The Alabama Senate Tourism and Marketing Committee will hold a public hearing on Tuesday, May 12 on Republican Senate President Pro Tem Del Marsh’s constitutional amendment to let voters decide if they want a state lottery and casinos. Alabama is one of six states without a lottery; the last time voters considered it was in 1999. Marsh is chairman of the committee. The proposal is meant to help close the projected state budget gap of at least 0 million plus unfunded needs in corrections, Medicaid and other agencies.
Governor Robert Bentley called Marsh’s proposal “one of the worst pieces of legislation I’ve ever seen,” stating gambling and a lottery are a regressive tax that preys on those least able to pay. Bentley noted gambling would not solve the state’s budget problems for 2016, since Marsh’s proposed gambling bill could not be approved in time. Instead, Bentley wants $541 million in tax increases.
Marsh’s measure would permit Class III gaming, including blackjack and other table games currently not allowed in Alabama, at four existing dog tracks: VictoryLand in Shorter, GreeneTrack in Eutaw, Mobile Greyhound Park and the Birmingham Race Course. Revenue would be taxed at 13 percent for the state and 1 percent for local governments.
Marsh’s bill also calls for a statewide lottery, plus the establishment of a lottery and gaming commission to oversee and regulate both. A separate lottery corporation would be responsible for administering the lottery.
Three-fifths of Alabama legislators would have to approve the constitutional amendment, followed by a majority of voters in a September 15 election. The governor would not be involved since the legislation is a proposed constitutional amendment.
Marsh said the bill is the result of a study by Auburn University Montgomery indicating four casinos and a state lottery would generate $400 million in new revenue, with $332 million from the lottery. He noted the plan would create 11,000 new jobs with a $1.28 billion economic impact, generating $400 million a year. “This is an extraordinary finding by the AUM group and clearly finds that casino gaming and a lottery would have a major economic impact on Alabama. These two ideas will generate hundreds of millions of new dollars for state programs at a time when essential government services may be cut,” Marsh said. “Do we raise taxes or do we find new sources of revenue? We have hundreds of millions of dollars leaving this state to fund gaming facilities in other states.”
In response, Robert McGhee, vice president of the Poarch Band of Creek Indians, said the tribe has “a better approach” than Marsh’s proposal to put casinos at four state dog racetracks. The tribe, he said, would give the state $250 million to cover the budget shortfall this year in exchange for a compact with the state giving the Poarch Creeks exclusive gaming rights. The compact also would require the tribe to pay the state a percentage of earnings each year. McGhee wants lawmakers to split the lottery and gaming options, approve the lottery, accept the tribe’s donation and then work with the Poarch Creeks on a compact that would give the tribe exclusive gaming rights in Alabama. “You’re still making most of the money you would be, because the lottery brings in $330 million,” McGhee said.
In addition, McGhee said the state would not have to alter its gambling laws, since the Poarch Creeks would continue offering only electronic bingo at its facilities. “Class III gaming is not something we’ve pursued because we were happy with our situation. If this is the direction that the state ultimately takes, we’ll have to discuss what’s best for us from an economic standpoint and make decisions that are in our best interest,” McGhee said. The tribe operates casinos in Atmore, Wetumpka and Montgomery, which together made more than $300 million in 2013.
Bentley spokeswoman Jennifer Ardis said the governor’s staff has met with the Poarch Creeks about the possibility of a compact but no agreements had been reached. “We don’t know if this is a loan, or if it’s a gift. When it is received, does it have to be paid back, does it require a constitutional amendment? There are a lot of questions we have,” Ardis said. She also emphasized Bentley’s position that no compact agreement would be reached unless the legislature found $541 million in revenue.
The Alabama House Republican Caucus also has come up with its own budget plan that they said would raise $200 million through cost-cutting and raising revenue, including increasing the cigarette tax by 25 cents per pack. Their plan also endorses negotiating an “agreement” with the Poarch Creeks to share revenue for either expanded or exclusive rights to run electronic bingo machines in the state, including opening a casino in northern Alabama. Republican House Speaker Mike Hubbard said the tribal casino only would offer electronic bingo, not casino games.
Democratic state Senator Roger Smitherman said the consideration of gambling and a lottery are “something that should’ve happened a long time ago. We’ve watched a lot of money go out of this state to the other states around us that have gambling and a lottery. I think what you’re seeing is that Republicans understand how serious the situation is, and there isn’t an appetite for new taxes, either among voters or in the legislature.”
However, his colleague, Republican state Senator Dick Brewbaker, said, “I’m not feeling it. There is nobody in that room that ran on the ‘I’m going to expand gaming platform.’ I don’t think all that many people have shifted.” And Attorney General Luther Strange, who has fought illegal gambling for years, and whose office still has two cases over electronic bingo pending, said gambling is the wrong direction for the state. “Gambling is an easy choice that would only provide a temporary solution to Alabama’s budget problems. If legalized, it would increase the burdens on law enforcement and our state’s social services, driving up government expenses even more. I support reforming the budget process to eliminate earmarks so that we have a true picture of available revenues to fund the government.”
Also in the Alabama legislature, state Rep. Danny Garrett introduced a bill making it illegal for gambling interests to contribute to a political candidate’s campaign or to a PAC. “I am not for legalizing gambling in Alabama. However, with the recent discussions about possible legislation to expand gambling in the state, I believe it is important to prevent gambling lobbyists from influencing legislators through political contributions.”
Alabama law currently allows those contributions. The Poarch Creeks in particular have given large contributions to political campaigns.
