FISCAL NOTE

Senate Bill 309 as passed the Senate would implement the provisions of the constitutional amendment proposed by Senate Bill 319 of the 2021 Regular Session, which creates the Alabama Education Lottery Corporation. This bill further establishes the Alabama Lottery Corporation as an instrumentality of the state, governed by a seven-member board of directors, with powers and duties to include the authority to regulate lottery games; adopt rules; enter into contracts; administer grants; receive reimbursement for actual and reasonable expenses; and employ, and set the compensation of, an executive director. This bill also provides for the duties of the executive director, which includes employment of additional personnel and general administration of the corporation. This bill further provides that the operations of the corporation would be funded from the lottery proceeds.

The amount of net revenue generated from the operation of the lottery is estimated to be between $194 million to $279 million annually, after the payment of:

(1) operating expenses of the corporation, including costs associated with administration, regulation, and promotion of the lottery,

(2) prizes, and

(3) grants to aid compulsive gambling programs, of at least 0.5% of the lottery proceeds, as required by this bill.

This bill provides for the distribution of new proceeds from the Lottery Trust Fund, created by the constitutional amendment proposed by Senate Bill 319 of the 2021 Regular Session, as follows:

(1) 50% to the Education Trust Fund (ETF), of which:

a. 70% shall be used for K-12 education, including 10% for failing schools, and,

b. 30% shall be used for Higher Education

(2) 50% by independent supplemental appropriation to a postsecondary scholarship program, to include a loan forgiveness component for certain scholarship participants. 

This bill further requires the first $20 million of unclaimed lottery prize money to be annually distributed to the Department of Agriculture and Industries for an agricultural grant program and requires any remaining unclaimed prize money be used for postsecondary scholarships.

This bill provides that lottery prize winnings are subject to state income tax, which would increase receipts to the ETF by an estimated $13 million to $19 million annually.

This bill would authorize the Department of Examiners of Public Accounts to audit or examine the Alabama Lottery Corporation, which could increase administrative obligations to the Department by an undetermined amount dependent upon the number of audits performed.

This bill would also establish the six-member Lottery Retailer Advisory Board, who shall serve without compensation or reimbursement, to advise the corporation on retail aspects of the Alabama Education Lottery.

Finally, this bill would establish criminal penalties for certain unlawful lottery activities which could increase receipts to the State General Fund and municipal general funds from fines; increase receipts to the State General Fund, county general funds, municipal general funds, and other funds to which court costs are deposited; and could increase the obligations of the State General Fund, local jails, the district attorneys, the Department of Corrections, the Bureau of Pardons and Paroles, and community corrections programs by an undetermined amount dependent upon the number of persons charged with and convicted of the offenses provided by this bill and the penalties imposed.