By John Allen Nichols, Federation Agriculture Counsel
Alabama has a complicated history with gambling. But for the greater part of the last 50 years, the state has opposed legalized gambling in most forms. There are of course exceptions to this rule, notably dog tracks and bingo halls, as well as the Indian-operated casinos scattered across the state.
Efforts to legalize gambling are the reason those isolated locations exist. However, in its most recent attempt to bring legalized gambling to the state, the Alabama Legislature has opened wide the doors to a variety of gambling enterprises, many of which should give Alabama citizens pause.
SB 319 and SB 320, by Sen. Jim McClendon, R-Springville, purport to authorize a lottery in the state to raise revenue for a scholarship program, similar to the Hope Scholarship program in Georgia. SB 319, a constitutional amendment (CA) gives a structure, albeit barebones and basic, to the lottery. SB 319, however, also authorizes casino-style gaming at “authorized locations.”
Loose Commissions
The Alabama Legislature is currently considering a bill that would legalize medical marijuana in the state. The bill is comprehensive and provides structure and detail to every aspect of this potential industry. There are strict standards as to the individuals who could be appointed to the “Medical Marijuana Commission” – the regulatory agency that would govern medical marijuana in the state. For example, under the proposed legislation, the governor has two appointments to the commission, one of whom must be a registered physician and another who must be a licensed pharmacist. The Alabama Gaming Commission as proposed by SB 319 includes no such language. There are no parameters as to who could be appointed to the commission. It even lacks a clear prohibition from appointing an individual who has an economic interest in a gambling enterprise in the state, or elsewhere for that matter. This loose structure indicates a prime opportunity for corruption to plague the system even as it begins.
Potentially Excessive Operational Costs
Although the CA contemplates how and where lottery and casino revenue would be spent – like to fund scholarships in the state – it contains no provisions preventing covered operators or even the commission itself from inflating operational costs to avoid those obligations. In other words, the commission or covered operators could spend excessive amounts on salaries, bonuses, even upgrades and decorations at facilities, to avoid having to pay gaming revenue into the designated funds. Under the current structure, gaming revenue could be used to pay a gaming commission executive director millions of dollars instead of funding scholarships.
Wily Bidding Process
The CA establishes a bidding system that allows would-be casino operators to bid for a license at one of several approved locations. This means any company wishing to operate a casino at one of these locations could make a bid (minimum bids are established in the bill). The CA allows the current operator of the “covered location” to make the final bid at a higher rate than any other offer. This seems to give Alabama residents who are already operating a gambling enterprise an advantage, however, this is likely “just for show.” Gambling enterprises outside Alabama are much more sophisticated and economically viable than those operating in state. Whatever advantage this provision seems to give Alabama citizens is lost when the expendable capital of gambling interests coming from places like Las Vegas or Atlantic City is considered.
More Than Alabamians Bargained For
Many Alabamians seem to be comfortable with the idea of “just a state lottery” and not casinos. However, Alabamians should be careful what they ask for. Under the Indian Gaming Regulatory Act (IGRA), a lottery is considered Class III gaming. Under the IGRA, when a state allows Class III gaming to occur, the state may also be authorizing other forms of Class III gaming at Indian casinos. At the very least, allowing Class III gaming allows an Indian tribe to force the state to enter into a compact which, up to this point, they have been unable to do.
Alabamians should approach SB 319 and SB 320 with abundant caution. These pieces of legislation seem to authorize far more than many citizens are aware. Allowing such a strong flow of external investment into Alabama could fundamentally change the way our state operates for years to come.
