Alabama House Speaker Nathaniel Ledbetter says upcoming negotiations over gambling legislation present lawmakers with an opportunity they cannot afford to waste.
Representatives and senators will try to reconcile the differences in the comprehensive gambling plan the House passed in February and the scaled-back version the Senate sent back three weeks later.
On Thursday, the House rejected the Senate version and voted to send the two-bill package to a conference committee.
Ledbetter, giving an example of what he sees as the high stakes, noted that in Tennessee about 147,000 students received $450 million in scholarships from that state’s lottery, figures from the 2022-23 school year.
“What are we thinking?” Ledbetter said when asked about the outlook for negotiations. “I think the people in Alabama are smart enough to vote yes or no. I mean, we’ve got smart people in our state. Why are we neglecting them the opportunity to vote? I don’t get it.”
As with any legislation to allow a lottery or gambling, final approval would be up to the voters in a constitutional amendment.
A lottery to fund education programs, including scholarships for two-year and technical colleges, was part of the package the House passed.
The Senate plan kept the lottery but split the revenue three ways – between education, the general fund, and funding for roads. That was just one of the differences in the House and Senate plans.
The biggest difference is that the House plan is much broader. It would allow up to 10 casinos and would legalize and tax sports betting.
The Senate plan allows three casinos, all operated by the Poarch Band of Creek Indians, and no legal sports betting.
Sen. Greg Albritton, R-Atmore, who handled the gambling legislation in the Senate, said he preferred the more comprehensive House plan but had to scale it back to get enough votes to pass the bills in the Senate.
Constitutional amendments require approval by three-fifths of the Senate and the House, a higher bar than normal legislation.
Eleven meeting days remain in the legislative session, enough time to approve a compromise if one can be found. On Thursday, Albritton did not like the chances.
“The optimism is gone,” Albritton told the Associated Press. He said some senators have taken hard stances against sports betting or allowing casinos.
“There is plenty of middle ground. There is plenty of opportunity. What we are battling is entrenchment,” Albritton said.
Gov. Kay Ivey supported the more comprehensive House plan when it passed in February.
“As I said during my state of the state address, I am hopeful the people of Alabama will have the chance to vote on the issue of gaming,” Ivey said in a statement Friday. “It also remains of the utmost importance that what we put in front of Alabamians is a good deal for them that will crack down on illegal gambling and responsibly regulate limited forms of legal gaming.
“I agree with Speaker Nathaniel Ledbetter in that I am hopeful members of the House and Senate are successful in working together to put something in front of the people of Alabama to have their say too.”
Jess Brown, a retired political science professor at Athens State University and longtime observer of Alabama politics, including the years of futility on lottery bills, said the potential revenue of the gambling plan ranks it as one of the most important revenue proposals in Alabama since the state income tax was enacted in the 1930s, and the biggest since Gov. Bob Riley’s $1 billion tax plan, which voters rejected in 2003.
“What we’re down to now is I think the biggest test of political leadership in our state, perhaps in my lifetime,” Brown said. “Because you’ve got a complex issue with a lot of moving parts, a lot of money involved. And that’s where you find out the quality of your political leadership. Whether it’s the governor, speaker, pro tem of the Senate, committee chairs, those conferees on the conference committee. Because that’s what great political leadership does.”
“Can the governor effectively use the clout of her office to find votes in the state Senate?” Brown said. “Can those conferees sit down with all the affected parties and put together a package that gets 60% in the House and 60% in the Senate?”
For negotiations to formally start, the Senate will have to vote to send the bills to a conference committee, as the House has done. The committee would include three senators and three representatives. Senate Minority Leader Bobby Singleton, D-Greensboro, expects that to happen after lawmakers return Tuesday.
Singleton, a supporter of gambling legislation, has been optimistic about a plan passing throughout the session.
“We are not in a hurry,” Singleton said. “We’ve got up until the last day of the session before we can report out. So, we don’t have to go into conference today and be out today. We have an opportunity to go through it, study it, talk to members, see what they’re liking and what they’re not liking and give it an opportunity.”
Alabama voters have not had their say on a lottery since 1999. Forty-five states have lotteries, including the four that border Alabama.
Lottery and casino proposals come up most years in the Legislature but most years do not advance as far as this year.
Gov. Robert Bentley called a special session to pass a lottery bill in 2016, a time when the state budget was facing shortfalls, but it did not pass.
In 2019, the Senate passed a lottery bill sponsored by Albritton, but it died in the House.
Three years ago, the Senate passed a plan for a lottery and nine casinos, but it also died in the House.
Last year, Ledbetter assigned a group of House members to study the gambling issue. They spent about 14 months developing the legislation and worked with senators and the governor’s office.
The House plan calls for a lottery, 10 casinos, including four operated by the Poarch Band of Creek Indians under a compact with the state, and legalizing and taxing sports betting. Casinos would be taxed at a 24% rate on net gambling revenue, while sports betting would be taxed at a 17% rate.
The fiscal note prepared by the Legislative Services Agency estimated the casinos would raise $315 million to $492 million in revenue for the state, the lottery would raise $305 million to $379 million, and sports betting would raise $15 million to $41 million. That puts the total estimated range at $635 million to $912 million.
The Senate plan calls for a lottery, three casinos, all operated by the Poarch Band of Creek Indians on tribal lands under a state compact, and state-regulated gambling at the state’s four former greyhound tracks and three other sites. Those seven sites would raise an estimated $99 million to $132 million, the fiscal note said. So the total revenue range for the Senate plan is $404 million to $511 million.
Those estimates do not include licensing fees for the casinos, which Rep. Chris Blackshear, R-Phenix City, said in the House plan would exceed $1 billion over the 15-year terms of the initial licenses.
Both plans would repeal 17 local constitutional amendments allowing bingo in certain counties. Both plans would create a gambling commission that would regulate all gambling statewide, including traditional paper bingo and raffles. Proponents of both plans say cracking down on what they say is rampant illegal gambling is a main purpose of the legislation.
Supporters of the House plan say the Senate plan, with only the three Poach Creek casinos and no sports betting, leaves hundreds of millions of dollars on the table.
“We’ve got a lot of needs in this state and we’re seeing them now and they’re ever growing,” said Blackshear, sponsor of the two House bills. “We don’t have another golden egg out there.”
Blackshear said proposals that include only a lottery will not pass the Legislature. Those have failed repeatedly over the years.
“I think the comprehensive approach is the only way you’re ever going to address it completely,” Blackshear said. “And again, we did that in the House.”
Rep. Andy Whitt, a Republican from Madison County who led the committee that developed the House plan, said he believes there are areas for compromise with the Senate but said the House would stand firm on committing all the lottery funds to education.
Whitt said it was disappointing that the Senate took sports betting out of the plan. He and others said illegal sports betting is rampant in Alabama.
“That needs to be taxed,” Whitt said. “That needs to be brought under control. And that was completely left out.”
Rep. Sam Jones, D-Mobile, a member of the House team that developed the legislation, said he believes the House bills are thorough and would provide enough new revenue to make a difference.
“We looked at every area, we looked at what people wanted to vote on in the state,” Jones said. “That was our real goal, to get something before people so they can make a decision in Alabama.
“We also were concerned about what does this mean to addressing some of the issues we have in Alabama that because of the lack of revenue we’ve not been able to address. So a key part of ours had to do with the amount of revenue that will be generated from what we recommended.”
Jones said it is important that proceeds from the lottery be devoted to education.
“That was very, very important to us,” Jones said. “We didn’t want an education lottery that had to split with everybody else.”
Albritton, the Senate sponsor and chairman of the General Fund committee in the Senate, has spoken about the rising pressure of non-education needs in the budget, like prisons and mental health, and the fact that the education budget has had hefty surpluses that gave lawmakers enough confidence to cut some taxes that support education funds.
The House plan set the vote on the constitutional amendment for the general election in November. The Senate moved that to a special election on Sept. 14.
House Democrats have said the Republican majority in the Senate did that because of fears that putting the constitutional amendment on the ballot could increase turnout among Black voters in November, a concern for the GOP in the state’s redrawn 2nd Congressional District, where Democrats have a chance to flip what was previously a safe Republican seat.
Blackshear said the election date could be one of the negotiable points.
“I think we’ve got to identify what that middle ground is first, because it’s such a distance between the two, they’re not even close bookends,” Blackshear said. “So we got to figure out, first off, establish what that middle ground looks like and then have those conversations until we feel confident that we can get there.”
Jones, who is the former mayor of Mobile, said he is keeping his focus on the main goal.
“When we’re back home, one of the biggest things, if not the most talked about thing, is people want a right to vote on the lottery,” Jones said. “It’s time that we deliver that to our citizens. That is the biggest question that I get back home, is when are we going to have an opportunity to vote on an educational lottery. That’s what we’re working toward.”
The Associated Press contributed to this report.