Alabama Gaming Legislation Finally Passed Through the State Senate

The state of Alabama finally passed a proposal for a state lottery; Alabama is one of the last few states in the country that do not have any form of legalized gambling. The legislation moved forward from the State senate to the House of Representatives, earlier this month, when it managed to gather enough votes. If successful at the House, the legislation will be up for a vote by all members of the state in a referendum in November 2016.

Current Gambling Laws in Alabama

The State constitution of Alabama has a very wide definition of gambling and as with most States, they ban it all. For many years, the state has seen a lot of religious and progressive clashes over the subject of gambling. The difference between the Yellowhammer state and rest of the country is that they refuse to allow too many exceptions to the rules when it comes to gambling; there are harsh penalties for violating those laws, which get worse on Sundays. Over the years, allowances have been made for dog racing and horse racing, as well as bingo and slot machines at tribal casinos.

Alabama shares a colourful gambling history with their neighbour, the state of Mississippi; however, while the Magnolia State embraced the gambling industry, Alabama went down the conservative route.

The 1901 State constitution defined gambling as any game for financial gain with an element of chance, which meant that games of skills that have an element of luck, all fall under the same category according to Alabama law; poker and daily fantasy sports being two games that have been oppressed because of that reason, but greyhound and horse racing managed to acquire an exception through an argument that the outcome of those sports are entirely dependent on the skill of the animal and the jockey and not on luck.

There are tribal casinos in Alabama, though heavily restricted in terms of the games that they are allowed to offer; there are no table games at all, only slots and bingo-type games.

Casino Games are not allowed in the state of Alabama. The tribal casinos that operate within the borders of the state, are limited to class 2 slots and bingo games only. While there are no specific laws related to Online Casinos in the state, the laws that cover traditional casinos are extended to the ones that operate over the internet, meaning online casinos are not allowed in the state either.

There are no distinctions between the laws that cover table games and those that cover poker; so, while residents are allowed to enjoy social poker games with friends and family, no one is legally allowed to arrange contests and collect a commission or engage in any form of advertising for the matches they have organised. Online poker, therefore, is also banned under the same terms.

There is no State lottery in Alabama and the state does not participate in any national schemes.

Betting is allowed only on greyhound and horse racing events at several tracks around the state. Gambling is conducted via pari-mutuel pools and the races can be watched on TV.

Bingo only exists at Indian Casinos in Alabama, and even then, the state is not keen on extending that permit to the electronic version of the same game; the casino operators have been tied up in legal battles with the state, over the matter of getting permission for electronic bingo machines for their premises.

Bingo and raffle games are also legal under charitable gambling laws; according to this exception in the rule, these gambling activities can be conducted for charitable purposes, provided that strict care is taken to uphold the firm licensing and legal conditions.

As a result of the strict gambling bans, many Alabamians cross over to casinos in the state of Mississippi to indulge themselves; this while allows Alabama to preserve their stance on gambling does channel a lot of money into the neighboring state instead of keeping it within their own economy.

Collapse of the Broader Gambling Bill

Given the stringent gambling rules in the state of Alabama, the progress the senate has made on the lottery bill, earlier this month can be considered an immense achievement. An earlier prediction on Governor Robert Bentley’s gambling bill suggested that it would fail to pass at the Senate on the day of the vote, but the votes taken on Friday, the 20th of August 2016, proved these expectations wrong; the lawmakers went against the forecasts and approved a simpler version of the bill by a margin of 21-12 in its favor. The bill, which was amended substantially before the vote, will now go on to the House of Representatives.

The governor got his chance to push his lottery bill on to the floor, after the broader gambling bill collapsed in the Alabama Senate. However, Bentley’s bill still faces steep odds in an Alabama Legislature, which is sharply divided over the issue of gambling; some legislators opposed all gambling activities, while others strongly suggested either excluding or including electronic gambling. The senate was also divided on the ideas of how lottery proceeds should be used, if gambling was to successfully be legalized in the state.

Issue of Electronic Lottery Terminals

The more complex lottery bill, which was sponsored by state Senator Jim McClendon, touched on prickly issues like placing electronic lottery terminals that resemble slot machines or video poker games in their appearance and function, at four state dog tracks and at their locations in Lowndes and Houston counties.

The Senators unsuccessfully tried to bring the bill to a vote with a motion to end the debate; however, while eleven of the senators wanted to bring the bill to a vote, 20 others, who were mostly Republicans, wanted to keep debate going. Finally, after it became clear the bill did not have the 21 votes needed to clear the Alabama Senate, the senators stopped the debate on the combined lottery and gambling machine bill.

The plans were hyped by the sponsors for holding the ability to generate USD 225 million and USD 400 million for the state, respectively.

Where to Direct the Lottery Revenues

The initial bill also suggested that all the taxes collected from these newly legalized gambling operations would go in its entirety to the state’s general fund; however, the bill, which was finally approved by the Senate on Friday, looks to divert millions of dollars of the anticipated revenue to the Education Trust Fund and Medicaid instead. The bill's passage caps off a contentious period of debate over how best to shore up the state's general fund.

According to the original version of the gambling bill, all lottery revenues were designated for the state's general fund; however, the chamber voted by a margin of 22-7, to approve a last minute amendment, by Senate Majority Leader, Greg Reed, to instead direct a 10 per cent share of the potential lottery revenues to the Education Trust Fund.

Senator Rodger Smitherman, said that he would only vote for the lottery bill if the Senate approved one of his proposed amendment to dedicate USD 100 million of the annual lottery revenues to Medicaid; the amendment passed by a 25-4 vote, with one abstention.

A number of other senators suggested amendments to the bill at the meeting on Friday; State Senator, Bill Holtzclaw, proposed two amendments to the bill that looked to direct 40 and 30 percent, respectively, of the lottery revenue, to the Education Trust Fund.

“A significant portion of the senate district I represent would like to be able to vote on a clean lottery bill, which I think the governor's lottery bill that we've seen is about as clean a lottery bill as we've seen,” he said.

Holtzclaw said that the proposed amendments stemmed from having heard from many constituents that “they want some of the funding from the lottery to go to education,” or else they will not vote to support a lottery.

Unfortunately, both the amendments were ultimately rejected by margins of at least 20 votes, as a number of concerns were raised regarding the state of the Alabama General Fund.

Individual Power to the Counties

Reed had also proposed two other amendments that did not meet with approval from rest of the Senate members. One of those amendments would have allowed the counties in opposition to legalized lottery in the state of Alabama, to refrain from selling the tickets at their shops.

“My intention, as I've stated, is to give more opportunity and control to folks in different communities,” Reed said.

However, Senator Gerald Dial, argued that a concept like that would potentially divide the state and cause the different counties to start fighting with each other.

Dial said, “You're talking about putting something in the Constitution that will divide Alabama's 67 counties.”

Next Steps

The discussions about gambling in Alabama this year, were reportedly the most serious talks that have happened over the last 20 years.

The only other states still without a lottery are Mississippi, Utah, Alaska, Hawaii, and Nevada; however, Mississippi and Nevada do have robust casino industries.

It has been revealed that more than half of the adults in the U. S. play the lottery and each year, more than USD 70 billion are spent on these lotteries, making it the most popular form of gambling in the nation.

Earlier this year, in April 2016, the state of Alabama failed to legalize daily fantasy sports contests and joined the ranks of states that have declared DFS illegal.

However, there is still hope for the lottery bill to be passed this year; the governor said during a news conference in the Alabama Capitol, urged lawmakers to approve the bill and put the idea of creating a lottery to the first state-wide vote since 1999.

“Let’s allow the people back home to vote. Let’s allow them to make the final decision on whether or not they want a lottery in this state to help the people of the state of Alabama,” Bentley said.




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