Gov. Frank Murkowski's plan to raise taxes on charitable gaming would result in fewer winners at pulltab parlors across the state.
Senate Bill 102, submitted by the Murkowski administration, would cap the percentage of winning tickets at 72 percent. The percentage of prize payouts now is closer to 80 percent.
The proposal also would place a 5 percent tax on operators for a box of pulltabs before prizes or federal taxes are paid. The state now raises $2 million under a tax scheme in which charitable gaming groups pay a 3 percent tax after prizes and federal taxes are deducted.
The proposal was presented to the Senate Labor and Commerce Committee on Thursday. The Department of Revenue said the plan would raise about $12.5 million a year.
The $270 million charitable gaming industry generates about $2 million for the state in taxes annually, according to Bill Corbus, commissioner for the Department of Revenue.
"There's an awful lot put into this endeavor on behalf of the state, and we don't think it is fair and that's why the administration has proposed this legislation," Corbus said.
Larry Persily, deputy commissioner for the Department of Revenue, said the 72 percent cap on prizes paid out is intended to protect charities - which receive about 30 percent of the earnings - from the tax increase.
Pulltab-parlor owners told the committee the proposal would strip them of millions in profits and drive away pulltab players because of the higher odds.
Bob Loescher, president and chairman of Tlingit-Haida community council of Juneau, said the tax threatens to put many pulltab operations out of business. Loescher said the council pays for its community hall, runs drug and alcohol programs, and funds other charitable events with the money raised from pulltab sales.
"Without this gaming income we probably would have great difficulty managing the community programs," he said.
Loescher noted that the city of Juneau already charges a 5 percent sales tax on charitable gaming. Juneau is the only large municipality in the state that charges local taxes on gaming.
"If you add another 5 percent to this ... there's no way pulltabs can be operated by our organization," he said.
No action was taken by the committee Thursday, and many on the panel acknowledged that lawmakers need to look at the bill closely to avoid placing too much of a burden on gamers or pulltab operators.
"It's the beginning of the educational process," said Sen. Con Bunde, an Anchorage Republican. "Obviously the state needs more money, and this is one source the governor thought would produce some revenue, and until you start this process you never know what the unintended consequences are."
Sen. Hollis French, an Anchorage Democrat, said lawmakers should be careful about placing a cap on the number of winning tickets sold.
"If you lower the odds so much that no one wants to play, then you're just driving a stake in the heart of the industry," French said.
Timothy Inklebarger can be reached at email@example.com.
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