corporation. In addition to the powers granted in this section, additional powers, procedures, and operations of the commission with respect to regulation and supervision of the Alabama Lottery and the Alabama Lottery Corporation shall be enumerated in one or more general laws enacted by the Legislature subsequent to and supplemental to Part II to further its purposes and provide for its implementation.

"(g) The commission shall regulate and supervise the conduct and operation of electronic lotteries by racetracks. In addition to the powers granted herein, additional powers, procedures, and operations of the commission with respect to regulation and supervision of electronic lotteries at racetracks shall be enumerated in one or more general laws enacted by the Legislature subsequent to and supplemental to this Part to further its purposes and provide for its implementation, subject to the following provisions:

"(1) Upon ratification of the amendment adding this part, a racetrack may operate electronic lotteries. If a racetrack operates electronic lotteries under this subdivision, the provisions related to the state gross receipts tax on gaming gross revenues, the local gross receipts tax on gaming gross revenue, and the electronic lottery terminal vendor tax are immediately applicable.

"(2) Until such time as the commission is fully established, a local racing commission having jurisdiction of a racetrack, in addition to the powers that it has under existing law, shall have the same power to supervise the operation of electronic lotteries as it has to regulate and supervise racing activities and pari-mutuel wagering thereon, with modification of the powers, not inconsistent with this amendment, as is necessary or appropriate to adopt them for the purposes of supervising the operating of electronic lotteries.

"(3) Nothing in this subsection prohibits, limits, or alters the authority of any local racing commission with respect to the continued regulation and supervision of racing and pari-mutuel wagering at a racetrack.

"(4) Once the commission is fully established, the commission shall assume the regulation and supervision of the conduct and operation of electronic lotteries by racetracks and shall issue an initial electronic lottery license to each racetrack to operate and conduct electronic lotteries for a period of 20 years. Thereafter, the license shall renew automatically for a period of five years subject to and in accordance with one or more general laws enacted by the Legislature supplemental to and subsequent to this part to further its purposes and provide for its implementation, and subject to and in accordance with rules adopted by the commission. The general laws enacted to implement this part shall provide a basis on which the commission may refuse to renew a license or when a license may be revoked or suspended.

"(5) No racetrack with an electronic lottery license shall contribute to or employ an elected official.

"(6) The number of electronic lottery terminals in operation by a racetrack and the percentage payout to a patron may not be restricted or limited by any general or local law, a local racing commission, or the commission.

"(7) A racetrack may not operate electronic lotteries without remitting to the state the applicable state gross receipts tax on gaming gross revenue.

"(8) A person under the age of 21 years may not play any electronic lottery, be employed to operate any electronic lottery equipment, be employed to operate any electronic lottery terminal, facilitate the playing of any electronic lottery, or serve any persons playing any electronic lottery or electronic lottery terminal. This subdivision does not prohibit persons under the age of 21 years from being allowed on the premises of a facility where electronic lotteries are being played in areas of the facility in which electronic lotteries are not being conducted.

"(h) The commission shall coordinate with local communities and the racetracks in developing educational programs and other social programs to enhance social and public awareness of gaming-related issues.

"Section 6. Special Session for Enabling Legislation.

"For the exclusive purpose of enacting general laws to implement this amendment, the Legislature shall meet in Extraordinary Session within 30 days after the effective date of this amendment on a day determined jointly by the Speaker of the House and the President Pro Tempore of the Senate. The Legislature may meet for no more than 12 legislative days and no other items of legislation may be considered during the Extraordinary Session except by a vote of two-thirds of each house.

"Section 7. Compact Negotiations.

"The Governor is authorized and instructed to negotiate in good faith a compact with the Poarch Band of Creek Indians for the conduct and operation of electronic lottery terminals at the three locations in Alabama where, upon ratification of this amendment, the Poarch Band of Creek Indians are conducting Class II bingo games. Any such compact shall then be submitted to the Legislature for ratification."

END OF PROPOSED AMENDMENT

Section 2. An election upon the proposed amendment shall be held in accordance with Sections 284 and 285 of the Constitution of Alabama of 1901, now appearing as Sections 284 and 285 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, and the election laws of this state on November 8, 2016.

Section 3. The appropriate election official shall assign a ballot number for the proposed constitutional amendment on the election ballot and shall set forth the following description of the substance or subject matter of the proposed constitutional amendment:

"Proposing an amendment to the Constitution of Alabama of 1901, to establish an Alabama Lottery statewide and the Alabama Lottery Corporation; to establish the Alabama Education Legacy Fund; to allow a bonding authority to issue bonds for Medicaid purposes; to authorize and regulate electronic lotteries by the four existing racetracks in Mobile County, Macon County, the City of Birmingham in Jefferson County, or Greene County, where pari-mutuel wagering is currently legal; to levy and allocate a state gross receipts tax on electronic lottery revenue of the racetracks; to levy and allocate a tax on vendors of electronic lottery equipment; to provide for the allocation of lottery proceeds; to create the Alabama Lottery Commission to implement, regulate, and administer gaming and regulate and supervise the Alabama Lottery Corporation; to authorize the Governor to negotiate a compact for gaming with the Poarch Band of Creek Indians; and to authorize the Legislature to pass general laws to implement the amendment.

"Proposed by Act ________."

This description shall be followed by the following language:

"Yes ( ) No ( )."


Constitutional Amendments
Gambling
Pari-Mutuel Wagering
Lotteries
Governor
Lottery and Gaming Commission
Poarch Band of Creek Indians