JBC-Administrative Rule Review Subcommittee

That gavel similarly for allowed clapped a recall this meeting to order Uh Paul just having to bring it right back into that were you know this is a big issue want to give a fair chance for everybody here Watson what's being presented and have a chance to ask all the questions I want to ask so we ended the meeting yesterday were up against a hard stop and we attended were presented garner had asked for the AG's office to come to the table to answer some questions we're gonna have the AG's office come in and be available for some questions I want to remind committee members the role of the AG and what they do for us you know there are legal counsel for the legislative body as well as for state agencies and so as legal counsel sometimes they are limited and and how and why they can answer questions I just encourage members to be sensitive to that as they come to the table there do the best they can't provide any answers for us that they I can feel comfortable doing so if we can have Mr bony coming terms that represent forgetting to tell introduce yourself or rescue to bring in before you started on the attachment project point of personal privilege from my chair I almost forgot a bill so kind of you remember there was a Johnson I appreciate the courtesy colleagues of we do have a special visitor today miss Julie hill Julie is Senator hill's daughter Julie if you'd please stand to be recognized member state of art they by the way. Julie. Looking great we're happy to have you here by the way who does your hair I noticed in split ends from up here you might want to get that taken care of because it's pretty yes actually all right well I with that jazz for both your your father and your co worker here I thought just to get you a call Jett we're glad to have you today glad everyone hears Mr boxing or depressed. Good morning Mister chair members my name is Brian bow and I'm the chief of staff for the attorney general's office. I believe there are some questions yesterday and before I start and I will reiterate with the chair has said in anticipation of potential litigation some of my answers maybe limited today I apologize for that but I'm happy to discuss with you. One on one offline any more detailed questions that you they you may have. I also want to make clear that the discussion today that I'd give you is is a legal opinion and it is not in support or opposition to the role or the policy that is being presented to you it is strictly a legal opinion based on our review. We have discussed with legal counsel for the racing commission I have discussed with our attorneys in our office including our Solicitor General and after review of the role we feel that the role can be defended if challenged there was several comments yesterday made on the legality of the role. And. Opinions as to whether or not it would violate the dormant Commerce Clause our position is if challenged we can defend this rule. You need. Thank you Mr Boehner the questions represent guard you have a question. And any other questions from committee members I see some questions. The representative when you're recognized for a question thank you Mr chairman. Can you show me. And the constitutional amendment. Or any rule or a law we're makes a reference to offsite Betty. And will you give me your definition of a casino. That. Hey the kid a casino as defined by amendment one hundred and amendment one hundred does address sports book betting of something that's not my question. My question is. Is owns all site betting mentioned in any of the constitutional amendment any rule or a law all site bedding other than the reference. The sports betting is is in the constitutional amendment is it referenced for off site betting so offsite betting and amendment one hundred is not specifically mentioned it does discuss is not is not mentioned. No Sir it is not specifically no could could you. Could you say that in the we don't know what the intent was the intent could have been not to permit the intent could have been to permit it but it was not mention all site specifically by the people of Arkansas who who voted on a constitutional amendment is that correct. I would say that you are partially correct Sir amendment one hundred is silent but what the amendment dies is give the racing commission the authority to develop rules regarding sports book betting. So while the constitution may be silent as to specifically off site or app gaming. The racing commission has the authority under the constitution to develop the rules that have been put in front of you today. What is your definition of a casino. At N.. I. I don't want to miss speak but a casino as defined by memo one hundred as well as the rules that have been promulgated by the you know the answer to a question tell me what was your office or the Attorney General what withdrawal how would you describe the casino. Not having it in front of me I don't want to miss speaking I'm happy to speak with the offline about what a definition of a casino is. You still not represent when we have other people lined up and Q. two questions I realize Mr he's given an answer not answer my question I think he has given an answer. And we we can queue back up for another question but I've got several other people on that some of you on Senator Chesterfield. Mr chairman of immediate consideration. That's a proper motion. So that's a post which all those in favor of immediate consideration say I'm home on. Senator. The. The center Chesterfield we're trying to sort through exactly the proper protocol here you have to be patient with this for a second. We have a roll before us. On which we can vote. It is proper to say let us vote now on that rule because there has been objection we will be voting either on the injection of Senate surjection or not is that correct I think I think the issue is there is the with the process and procedure would be without objection the rules. Reviewed. They would have to be in a there would have to be we're not we're not required to vote on this the default is we review the role and so if we have an objection is that a debatable. It serves so if I I'm trying to find out where we are I understand Senate understand we're trying to work through that to you that I understand what's trying to accomplish we're just trying to trying to work a bill or staff understand the right way to approach that. Mmhm. Can. Swappers. That serve I think the I think the proper motion that you would want to make would be to end debate with his immediate consideration well. That isn't just the nomenclature difference there hello and direct okay that sounds fine. So there's a motion to stop discussion and debate on this rule that's a voice vote all those in favor say aye all those opposed say no. So does have it. Call the roll. Three hands. Okay what and if there are other people want to say something I think the asset it and so. What is a quorum of the chair what is the quorum for the meeting. Never miss majority from a motion Mr. Represent Dotson you had a question. Thank you Mr chair Service. Distracted on other or at me back my notes here. So I was in the queue yesterday to ask some questions It's regarding this and I mean there's been a lot of discussion here regarding you know public policy but that's not necessarily what we're here to determine the public policy of the rule I mean we we would debate that during a session and that sort of thing but the legality of it is is really the question and not being an attorney. I'll have to admit before yesterday I never heard the dormant Commerce Clause Commerce Clause so I had to do a little bit of research and try to figure out a little bit more about that And one of the attorneys yesterday wrote down. Kept saying clearly excessive to local benefit I'm trying to figure out exactly what that is whether or not this is a discriminatory and clearly excessive benefit to local interests many of the comments the public comments said that this would This rule would Because revenues to stay in state that it would be more beneficial to have this rule the not I don't necessarily believe that it's a requirement that fifty one percent occurring amendment one hundred B. in there it's a policy question determined by the commission and they've made that policy decision but. It seems they made that decision because it bases it It clearly benefits local interests more than out of state interests so. In that regard is that violate And I know I'm asking you to to say what a judge would say in this case but based off some of the the the case law that's out there You know it. Differential treatment of in state and out of state economic interests the benefit the former and burdens the latter is if it is clearly excessive in relation to its. Into the local benefits I mean that it seems to me. That's a lot of the argument that some people have been making for this that it's more beneficial locally it's more beneficial to our in state operators for this will be fifty one percent and that's argument they're making. to try to pass it then houses that not violate the calm the the storm coming Commerce Clause. Thank you for your question representative and you are correct on the dormant Commerce Clause is not a. Easy area of the law to understand it is conceptually very difficult but Specifically to your question I must apologize because again in anticipation of litigation I don't want to lay a roadmap out for any defense that our office might have I'm happy to visit with the more offline and will say again after our review of the rule we do feel like we can defend the role that challenged okay at. That's really the only question I have for the G. and I may ask that same question of the the attorneys yeah Commission when they get back up here thanks stands anyone have any other questions for the AG's office. C. nine thank you for your time this morning appreciate it thank you the prior to requesting the AG the casino representatives were at the table I think there were there other questions lined up before that for the casino representatives is there anyone in the audience now that has in the in the committee members that have questions for the scene as it sounds like you representative Dotson. So if you all can come back to the table and answer whatever questions represent Dotson House. And if there other members have questions feel free to queue up. You're recognized yourself more time for the committee thank you. I'm Steve Lancaster representative for Southland. Skip able of for Oaklawn. Carlton Safra Sarasin casino. Represent recognized ask questions. Thank you Mr chair so I'm I'm sure you just heard what my question was I guess Mr Lancaster is probably the the one I heard speak about this clearly excessive to local benefit yesterday And I guess. I guess first of all the question would be Obviously this is about the money and you feel as if this is a more beneficial rule did not having a requirement by the state to have fifty one percent that's obviously policy discussion and Mr sapper you feel this is good public policy I mean I had I don't necessarily agree that it's good how public policy but that's a public policy debate for a later time that's not what we're talking about with this rule. The the real. I guess first of all do you think that this is more beneficial. This rule for your local interest then having a a a rule that doesn't require a fifty one percent. I believe the the local interest that would be under consideration for or looking at the commerce for the document or mint Commerce Clause would be the the state benefit rather than than our our benefit and that of benefit that has been the case in Little a lot of other areas primarily again gaming is that it is strong the regulatory framework over gaming that's something that we've worked with for years it also satisfies the public benefit of amendment one hundred requiring that the gaming of mobile wagering be conducted by a casino license. that addresses that public policy that preference by requiring that the license the retain at least fifty one percent so that would that make more I guess you're talking about in state with that make more in state tax revenue if if fifty one percent of the revenue was. To in state casino versus going out of state I'm assuming we would collect more state tax revenue it It could potentially I don't think that that's unnecessarily would have to be the case but that could potentially be the case. Okay we have other questions on our on represent senator Johnson you have a question a representative needs I'm sorry you're next in the queue. To be on sorry image out there yes Sir I think I hit the button twice. I'm still looking for and I know this is not exactly what we're talking about in this committee but I'm still looking for a good answer. Two why the fifty percent fifty one percent real needs to be there I've I've not had anyone tell me what I can single could or could not do differently without that rule in there and and I don't see how you can make the statement that this is a good regulatory framework they're already you know of. Constitutionally protected monopoly which I have no problem but I just have and I talk to people about it last night trying to understand the the real reason that fifty one percent needs to be in there can you enlighten me. Someone. Thank you. Because. So I don't think these. I don't think this question has to be as sort of hostile I'll as it might seem I'm not your long but I know it's not and so I know you for a long time although we're in a formal setting I'm going talk to you like we would talk we were having coffee. We have many rules in this state that. Make reference to being a resident. Or to living here and having an ownership interest that in my opinion. Far exceed any kitchen sink as I said yesterday the could be thrown at this rule and I want to answer your question by giving a reference to something totally unrelated. I know about this much about the marijuana business but I know that the marijuana business has a sixty percent provision in ownership if I understand correctly. We never talked about the Commerce Clause there right we we never had a discussion about that and that seems logical and like it made sense to everyone in the room the representative I'm not suggesting that that was wrong I don't have an opinion on that I don't know anything about the marijuana business but we have rules all over state law that make references to in state and out of state. The question of whether or not fifty one makes sense Israel and we can talk about it. But I think we should be honest to. Fifty one is important to talk about the issue with fifty one percent is not the number fifty one percent and it's not the Commerce Clause it is that the national vendors business model does not work unless as they testified they get eighty five to ninety five percent of the money if they don't get eighty five to ninety five percent of the money they say they can't enter the market place I realize I'm out of the scope of what the law is legal or not but we have a little more time today and I think these conversations fair okay with you. The law. I want to say you got to have sixty percent Arkansas ownership we never heard the storm Commerce Clause thing. Because it wasn't necessary to stop a rule the dormant Commerce Clause has only been introduced into this room. Because the national vendors need a hail Mary pass to stop a rule a rule that's not illegal or not invalid or doesn't comport with the law it's fine as you've heard it's fine. But I get it they must produce something for you today to stop this and thus we're hanging our hat on one of the most obscure and complex components of constitutional law and I say that not as a lawyer just to somebody who can Google it and figure out its darn confusing to the fifty one specifically that I still contend as a matter of public policy it is important. We can make a decision at Saracen to run our own sports book we can make a decision to do business with an out of state vendors if we did business with the out of state and please understand representative what that largely means is we turn over that book to the vendor our name may be associated with it but what I'm essentially saying aye here's my license go book business under it send me some money when you're down five percent and I believe I can only speak on behalf of myself and our organization I believe that that is not good public policy because while the national vendor certainly have lobbyists in this state they don't have buildings and employees they don't have known entities if you want to talk to me half the people in this room have my number and if the other has not even been before I forget I I I don't disagree with that I don't disagree with your premise. But the casinos could if. If you don't think that the casino would make enough money using an outside vendor I totally get that and I respect that and bill and believe what you're saying so then just don't sign a contract with a third vendor or third party vendor I don't know why you need a rule. That would ultimately just completely prevent. Any casino from using a third party vendor if if one of the other three at some point decides will you know this isn't working Act socks we want to a third party vendor at if we pass this rule like it is. Clearly that's not gonna happen they can't use a third party vendor so I understand what you're saying aye I wholeheartedly agree. Is that it. That you you may want to develop your nap you may want to use third party vendor for them yes I'm trying to say is I I just can't see wine you need us or the racing commission rule to prevent you from entering into a contract with a third party vendor it should be just in it your choice and and so we made a direct conversation obviously get conversations get dialogue again reminding the committee the question at hand is. You're not the rule itself that does the rule violate state or federal law does rule ballet Legislative intent I want to try to keep the conversation directed that way there's lots of questions in the queue I want to be fair to the process give everybody a chance to ask the questions against good discussion but I need to keep the meeting move along because we want to get to the question at hand representative Cavenaugh you're recognized for a question. Thank you Mr chair I have a motion at the proper time. Which motion moved for approval of the rule. All those in favor say aye. All those opposed. Is have it. So now. Serve the rules reviewed and approved. And there's no further business.