Omnibus gaming bill discussed

Lawmakers resumed general file debate Feb. 19 of an omnibus bill that would change provisions of several gaming rules in Nebraska. The bill was first debated Feb. 11.

LB970, as introduced by O’Neill Sen. Tyson Larson, would allow any form of payment in U.S. currency under the various state acts that govern bingo, pickle cards, lotteries and raffles. Currently, only cash is allowed for keno transactions.

The bill also would make the following changes regarding pickle cards:
• eliminate a requirement that a pickle card operator purchase, lease or rent a pickle card dispensing machine;
• allow a licensed organization or pickle card distributor to offer a dispensing machine for free or below fair market value as a means to induce the operator not to contract with a licensed organization;
• allow a licensed organization 30 days to deliver payment for a pickle card delivery and allow a licensed organization to extend credit for pickle cards;
• increase the operator’s maximum definite profit from 30 to 35 percent; and
• increase prizes from 80 percent to 85 percent and decreases the tax on the definite profit from 10 to 5 percent.

The bill would allow keno to be played with electronic tickets and would require paper tickets to be available at the request of a player. The bill also would eliminate the mandatory five-minute wait time between keno games.

Larson said the measure would benefit Nebraska communities that have seen a drop in keno revenue, which is used for parks and to purchase ambulances and law enforcement vehicles. In addition, he said, local nonprofits would benefit from keeping a higher percentage of the profit from players.

“We know what pickle cards give charities—what they do for your local rotary clubs, lions clubs and girl scouts,” Larson said.

A General Affairs Committee amendment would strike the provision eliminating the five-minute wait between keno games. The amendment also would incorporate provisions from several additional bills.

Provisions from LB820, originally introduced by Venango Sen. Dan Hughes, would allow a lottery or raffle in which the winners are determined based on the timing of a naturally occurring event, such as a weather event.

The possible timing of the naturally occurring event would be indicated on tickets sold to participants in the lottery or raffle. A licensed organization using this method would be required to comply with all other requirements of the Nebraska Lottery and Raffle Act.

Hughes said the provisions would provide harmless entertainment for many Nebraskans, just as other legal forms of gaming do. Everything in life involves some risk, he said.

“People love to gamble,” he said. “There are some that it’s a problem for. Are we going to regulate everything in our lives to try and save a few people?”

Provisions of LB862, introduced by Larson, would codify fantasy contests in Nebraska law. The provisions would apply only to operators who offer fantasy contests for cash prizes to the general public upon payment of an entry fee.

Larson explained that a typical fantasy sports contest involves participants forming fantasy teams of players. Following completion of sporting events, game statistics are converted into points and the person with the most points wins the contest, he said.

A fantasy contest would include any fantasy or simulated game or contest in which:
• winning participants are eligible to receive cash or any other item of value;
• the value of all prizes and awards offered are established and publicized to the participants prior to the game or contest;
• all winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals, including athletes in the case of sports events; and
• no winning outcome is based on the score, the point spread or any performance of any single actual team or combination of such teams or based solely on any single actual event.

Omaha Sen. Ernie Chambers opposed the bill, saying the provisions relating to fantasy sports contests would constitute expanded gambling, which is illegal under the Nebraska Constitution.

“The state cannot regulate that which is illegal,” Chambers said. “Trying to put in place a regulatory scheme does not make that which is illegal, legal.”

Larson countered that the bill’s provisions would provide safeguards for the 300,000 Nebraskans who currently engage legally in daily fantasy sports. The bill would require operators to register and be licensed, he said, which several other states also are considering.

“If you don’t want the little guy to be taken advantage of, then you need the consumer protections that are in LB970 and the committee amendment,” Larson said.

Omaha Sen. Heath Mello spoke in favor of regulating fantasy contests, saying the bill could be considered expanded gambling only if fantasy sports contests were a game of chance rather than one of skill.

“It’s not flipping a coin,” Mello said. “It does require a considerable amount of work and a considerable amount of research. I think that it’s only worthwhile that we consider regulating an industry like this.”

Sen. Colby Coash of Lincoln agreed, saying that providing a regulatory framework for fantasy sports does not qualify as expanded gambling.

“The portion of LB970 that we’ve been talking about is a regulatory bill, it is not a legalization bill,” he said. “This is regulating something that is already here.”

The amendment would require a fantasy contest operator to:
• verify that participants are at least 18 years old;
• ensure that a person who plays or officiates in a game or contest that is the subject of any fantasy contest is restricted from participating in such fantasy contest that is determined on the accumulated statistical results of a team of players in a game or contest in which such person is a player or an official;
• take reasonable steps to restrict a person’s participation if the person requests that their access to play fantasy contests be restricted;
• disclose the number of entries that a participant in a fantasy contest may submit and take reasonable steps to prevent the participant from submitting more than the allowed number;
• protect a participants’ funds by segregating the fantasy contest funds of participants from the operator’s operational funds and maintain an adequate reserve; and
• contract with a third party to perform an annual audit to ensure compliance and submit the results to the state Department of Revenue.

The amendment also would prohibit a fantasy contest operator or an employee—or any relative living with the operator or an employee—from participating in that operator’s fantasy contest.

A motion offered by Chambers to indefinitely postpone the bill was supported by Scribner Sen. David Schnoor, who said the state should not encourage gambling.

“The consumer protection is not letting this [bill] go through,” Schnoor said.

The motion was defeated 14-11. A motion to reconsider that vote also failed on a vote of 18-10.

A Chambers motion to bracket the bill until April 20, 2016, was pending when the Legislature adjourned for the week.

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