Alabama lawmakers considering expanded gambling

Alabama Looks Likely To Legalize Lottery; Don’t Count On Sports Betting

Alabama is one of just five US states without a lottery. That could change this year, as two separate bills were recently introduced to create one.

Submitted last week, the first is H 418, a single-purpose lottery bill. It would allow the retail sales of paper tickets, however, expressly forbids any internet-based lottery or video lottery terminals. The other is a broader gambling expansion bill introduced in the Senate by Sen. Greg Albritton.

In addition to lottery, S 282 would upgrade the state’s tribal casinos from Class II gaming facilities to Class III. That would allow them to offer a much wider range of games. The existing Class II license only allows products, such as bingo and pull tabs, though the former includes electronic bingo terminals that provide an experience similar to slot machines.

The bill would additionally legalize sports betting while placing it under that Class III gaming umbrella. Finally, it would allow the tribes to construct two new casinos and establish a 25% tax on their gross gaming revenues.

The former bill stands much better chances of success than the latter. It’s a much simpler proposition and has more support. However, both bills face the dual challenges of an anti-gambling governor and the threat of a legislative shutdown due to the COVID-19 outbreak.

Why no lottery in Alabama?

The few states that don’t have a lottery lack the offering for different reasons.

Alaska and Hawaii have both decided that it wouldn’t be profitable. In Nevada, it would be mostly redundant due to ready access to other gambling options. Casinos are also resistant to additional competition from the state. For Alabama and Utah, it’s about social conservatism and widespread resistance to gambling in general.

Mississippi was in the same boat until recently. Its legislators passed a lottery bill in 2018, and the first tickets went on sale just a few months ago.

The challenge wasn’t so great for Mississippi as it is for the other two, however. For one thing, the state’s population is more accustomed to gambling, thanks to the presence of riverboat casinos.

More importantly, though, its lottery only needed legislative approval. Alabama and Utah, on the other hand, have strict prohibitions against gambling ensconced in their state constitutions. That means that any bill which would expand gambling requires a referendum.

Meanwhile, Utah has moved in the opposite direction from Mississippi.

Just this week, it passed a new bill cracking down on what it calls “fringe gambling” — or what is often referred to as “gray machines” elsewhere. These are terminals that resemble slot machines but use mechanics that target loopholes in anti-gambling laws to achieve a quasi-legal status.

Alabama split on gambling

Alabama’s gambling history and attitude fall somewhere between Mississippi and Utah.

It has a fringe gambling situation in the form of electronic bingo machines, which have both supporters and opponents. They’ve produced several back-and-forth legal battles over the years between counties that want them legal and efforts by the state to crack down.

This isn’t the first effort to create an Alabama Lottery, either. The state came extremely close in 1999.

The year before, voters elected Don Siegelman governor. One of the planks of his platform had been to establish a lottery. A relevant bill passed the legislature easily enough and seemed to be on track to pass the referendum as well. However, a last-minute push by anti-gambling hardliners got enough voters to the polls to cause the referendum to fail.

There have been other attempts in Alabama since, including one just last year. None has made it as far as that 1999 effort, however.

Will the legislature remain open?

As the novel coronavirus sweeps the US, no bill is safe from the possibility of a legislative shutdown. Aat least 17 state legislatures have postponed their sessions, so far, and a further four states have seen one chamber or the other make such a move.

Alabama is not among these at this point. Nor is it one of the harder-hit states, having just 0.6% of the confirmed cases, so far, for 1.5% of the national population. However, the House has begun canceling certain committee meetings due to the outbreak. That could mean that a postponement is coming.

If that happens, then it’s anyone’s guess when the legislature will resume. Either way, debating the merits of a lottery may end up falling to the bottom of the priority list.

Broad support, but not from the governor

If the legislature does remain in session, then the House could probably pass its bill any time it wants. It has bipartisan support from over 70 co-sponsors, including House Speaker Mac McCutcheon, Majority Leader Nathaniel Ledbetter, and Minority Leader Anthony Daniels.

Prospects in the Senate, while still favorable, seem less certain. Last year’s effort to establish a lottery only passed the Senate by a narrow margin, so there’s no guarantee that it would do so again.

Assuming it does pass both the House and the Senate, it would likely face opposition from Gov. Kay Ivey. Last month, Ivey commissioned a study on expanded gambling. It isn’t due until the end of the year, however, and she’s indicated a refusal to consider any gambling legislation until the study is complete.

Rep. Steve Clouse, who filed the bill to “get the conversation started,” said he won’t try to move it further until he knows that the Senate and the governor are ready to consider it. If the bill clears all those hurdles, then the lottery question would go on the ballot in this November’s general election.

It’s therefore far from a done deal, despite the overwhelming support in the House. That said, its chances look far better than those of the Senate bill.

Senate bill is unabashedly one-sided

At the moment, the Senate bill is a solitary effort by Sen. Albritton with no co-sponsors.

Although he officially represents the community of Range, a large portion of his constituency consists of the Poarch Band of Creek Indians. They are the state’s only federally-recognized tribe and the owners of Wind Creek Hospitality.

Among his peers, Sen. Albritton is frequently referred to as “the Senator from Poarch Creek” because he is their de facto representative in the state capital. The bill would, therefore, do a lot for the tribe, a little for the state and nothing for anyone else.

Wind Creek would, for starters, get exclusivity over both sports betting and casino gambling. It would receive permission to build two new casinos as well as upgrade its existing ones. Unlike previous proposals, it would only have to pay licensing fees for the new casinos. The Class III upgrade for its existing properties would be free.

Establishing a lottery is the only portion of the bill that represents a concession to other interests. The 25% tax rate is on the high side and may appeal to the state, but it also serves a dual purpose for the tribes. It wouldn’t apply to their existing casinos, which currently pay nothing.

It would, however, apply to the state’s dog racing tracks, which offer one of the only other forms of gambling in the state. They are already on tenuous financial footing, leading at least one political columnist to opine that the proposed tax represents a deliberate opportunity by the tribe to drive its competition out of business.

Wind Creek can afford to wait

Because the bill represents the tribe’s interests so narrowly, it’s likely to have more opponents than supporters. It stands a good chance of dying in the Senate even before running the gauntlet of the House, the governor’s probable veto, and finally, a general referendum.

Given that context, it doesn’t seem likely that the bill is intended to succeed this year and in its current form. Rather, it’s more of a wishlist from the tribe. It establishes a bargaining position in preparation for any discussion further down the line.

We’ve seen elsewhere, such as in Connecticut, that efforts by tribes to establish exclusivity over sports betting can mean major legislative delays.

In this case, the tribe is in a position to play hardball because it can afford to wait. Wind Creek operates multiple properties in other states. It even owns a pair of hotel-casinos in the Caribbean and recently purchased and rebranded the former Sands Bethlehem casino in Pennsylvania. These outside revenue sources mean that it can afford to focus on striking a favorable deal rather than a quick one.

The state, on the other hand, has almost no revenue from gambling at the moment. Every day it fails to pass gambling legislation, for one reason or another, is a day that potential tax revenues are lost to illegal offshore sites, neighboring states, and Wind Creek’s untaxed bingo halls.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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