The 1st meeting of the Interim Joint Committee on Licensing and Occupations was held on Friday, August 22, 2003, at 10:00 AM, in Room 129 of the Capitol Annex. Representative Denver Butler, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Gary Tapp, Co-Chair; Representative Denver Butler, Co-Chair; Senators Charlie Borders, David Boswell, Tom Buford, Brett Guthrie, Richard Roeding, and Jack Westwood; Representatives Tom Burch, Larry Clark, Ron Crimm, James Gooch, Dennis Horlander, Joni Jenkins, Paul Marcotte, Ruth Ann Palumbo, and Jon David Reinhardt.
Guests: Willie P. Thomason, Jr.
LRC Staff: Vida Murray, Jack Jones, Ann Seppenfield, Judy Fritz, and Susan Cunningham.
Chairman Butler called the meeting to order. The motion was made and seconded to approve the minutes of the last meeting and was adopted by voice vote.
Willie P. Thomason Jr. was introduced to the committee as a long-time member of Gamblers Anonymous (GA). He told the committee that he had at one time been a car salesman with a very lucrative salary but, he gambled all his money away. He testified to the committee about financial and family problems he had experienced because of his gambling addiction and his attempts at sobriety. Mr. Thomason told the committee that the GA program helped him overcome his gambling habit. He said that unlike an alcoholic, a gambling addict could hide his or her disease. He said while the program was helpful to him, treatment centers, like centers modeled after those for Alcoholics Anonymous (AA) but tailored for gamblers, would help many others and could increase attendance at GA meetings.
Senator Boswell asked if the funding for his gamblers anonymous program came from public money. Mr. Thomason responded that the program was self supporting, paying for everything from coffee to the answering service to the beeper he carried.
Senator Borders commented that Mr. Thomason’s testimony was important because it gave the committee some insight into how an addicted gambler’s behavior may have devastating effects on his or her family, career, and other things.
Representative Horlander asked how people find out about the program. Mr. Thomason told the committee that The Kentucky Council of Compulsive Gambling is supposed to advertise, and there are other means of advertising. For example, the Louisville based Gamblers Anonymous is listed in the Louisville phone book.
Representative Marcotte asked Mr. Thomason if slot machines were more accessible would their accessibility cause compulsive gamblers to bet more. Mr. Thomason said a compulsive gambler will always find a place to bet, and because of this compulsion a treatment center for the gamblers is needed.
Representative Jenkins asked Mr. Thomason if there had been no race tracks or bingo would he not have gambled. He said that because of his addictive personality nothing would have stopped him from gambling at that time.
Senator Buford said he felt that Kentucky has an obligation to create a fund to assist addicts and alcoholics. He asked Mr. Thomason if he felt that he could walk into a casino without gambling Mr. Thomason replied that one of the principles of the GA program is to not tempt yourself.
Senator Buford indicated that he was skeptical that the Senate would pass a Constitutional Amendment to legalize gaming.
Representative Palumbo asked Mr. Thomason when he first started gambling. He told the committee that in 1944, when he was 14 years old, he won $35 at the Kentucky
Derby.
Senator Westwood said that if expanded gambling were approved there should also be an intervention program and asked how money for compulsive gambling earmarked in the proposed legislation could be used most effectively for that program. Mr. Thomason said there should be a treatment center with an in-patient, out-patient program. He told the committee that in a meeting with Churchill Downs officials, he was told that Churchill Downs was willing to donate a percentage of its gross income for compulsive gambling treatment if other gaming establishments would do the same.
Senator Tapp asked what the qualifications should be for a counselor in a treatment facility for compulsive gamblers. Mr. Thomason said, “You have to be one to know one.” He said he had talked to over 15 certified counselors who really did not understand compulsive gambling. He indicated that the addicted gambler is generally quite talented at deluding others.
Representative Crimm said that after hearing Mr. Thomason’s testimony he wondered why he should vote to bring more gaming into the Commonwealth. Mr. Thomason replied that he was not for or against passing gaming legislation, but was advocating the need for funding for treatment programs.
Representative Butler asked if things remain the same would there be a decrease in the need for GA programs or would there still be a problem in the state of Kentucky. Mr. Thomason said that nothing is going to change because even now there is gaming around-the-clock within a few minutes drive of every Kentuckian.
Next, Representative Burch spoke to the committee about three bill drafts concerning expanded gaming in Kentucky, BRs 20, 21, and 93. BR 93 will amend Section 226 of the Constitution to permit the General Assembly to enact laws permitting the operation of video lottery terminals at horse racing tracks. The Constitution, if amended, would require the General Assembly, if it chooses to pass such laws, to ensure the proper functioning, honesty, and integrity of video lottery terminals at horse racing tracks and the organizations conducting the terminals. A second bill, BR 20, was summarized by Representative Burch. He began by noting the bill’s purpose is to provide financial support for Kentucky’s racing industry and to enhance the state’s revenues without having to raise taxes. This would be done by installing new gaming venues, namely electronic gaming devices (EGDs), at Kentucky’s eight race tracks, exclusively. Other highlights of the bill noted were security measures at the sites which will prohibit the use of credit or debit cards on EGDs. Also, the kinds of electronic games offered will use random-selection options based on chance, not skill. EGD games may include video poker, keno, line-up, or blackjack. The Lottery Corporation will be the oversight agency for electronic gaming. In order to implement this Act quickly, a provision to initiate the operation of electronic gaming no later than 120 days after its effective date is included. Entities to be investigated, licensed, and overseen by the Lottery Corporation include gaming device manufacturers, distributors, operations employees, security personnel and others. The Lottery Corporation will also have the authority to install and operate telecommunications lines between each EGD and the Corporation’s central computer system for transmission of relevant data. All EGDs placed at race tracks must meet approved Lottery Corporation standards. Costs involved in the Corporation’s approval process will be the responsibility of the device manufacturer or the operator seeking approval. To ensure that racing is not supplanted by electronic gaming, each race track that conducts electronic gaming must apply to the Racing Commission annually to receive 100% of the number of racing days awarded in 2001 and at least 100% of the races scheduled to be run in 2001. All personnel who interact with patrons in EGDs areas will be trained to recognize pathological gaming behavior and required to report such activity to supervisors. Facilities will also post information regarding resources that offer help for gaming problems. Each operator of a gaming premise will have the authority to determine the number of EGDs needed, hours and days of operation, games played, betting limits, and payoffs awarded. Operators of gaming premises will be required to adopt an internal control system that safeguards its assets and revenues and makes other assurances. An audit of the books and records for each operator must be conducted by an independent certified public accountant. No person under the age of 21 will be allowed on the premises of an electronic gaming area or be allowed to wager personally or through an agent.
Senator Boswell asked if the reason for having the expanded gaming at the race tracks only was because race tracks were losing money and purses were deficient. He was also concerned that because there are no tracks in Daviess County that the county would lose tourism revenue. Representative Burch responded that because race tracks are already set up to handle gaming, it would be easier to supervise the use of EGDs at tracks than if they were installed in other places such as grocery or convenience stores. Also, money from expanded gaming in other states, in particular West Virginia’s Mountaineer Park, has enabled race tracks to draw more entries because they can offer bigger purses.
Representative Clark suggested that the Legislative Research Commission hire a gaming consultant to advise the state where the best locations would be to maximize tourist dollars and how best to distribute revenues from gaming. He said the race tracks should not be the only sites for expanded gaming; however, if there are land based casinos there should be some dollars set aside to help the thoroughbred industry. He noted that the bill should contain a local option provision. He also stated that the Racing Commission should not be in charge, rather a Gaming Commission should be appointed to be established to regulate all gaming, charitable gaming, racing, and the lottery.
Senator Borders said he was concerned that expanded gaming was being seen as an “easy solution” for budget shortfalls. He did comment that discussion on the issue was important, and that during the session, issues such as tax reform, trucking jobs, and the Fox Report, which will bring in legitimate jobs, will be looked at.
Representative Burch responded that Governor Brown requested the General Assembly to pass tax reform, but the legislators would not do it because they did not feel they had the expertise. The legislators wanted to hire experts to address complex tax issues. He said the legislature has to come up with a way to raise revenue for the state.
Representative Burch explained that BR 21 will create new sections in KRS 230A regarding the revenue distribution, and utilizes the $400 million of up-front money supplied by the tracks; however, he cautioned that the tracks had indicated that the same figure would not be offered this year.
Senator Buford then said that approximately 4 years ago he had asked the Attorney General for an opinion on the lottery legalizing gambling in Kentucky and received an answer that was not clear. The Attorney General said the General Assembly “should” have a public vote; however, he never said that the Governor could, by Executive Order, issue the lottery to have any other forms of expanded gambling. Senator Buford said that any bill would have to legalize the collection of a gambling debt.
Senator Boswell said he wanted assurances that this was not a way for race tracks to get their “foot in the door” so that they could have full blown casinos at the race track, eventually. He said that there are arguments on both side of this issue and that legislators should be cautious of creating monopolies for a select group of people.
Representative Burch said the only way to do that was to subpoena people involved and put them under oath; however, he said that people who testify before the committee have their own agenda and objectives.
Representative Butler said he understood that most of the committee members wanted to make comments about expanded gaming; however, his plan was to get dialogue started early so that people will have time to voice their opinion and to let the people at home know what is happening. He also said that if there is a bill considered, part of that money should go to the tracks to help raise their purses to keep horses racing at Kentucky tracks.
A motion was made with a second to adjourn.