Op-ed on HB 84

A Great Time To Brag

by Rep. Terry Martin

It has been ten years since the Alaska Legislature legalized the use of paper slot machines, known as pull-tabs, for organizations to raise money for their charitable activities.

I think it is wise and prudent of the Legislature to ask ourselves if this new gambling activity we created is doing what it was intended to do. Pull-tabs generated $260 million in income in gross receipts with only eight percent (8%) going to charities in 1995. What are the permit-holders really doing with their new source of revenue, intended for charitable purposes? Is that percent acceptable to us?

I try not to climb up on a moral high-horse about gambling, but the fact is that it does have a corrupting effect on society. The legislature made a moral policy decision in 1988 when it permitted qualified organizations to raise money with pull-tabs.

To engage the Legislature in an open debate with the non-profit organizations about this issue, I introduced a bill (HB 84) that would limit the pull-tab permits to 501(c)(3) and (19) charitable organizations under the IRS code. These are basically non-political, tax-exempt, non-profit charitable organizations under (c)(3) and veteran’s organizations under (c)(19).

My purpose in introducing such a narrow field of tax-exempt groups who would qualify for a pull-tab permit is simply to prohibit the participation of organizations that are not involved in charity work. Both political parties, and many subgroups within the parties, raise campaign funds with pull-tabs. Is this charity? Many labor unions use pull-tabs to raise money, much of which ends up as political contributions and may cover union administration costs or replace dues from members for non-charitable purposes. It’s the same with professional organizations, such as the Chiropractor’s association.

Some will argue that the campaign donations come from member dues and other sources. But, if pull-tab revenues are being used for internal expenses, or to pay administrative costs that years ago were paid out of dues, that’s not charity.

Predictably, the first people we heard from were some of the organizations that would no longer be permitted to sell pull-tabs under

HB 84. For example, the Mat-Su Miners baseball team. Now, I have to seriously question the charitable nature of their efforts; that is, to raise money to bring underprivileged, semi-pro, college baseball players to Alaska all summer. Sure, the pull-tab dollars allow the promoters to charge only $3 for a ticket instead of $6. So, that could be charitable. But think about how many local little league teams could supported by this money instead.

Others we have heard from are fraternal organizations such as the Moose and Elks, which are tax exempt under 501(c)(8). Naturally, their arguments against the bill are that they raise lots of money for charity, give out scholarships, help the widows and orphans, etc., etc.

I say, “Wonderful, tell us all about it.” If you are truly doing great charitable works, it should be reflected in your bottom line. But even if you are the Sisters of the Holy Angels of Bethel, if you’re making $70,000 a year on pull-tabs and only $5,000 is going to charity, that’s not very charitable. What are you going to do with the other $65,000?

Again, I introduced the bill to spark the conversation and to find out if the program is working the way it was intended. Representative Jeannette James began holding hearings on this issue in the House State Affairs Committee. And we are very interested to hear the current pull-tab permit holders explain the wonderful work they are doing. For those who do not come forth, we then have to ask, “Why do you need a professional promoter to get favored legislators to stop the new legislation that is intended to sort out the chaff from the wheat?”