State says video gaming not as profitable as projected

Posted: Friday, October 03, 2003

ANCHORAGE - Legalized video gambling would bring in far less money to the state than proponents suggest, according to the state Department of Revenue.

The department recently took a close look at a proposal to legalize video gambling in bars and clubs, and says the state wouldn't get a dime the first year, because of all the startup costs. Then, once video gambling had a few years to become an established part of Alaska's bar scene, the state might get $30 million a year from the machines.

The state released those estimates at a hearing Wednesday by the state Senate's Committee on Labor and Commerce.

The Legislature is looking into gambling as a source of nontax money to help bail out the state budget. Video gambling bills were debated in the last session, but stalled in the face of vigorous opposition.

The bar owners pushing electronic gaming claim it could bring in much more than the state estimates.

"We came up with figures in the $50 million bracket and as much as $100 million," Frank Dahl of the Cabaret, Hotel and Restaurant Retailers Association told the committee.

House Speaker Pete Kott, who has supported the video gambling proposal, said he needs to look over the state's estimates. But, even if the smaller estimates seem justified, Kott said it would not make him want to abandon video gambling.

"It's a lot more than what we're getting now," Kott, R-Eagle River, told the Anchorage Daily News.

Video gambling could help with the state's huge and recurring budget shortfall, Kott said. Largely because of a decades-long decline in oil production, the state spends hundreds of millions of dollars more each year than it brings in. And the budget reserve that absorbs that fiscal gap could be gone in a few years.

Kott also wants the state to join a multi-state Powerball lottery. The revenue department does not have a good estimate of how much that could bring in. But, based on figures from South Dakota, it might fall between $1.3 million and $6.3 million a year, according to the department.

The department looked at how much a video gambling bill proposed by former Wrangell Republican Sen. Robin Taylor would bring in. Taylor's bill, giving the state 15 percent of the net revenue from the machines, would eventually bring the state $15 million a year.

But the state would be more likely to get a 30 percent cut if a video gambling bill passes, according to lawmakers in the House. So its take would double to $30 million.

Charities would also get 30 percent, the bar or club would get 30 percent, and the local government would get 10 percent, under a bill in the House.

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