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April 13, 1999

Lotto & Gambling in Alabama

by Cathy Donaldson

Gambling interests in Alabama could hit the jackpot with two major gambling bills running on separate but parallel fast tracks in the state Senate []. Among the first measures the Alabama House of Representatives passed early in this legislative session which began March 2 were bills giving video poker and blackjack to the state's four racetracks and voters a chance to vote on a proposed constitutional amendment for a statewide lottery. Ostensibly, the two bills are unrelated but lawyers in the state attorney general's office read the pair like cards shuffled into a stacked deck. Some lawmakers also have questions about the bills spinning like a roulette wheel though the Senate which held public hearings Wednesday on the lotto bill backed by Gov. Don Siegelman.

"People better wake up and start asking some questions. It think it was a joint effort with the gambling interests and the governor's office working together," said state Rep. Steve McMillan of Bay Minette. "We even had legislators saying that if the video poker didn't pass, they would not support the lottery."

Siegelman, elected in November on a campaign promise to bring a lottery [] vote to Alabama to fund college scholarship and education, is championing the lotto bill. Alabama Attorney General Bill Pryor has opined the governor's proposed lottery amendment bill won't allow casino gambling in the state, but believes the video poker machine bill will.

Some state attorneys in his office view the two bills in terms of reciprocity and synchronicity. The administration's eight-page lotto bill authorizes "games of chance" and "reciprocal agreements with other jurisdictions" and any other betting legal at the time it becomes effective.

A vote on the proposed amendment is unlikely to take place before the Legislature finishes its work. A main order of business so far has been changing gaming laws, so there is no predicting what other gambling bills will roll through this session. The bill setting up a vote on the lotto passed the House 70-29. The poker slot machine measure passed the House a week later by one vote 49-48 in late March. Last year it failed to pass by two votes. It would have been a tie this year but one lawmaker, Rep. Riley Seibenhener of Hartford said he was playing with his voting machine. Seibenhener says he is anti-gambling, but his vote registered as "Abstain."

On its surface the dog track bill appears to prohibit casinos and slot machines, according to the attorney general. But Pryor said he also found "double-speak" in the bill. "On closer examination it is apparent that the bill if passed, however, will lead to the legalization of many forms of casino gambling, at least at the dog tracks [] in Alabama," Pryor wrote March 19.

The gambling side then hired prominent Montgomery attorney and former Alabama Supreme Court Chief Justice C.C. "Bo" Torbert to examine the bill allowing "skill-dependent" games at the track. Four days later Torbert issued a statement saying the bill doesn't allow live card or dealer casino games -- two components of traditional casinos. In his written opinion, Torbert took a shot at Pryor. "As Attorney General for the State of Alabama, Mr. Pryor is obliged to follow and enforce Alabama law in any opinion issued by his office rather than argue for a change in the law," he said. One of Pryor's lawyers, who asked not to be identified, told The Harbinger this week that while he held the former Supreme Court chief in the highest regard, he couldn't help but believe someone in Torbert's law firm of Maynard, Cooper & Gale gave the video poker/black jack bill just a cursory reading.


So the legal debate goes on with both sides drawing different conclusions. Both bills are expected to be the focus of the battle of the barristers for some time in the future if they pass the Senate. Because, if Pryor is right and the bills remain unchanged and become law, gambling forces have lucked out on a roll of the dice here in the Heart of Dixie. Alabama could end up being the only state with certain types of legalized gaming monopolies at just four privately owned spots with no statewide gambling or gaming commission like most other states have to regulate, license or investigate video poker. And some as yet unnamed syndicated gaming groups will have the luck of the draw and possibly relatively low "sin taxes" to pay on their gambling or lotto profits. It depends on who will hold and who will fold in the Senate. Both House-passed bills are in the Senate, where a standoff and bitter rules dispute was settled last week in the short special session called by the governor.

Lt. Gov. Steve Windom of Mobile agrees with the attorney general on the casino question in the video poker bills. He and other Senate Republicans and a handful of Democrats who threw in with him were locked in a power struggle with a majority coalition of eighteen Democrats who shut down the Senate. While the fight that stalled the upper chamber until last week was reportedly over majority rule and tort reform, others think gambling was at the heart of the fracas. "I think the gambling question played an active role in the organization and special session," said gaming opponent state Sen. Albert Lipscomb of Magnolia Springs.

Last week's Senate compromise was sealed in a 31-1 vote in the wee hours of the morning. Lipscomb cast the one vote against the compromise because it radically changed and loosened Senate rules governing the passage of gambling bills. Traditionally throughout Alabama history, any and all gambling bills have been treated as general bills in the Legislature, but in the Senate's January 21 organizational session, gambling bills went from being general bills to local bills.

When Windom gaveled through new rules on the opening day of the regular session, the wording was changed back to "general." In the final Senate compromise, gambling bills became "local" bills again. The House made the same rule change, almost unchallenged and unnoticed, this session too. "Certainly I am concerned about the rule change because in the number of years I've served in the Senate all gambling bills have been treated as general bills because they definitely have an impact beyond one area." Lipscomb said this week.

He sees the entire legislative session geared around gambling. "I believe the lottery bill will bring casinos to the State of Alabama," said the senator who represents south Baldwin County. Sen. Pat Lindsey of Butler, who represents huge southwest Alabama Senate District 22 covering parts of seven counties including northern Baldwin, could not be reached for comment Wednesday. He was busy chairing the Senate's five-member Economic Expansion and Trade Committee holding public hearings on the lottery measure. In the past all gaming bills were sent to the Rules Committee, but the Senate changed those rules in the middle of the night last week too, while most of the state was asleep. [According to the Mobile Register, the Economic Expansion and Trade Committee voted 4-0 to forward the legislation with Sen. Lindsey voting for the amendment.]

McMillan, who sees other gambling tied to the lottery, also has problems with the lotto bill's broad language. "The fact there was no enabling legislation with it is almost unheard of. Never in my 20 years in the Legislature have I seen a Constitutional amendment without enabling legislation," McMillan said.

According to the proposal, the lottery -- which would require statewide voter approval -- would be administered by an as-yet shadow Alabama Education Lottery Corporation. The bill specifies no corporation duties, powers, membership, enforcement power nor salaries. The proposed amendment, however, would monopolize the lottery -- just as all monopolies spring in large part from legislative commission -- or omission. House members voted down an amendment prohibiting convicted felons from being members of the proposed lotto corporation the governor has said will be run by "businessmen."

Rumors, begun by monied Montgomery gambling lobbyists boasting they helped slide the lottery bill through the House in return for the governor's support on their video poker bill, have been circulating about a backroom quid pro quo deal. "I haven't heard that and don't know anything about it," said Mobile attorney Richard Dorman, the governor's point-man on the statewide lottery and a one-time casino proponent. A friend of the governor from Mobile since college days, Dorman is chairman of the Alabama Education Lottery Foundation, a political action committee (PAC) formed last winter to raise money for Siegelman's lottery campaign. Dorman, who said he has severed past ties with casino efforts, once represented the now defunct Riverhead gambling group and the Atmore-based Poarch Band of Creek Indians in an unsuccessful lawsuit to force the State of Alabama to permit the tribe to operate a casino. Riverhead managed the Creek Bingo Palace off I-65 near Atmore for a couple years, but now it is run by tribal members.

To run a casino on its lands in Escambia County and Elmore County outside Montgomery, the Poarch Creeks must have a compact signed by the governor, according to federal law. With a state compact, a federally recognized Native American tribe can conduct the same types of gaming or lotteries allowed under state's law. So far four successive Alabama governors from Guy Hunt to Siegelman have failed to sign a compact with the Poarch Creeks, Alabama's only federally recognized tribe. "We're trying to negotiate a compact," Terri Toust, Creek tribal manager for the Atmore-based group, said this week. She said legal action is still pending in the lawsuit that went all the way up to the U.S. Supreme Court, which held the tribe could not sue the State of Alabama.

Carter Wells, field director for Siegelman's gubernatorial campaign who now works for the lottery foundation, said he was unaware of any race track money coming into the PAC. "It's a rumor and I don't know anything about that. The video poker bill is not what we're doing here," he said. Wells said the PAC plans to file contribution reports with the Secretary of State office before the election on the constitutional amendment, if it passes the Senate.

Mobile leaders have been pushing for casinos and a lottery for years. In 1993 Mobile Mayor Mike Dow led the formation of Jobs for Alabamians Coalition (JACO), a PAC to get the Alabama Legislature to pass a constitutional amendment for a statewide lottery and casinos in downtown Mobile, Prichard and at the state's four dog tracks. Mobile city attorney John Lockett - - Siegelman's former law partner -- defended Dow being president of JACO back then, saying it was no different than him being a member of the League of Municipalities. Joining Dow in JACO were the mayors of Birmingham and Tuskegee and racing magnate Milton McGregor.

Other politicians have been involved with McGregor. Gubernatorial candidate Winton Blount III, now state GOP chairman, set up a 1993 meeting with McGregor and two long-time personal friends who were top executives of Promos, a major casino operation seeking to expand into Alabama. McGregor claimed Blount attended part of the meeting and talked about casino benefits. When Blount later denied it, McGregor called him "a hypocrite."

Far from being hypocrites, the state racetrack interests [] are out front on gambling. The track interests have hired the Birmingham-based Direct Communications firm to speak for the dog tracks on the issue. "We speak for the pari-mutuel industry as a whole," Direct spokeswoman Rena McKannan said this week. She said the games allowed in the video poker bill aren't traditional casino games. "This bill specifically prohibits casino gambling in the state. It only permits games of skill already allowed under the Constitution," she said. The track video poker bill also would arm law enforcement with the power to go in and shut down video game machines everywhere but at the racetracks, according to the track spokeswoman.

She said giving the video poker machines exclusively to the state's four tracks wouldn't make a monopoly because any area of the state that wants it can have local legislation passed to have pari-mutuel gaming. "If this bill is passed it will do a lot to get rid of a lot of games of chance we can't do anything about. On federal Indian land there are slot machines at Wetumpka and at Atmore. This will outlaw that. This bill arms law enforcement with the power to go in a shut them down," Ms. McKannan said.

Actually it would be impossible for lawmen to shut down the slots at the Poarch Creeks' tribal-owned land near Wetumpka even if they had magic bullets. The 50-acre Indian property -- undeveloped though a casino agreement exists -- is a big vacant lot with no building -- nor gambling machines. There are no slots at the Creek Bingo Palace [] either, according to the tribal manager. "In Atmore we don't have slot machines. They are called video pull tab machines," Ms. Toust said, explaining a winner gets a ticket similar to the pull-tabs in the tops of soft drinks. A slot, she said, is a machine with a lever where money is put in a slot and money comes out for winners.

The dog track video poker proponents are opposed to other video gaming machines in Alabama and want them shut down. "We have reports of between 20,000 and 30,000 illegal gaming machines -- unlicensed games of chance in the state," Ms. McKannan said. "There are slot machine games at truck stops and private clubs. The objection is they are unlicensed games of chance run without regulation." A spokesman for the attorney general's office said the video gaming machines are not illegal. What is illegal is a payoff, either in cash or merchandise, to a game winner.

Ms. McKannan said a 20 percent tax is proposed on the racetracks' video poker profits, after payoff to winners. Five percent would go to the county where the gaming is conducted and fifteen percent to Alabama's general fund. "That is expected to be about $20 million a year for the state's general fund, if things go as projected by those who know these things," she said. If things go as planned, simple math shows that means over $100 million annually for a handful of Alabama race track owners.

The big dogs

The lucrative racing tracks took a financial hit from the opening of casinos [] and riverboat gambling in neighboring Mississippi and are looking to make a killing on gambling machines. The ill-fated Greenetrack in Eutaw no longer runs dogs, but still has the simulcast dog and horse betting the three other tracks have. Its ownership was turned over to the employees and Greene County last fall after former investor Paul Bryant Jr., son the famed Bear Bryant football coach, left for greener pastures at a Texas track. The 21- year-old track, one of the country's infamous dog-kill tracks, had a national "killing fields" [] reputation before animal right activists removed all the laid-up greyhounds from its kennels last fall. Owners operating Mobile Greyhound Park include Aldon "Duke" Smith Jr., Herman Maisel, Daniel Wilson and Joe Morrison of Fairhope across Mobile Bay. All except the Browns also own the Pensacola dog track across the state line in Florida.

As far as Alabama racetrack ownership goes, McGregor is the big dog. He owns the Birmingham Race Course [] and Victoryland [] at Shorter outside Montgomery and stands to gain the most money from the video poker measure, if approved.

Play the cards you're dealt

If it's approved, Alabama could be the lone state in the Union with gambling without a statewide racing or gaming commission. Ms. McKannan said the current system with a local racing commission for each track works best. "Consultants that have talked to us have said the local commissions are far tighter than the state commissions in other states. Here the commissioners know the proprietors in each county. They know what is needed," she said. Each of the state's four counties with racing has a local appointed racing commission. The Mobile County Racing Commission has a three members and offices at the Theodore dog track. The members are Nina Sheppard, who has been commission secretary since its formation in 1973, former Mobile newspaper city editor Eddie Menton and Robert Davis, appointed in January to replace former racing commissioner George Callahan. Callahan, who won election to the state Senate last fall, is U.S. Rep. Sonny Callahan's brother.

Davis, a longtime investigator for the commission before he was appointed as a member, said he doesn't believe the video poker bill will allow casino-type gambling at the Mobile greyhound track. "This is really for video poker and maybe blackjack," Davis said.

Notwithstanding the debate over whether the track bill allows casino gambling or not, video poker has had its problems in other states. In the early 1990s Louisiana's scandal-ridden legalized gambling industry saw the arrest of seventeen mob members from the Marcello, Genovese and Gambino clans in a major video poker skimming operation. "These people were laying the groundwork before the law actually went into effect," Rafael Goyneneche of the New Orleans Crime Commission said. "You have to wonder, did our Legislature intentionally short- change the state police and the rules and regulations needed to adequately police this?"

A long-time Mobile gambler and big-time bookmaker who doesn't want to be named is himself confused about the tandem gaming bills the House approved. "Is the thrust of the lottery a start to getting legalized gambling in Alabama?" he asked. "Who would be pushing it would be amusement machine companies. And the politicians won't be satisfied with just a lottery." Then again, he noted, it's always been an open secret that Mobile has always had casinos. "Illegal gambling was did in the back alleys and backrooms," he said. "They didn't open the door to everybody."

Video poker and video lottery is the new wave at a lot of racetracks [] across the country. A bill to legalize video lottery machines in all pari- mutuel facilities in Florida is working through the legislature in Alabama's neighboring state. If Alabama racing owners aren't pushing casino-tracks, they're behind the times because it's the latest trend

Casinos and racing mix

Last month a group including Harrah's Entertainment (part of Promos) and GTECH Corp., [] bought Turfway horse track near Florence, Kentucky for $37- million. The deal was completed just a day after the Kentucky Racing Commission approved a license for the new partnership to operate Turfway. Track owners told state officials they plan to establish a casino at Turfway if that gaming is legalized in Kentucky.

In Wisconsin, the Dairyland Greyhound Park [] could become the state's first hybrid dog track/tribal casino if plans by track owner Harold Ripps of Birmingham to sell the track in Kenosha to the Menomonee Nation are approved by the state and local governments. The sale of the track to the tribe for $45 million hinges on permission to have the hybrid gaming there.


Last year Oklahoma voters rejected a referendum that would have allowed casino-type gaming at four locations, including two racetracks. The issue was on the ballot, despite opposition from most state lawmakers and the governor, because of a petition by owners of an Oklahoma City track. Oklahoma voters rejected a lottery four years ago.

In Alabama gambling opponents are beginning to wonder where the opposition is here. McMillan said he got only one anti-gambling letter from a minister, but believes a lot of legislators who voted for the lottery got flack back home and decided to vote against video poker the next week. "I heard several say I supported lottery and I caught hell in my church back home," he said.

State Rep. Victor Gaston of Mobile voted for the lottery legislation but against the video poker. "I relied totally on Bill Pryor's assessment," said Gaston, a deacon at Spring Hill Baptist Church.

The Rev. Jay Wolf, pastor of the capital city's biggest Baptist church, First Baptist Church in Montgomery, said he's received a lot of calls against the lottery. "Any good to come out of the revenue would be more than offset by bad in our society," he said. "Don't bet on it. This is a stacked deck."

The Alabama Baptist Convention went on record last fall formally opposing Siegelman's education lottery, setting the stage for an expected major lobbying effort by churches, viewed as a potent political force in Alabama.

After getting bad press for flying to the Cayman Islands in dog track owner Milton McGregor's private airplane and losing the 1994 gubernatorial election, former Gov. Jim Folsom Jr. quipped he had gotten "run over by the church bus." However, no church buses were in sight around the Montgomery Capitol or State House when the lotto or video poker bills were being debated.

Many political observers have expressed amazement at the slick passage of the gambling bills in the conservative state, the buckle of the Bible Belt, and many upstate newspapers have editorialized against the gaming.

Prostitution legal in state

Chris Waddell, editorial page editor of The Anniston Star -- one of only two locally owned daily newspapers left in this state -- joked on last Friday's "For the Record" commentary program on Alabama Public television that he wouldn't be surprised to see the Legislature legalize prostitution next. Surprise, surprise. Prostitution [] is totally legal, unregulated, unlicensed and untaxed in Alabama, outside any town with municipal ordinances against plying the oldest trade.

The Harbinger, P.O. Box U-980, Mobile, AL 36688-0001