By Jason Johnson & Dale Liesch
Alabama lawmakers are in Montgomery considering a lottery, but despite public support, concerns about how the proceeds would be spent and the type of activities that would be legal are threatening to derail the process before there’s even get a chance for citizens to vote.
That sentence could have been accurately written last year … or in 2016 … or at pretty much any point over the past decade. Alabama has gone back and forth many times over the possibility of a state lottery to keep residents from playing ones already established in neighboring states.
Most political observers believe there is as much public appetite for a state lottery today as there has ever been in Alabama, but establishing a lottery here isn’t an easy process. For one, it requires a referendum vote because Alabama’s 1901 Constitution bans all forms of gambling.
The last time the Legislature managed to pass a bill authorizing a referendum vote on the issue was in 1999, and Alabama voters shot down that state lottery proposal by 61 percent.
Sam Fisher, an assistant professor of political science at the University of South Alabama, said he believes — if legislators were able to get a vote before the people again — things might be different this go-around. Fair warning, though: Fisher said he thought that in 1999, too.
“I would imagine it would have a better shot of passing because people have become more used to the notion of a lottery, and nothing really tragic has happened in these other states that have had them for years now,” Fisher said. “In the past, at least in Alabama, it’s been cast as a moral issue, but I think some of the conservative Christians that may have been opposed to it in previous years have loosened that grip a bit.”
While that may be true, a referendum vote would be the easy part. Getting there is trickier.
Alabama’s Republican-led Legislature was able to quickly organize and pass the state’s first gas tax increase in 27 years in only a few short days, but a bill letting Alabamians cast an up or down vote on a lottery is not expected to move as easily.
Danny Sheridan, a nationally recognized oddsmaker who provided daily odds to USA Today for more than three decades, has long accused legislators in Alabama of treating residents like they aren’t smart enough to be trusted with something like a lottery referendum.
“We’re smart enough to vote them into office, but they don’t think we’re smart enough to vote on lottery or casino gambling or other things that affect the state,” Sheridan said. “Don’t get me wrong, it’s OK if you’re against the lottery, but it’s not OK to refuse to let citizens vote on it.”
If citizens were to get that chance, Sheridan said he would bet on Alabama approving a state lottery by a 65 to 70 percent margin, at least. Even though he believes lotteries are “a regressive tax on the poor,” Sheridan said he would cast a “yes” vote if the question was on the ballot today.
That’s because, for years, he’s watched residents take millions of dollars to neighboring states like Florida, Georgia and Tennessee. Mississippi, which already has waterfront casinos and legal sports betting, is also considering a lottery. Without a lottery of their own, Sheridan said Alabamians will send money there, too.
It’s hard to put an exact number on how many Alabamians are playing other states lotteries, but it’s estimated to be millions. Another way to gauge the popularity of out-of-state lotteries is by looking at how many winners hang their hats in the Yellowhammer State.
According to the Florida Lottery, more than 1,620 Alabama residents claimed prizes greater than $600 between the beginning of 2018 and last week.
Of those, at least 183 were from Mobile County — including some of the state’s biggest winners.
In 2018, a Mobile resident claimed a $223,639 prize from one of Florida’s many lottery games. Another man from Wilmer took another $175,000 back to Alabama.
Neither of those compared to the $5.3 million prize claimed by a woman from Ozark, Alabama last March.
The identity of Florida’s lottery winners — even those from Alabama — is public information, but Lagniappe is not naming any individual winners out of respect for their privacy.
With public support at a perceived high, Sen. Jim McClendon, R-Springville, has introduced the first of what are expected to be multiple bills aiming to create a state lottery in Alabama.
Though he’s pushed similar efforts unsuccessfully in the past, McClendon said he feels more optimistic about his chances in 2019.
He said Alabama has more pro-lottery, or at the very least pro-referendum, legislators than it’s had in previous years, including several who were elected for the first time in November.
“About 25 percent of the House and Senate are new this year, and some of the people they replaced were ones who were hard-and-fast ‘no’ votes on topics like this,” McClendon said. “Well, they’re gone. We’ve got another generation that has come into the Senate, and the public is also much more aware of the fact that other states are benefiting from us not having a lottery.”
Support in the Legislature
McClendon’s current proposal is broken up into two bills.
One would authorize a referendum on a state lottery to be placed on the 2020 presidential ballot, and a second lays out details of how it would operate and where the money would go.
The plan would see proceeds from a lottery placed into a trust and split evenly between Alabama’s General Fund and the Education Trust Fund — a process that would be overseen by an Alabama Lottery Commission the legislation would also establish.
McClendon said that’s “a starting point” for conversations about where revenue might go, though it’s currently unclear exactly how much that could be. McClendon estimates annual proceeds at around $250 million, but the fiscal office has yet to submit its official analysis.
“I didn’t put these bills in to solve any revenue problems because I don’t think they’ll solve our revenue problems,” McClendon said. “I introduced these bills so that the people of Alabama could buy a lottery ticket without having to drive to another state.”
While revenue might not be the intent of the bill, it has historically been the focus of debates about previous lottery proposals. This year, state Democrats have already eyed lottery proceeds as a way to address everything from Medicaid expansion to funding public education.
The House Democratic Caucus has also made passing a state lottery a pillar of its multifaceted plan to fund schools and protect rural hospitals. Speaking for the caucus, Rep. Kelvin Lawrence, D-Hayneville, recently said banning the lottery has only helped other states profit.
In a public address last week, Lawrence said Tennessee has seen $4.8 billion in revenue since the inception of its lottery, and another $4.1 billion has been collected in Georgia over the last decade. A significant chunk of that revenue, he said, comes from Alabamians crossing state lines.
“Like 1920s prohibition, banning a state lottery has done little to deter Alabamians from playing the lotto,” Lawrence said. “We play it in our surrounding states, whether it’s Georgia, Mississippi or Tennessee, who in turn keep the benefits of our rewards. Why are we allowing our dollars to go to neighboring children’s education and to neighboring states’ roads?”
When it comes to Mobile’s local legislators, both sides of the aisle seem to support a lottery vote going before the people, and most believe a referendum would pass this time as well.
“I bet nowadays it would,” Rep. Chris Pringle, R-Mobile, said. “It depends on how it’s written. Everyone thought [former Gov. Don] Siegelman’s [1999 lottery proposal] would pass, but it got hammered. But, it was also poorly written.”
While he hasn’t read McClendon’s bill, Pringle said there have already been discussions among legislators about using income from any lottery plan to cut other taxes, such as the sales tax on food.
Pringle said proposals like that if tacked on in the legislative process, would make any bill harder to pass. He’s also unsure whether revenue from a lottery could make up what the state might lose eliminating something like the grocery tax, which brings in around $405 million a year.
Plus, now that some neighboring states have moved on to other gambling options, Pringle said he wonders whether Alabama has the economic base to make a lottery plan successful.
“A lot of state lotteries are not doing nearly as well as they used to,” he added. “Now, you’ve got lotteries, casinos and sports betting in neighboring states as well.”
Barbara Drummond, D-Mobile, told Lagniappe she supports a lottery and, like Pringle, thinks a referendum would pass in 2020. Drummond said she has always supported referendums because they give the people an opportunity to vote on something directly.
But while she might support what’s at the heart of McClendon’s proposal, Drummond said Alabama Democrats also plan to introduce their own lottery bill during the regular session.
The main difference would deal with funding, she said. While McClendon’s bill divides lottery profits between the General Fund and the Education Trust Fund, Drummond said the Democrats’ bill would be a little more targeted — splitting the proceeds between rural health care and education.
A “clean lottery”
There does seem to be broad support for some type of lottery. However, as with previous attempts to established one in Alabama, the devil is in the details.
Just hours after McClendon introduced his “clean lottery” bill last week, it found some familiar opposition. That’s because in addition to standard paper ticket lotteries, the proposal would authorize video lottery terminals (VLTs) to operate at four existing dog tracks in Macon, Jefferson and Greene counties, and at the Mobile Greyhound Park in Theodore.
Those terminals, unlike slot machines and much like bingo machines, have a preset number of winners. Players also compete with each other on a network of machines, rather than against the house on a single device. McClendon argues they’re similar to a scratch-off lottery, only digital.
According to McClendon, allowing the state’s four existing dog track facilities to obtain a state license to operate VLTs would let them develop a business plan and feel comfortable hiring employees. He said some of them have been operating in a legal grey area for years now.
In Macon County, VictoryLand dog track and casino has been at the center of Alabama’s efforts to stamp out gambling for years. It was shut down in 2013 for operating electronic bingo machines, only to reopen in 2016. It was then sued by the state in a case that’s still pending.
The Alabama Supreme Court has determined electronic bingo machines to be “illegal gaming devices” on several occasions, but authorities in areas like Macon County have argued that various local constitutional amendments passed by voters have legalized the devices.
As recently as this week, though, Attorney General Steve Marshall said “should local agencies in other jurisdictions fail to enforce state laws on gambling, my office will take action.”
“This sort of legal limbo makes it difficult for the owners of these facilities to do any kind of planning,” McClendon said. “Some of those are the largest employer in their county, and if you work in one of those facilities, knowing you could be raided at any minute isn’t very comforting.”
If McClendon’s bill passed as written, a 10-year VLT license would cost $100,000, and licensees would also be required to pay taxes to the state as well as the county and city in which they operate. It would also prevent similar facilities from opening in other areas by only extending the VLT option to facilities that already have an exemption for live and simulcast dog races.
Similar language derailed a lottery proposal in 2016 after the Poarch Band of Creek Indians mounted a strong opposition campaign against it. That’s because the PCI Gaming Authority has enjoyed a monopoly on gambling in Alabama for years.
The tribe’s three casino properties — in Atmore, Montgomery and Wetumpka — can legally operate electronic bingo machines because they are located on reservation lands. Though it’s unclear how much of an impact it could have, allowing VLTs to operate in Alabama is a threat to a gaming enterprise that is estimated to bring in more than $1 billion a year for PCI.
While PCI has said it would support a bill that only creates a classic, paper-ticket lottery, the expansion of any type of gambling appears to a nonstarter for the tribe.
“[The bill] does not give citizens an opportunity to cast one vote on one issue — whether we should have a traditional lottery in our state. Instead, the bill is cluttered with provisions that will expand private gaming operations in a few parts of the state owned by a handful of individuals,” a PCI spokesperson said. “It also demands that any vote on a lottery include a vote on video lottery terminals, which are also commonly known as ‘slot machines.’”
While other cities and counties would stand to benefit from dog tracks in their area being allowed to add VLTs, that likely would not be the case for Mobile and Mobile County, even if McClendon’s bill were to pass the Legislature. That’s because Mobile Greyhound Park is owned by PCI, which purchased a controlling interest in the property in 2009.
Back in 2016, tribal leaders said PCI would never expand the gaming options offered there because it could take away business from its Windcreek Casino in Atmore. A spokesperson for PCI did not respond to questions about the tribe’s current position on expanding gaming there.
Sheridan said he doesn’t blame PCI for not wanting to “split the pie” it’s currently enjoying all of.
However, he also doesn’t share the animus some others have for the tribe and its billion-dollar gaming monopoly in Alabama. In fact, if he had his way, the state would have already signed a compact allowing PCI to expand its operations to include table games … for a price.
“I still think we need to do a compact with PCI and let them pay for the right to have casinos. It wouldn’t cost the state a penny to have them pay something like a $250 million annual fee,” he said. “They’re already developing their properties, they’re a huge employer and I think they’re a great corporate citizen. They’ve done good things in Alabama, and they don’t have to.”
McClendon, on the other hand, said PCI’s opposition to the bill is purely self-serving, telling Lagniappe: “not only do they not want to pay taxes — and they don’t pay a dime in taxes — they don’t want competition either.” His bill never mentions PCI directly, and McClendon said the tribe should keep out of it.
That does not appear to be PCI’s intention, though. It’s worth mentioning that, when facing the same concerns over VLTs in 2016, the tribe offered to cover Alabama’s $250 million budget deficit in its entirety if it were granted the exclusive rights to casino gaming in the state.
That deal never came to pass, but PCI has continued to be a major player in Alabama politics.
According to records kept by Alabama Secretary of State John Merrill’s office, PCI has made more than $4.5 million in contributions to Alabama candidates on both sides of the aisle since 2014, including several local legislators and Senate President Pro Tem Del Marsh, R-Anniston.
Marsh, who state records indicated received at least $30,000 from PCI in 2018, is believed to be considering a separate lottery bill without VLTs. A member of his staff didn’t respond to questions about that, but McClendon said he’s gotten mixed signals from Marsh himself.
Asked whether he was concerned about PCI’s ability to bankroll an opposition campaign against his lottery bill, McClendon didn’t express much concern. He said he’s more focused on businesses that could contribute taxes to the state than appeasing political donors who do not.
“I have no idea how much money [PCI] has spent on lobbying efforts against this or anything else. I really haven’t looked into what they do with their money,” McClendon said. “Here’s the only fact I can tell you about them giving out money — they haven’t given any to me.”
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