Limits on electronic pull tabs in North Dakota clear Legislature

BISMARCK — North Dakota lawmakers have inked a final proposal limiting electronic pull tabs, glitzy gambling machines that have proliferated throughout the state.

Key players say the bill wouldn't expand gambling — a bipartisan concern and a focus point of the session's discussions of the machines.

Senate Bill 2304 would restrict where the machines can be located and how many machine sites a charitable organization can have, as well as how many machines per site. The bill also would mandate a 2023-24 interim legislative study of the state's charitable gambling issues and increase rent for the machines.

"Every part of this bill does not expand gaming. Actually, you could look at it and say it restricts. There's something in here for everybody," said House Industry, Business and Labor Committee Chairman Scott Louser, R-Minot.

The bill by Sen. Jerry Klein, R-Fessenden, originally sought to define an "alcoholic beverage establishment" — where charitable gambling traditionally has taken place — to outline where the machines can go after scrutiny in recent years of a handful of convenience stores and gas stations that have e-tabs. The bill would grandfather those four sites.

The state's top gambling regulator has said action from the Legislature will help guide how her office will proceed as to regulating e-tabs.

Sweet Crude Travel Center owner Brett Narloch, whose truck stop near Grassy Butte has drawn scrutiny for having the machines, said, "Generally speaking, I don't like (the bill). I prefer leaving these decisions to local governments.

Jeremy Turley / The Forum

"That being said, I read it to mean that Sweet Crude Travel Center will be able to conduct gaming forever. That’s a very good thing," he told The Bismarck Tribune.

The machines first appeared in 2018 and now number 4,500 at 800 sites statewide.

The Senate on Wednesday passed the bill 38-9. The House of Representatives later that day did the same, 81-11.

The bill goes to Gov. Doug Burgum, whose spokesman declined to comment.

Attorney General Drew Wrigley said the final bill amended by a House-Senate conference committee includes "new provisions reflecting the legislature’s intention to slow the dramatic expansion of gaming in our state."

"This is a multipurpose piece of legislation that aims to restore the carefully crafted balance between support for charitable gaming and prevention of abuses of North Dakota’s gaming laws," he said.

The bill defines an "alcoholic beverage establishment" as having a retail license and being an establishment "where alcoholic beverages are sold, dispensed, and consumed by guests on the premises." The term specifically excludes liquor stores, gas stations, grocery stores and convenience stores.

E-tabs would be allowed only in a designated area where people 21 and older can enter. Signage and rearranged furniture could accomplish that, according to Rep. Ben Koppelman, R-West Fargo.

"We don't want kids sitting at the these e-tab machines. We don't want them to be enticed into underage gaming of any variety, and we want the charities, the bar owners to just be mindful that these are not for kids," he told the House on Wednesday.

The state Gaming Commission last year moved to alter the definition of a bar in rules to clarify that it does not include off-sale liquor stores, gas stations, grocery stores or convenience stores, but does include bars in hotels, bowling alleys and restaurants. The rule change was "for the future in case nothing happens during this legislative session," State Director of Gaming Deb McDaniel said.

The bill would limit charities to 10 machines per site. Charities licensed before 2023 and their "closely related organizations" would be limited to 15 sites. Ones with more would be grandfathered and capped.

"If they have 22 today, that's their cap," Koppelman said.

Sen. Bob Paulson, R-Minot, said those caps would amount to a pause during the Legislature's interim study of aspects of charitable gambling issues.

Jeremy Turley / The Forum

Wrigley said the machine limits would "prevent the creation of makeshift casinos," and "also would clamp down on entities that create multiple, closely related organizations to evade current site limits in law."

Rent for the machines would be raised from $100 each for a site's first five machines and $50 for each additional, to $175 for each of the first five machines and $75 for each additional, capped at 10 machines total.

Charities pay rent to bars for the machines.

The bill also gives local governments "the ultimate say" when an eligible charity requests a location for e-tabs, but cities or counties must "do so in an objective and evenhanded way," and can't force charities to conduct gambling in certain bars or "try to manipulate where the money from the charity goes," according to Koppelman.

The attorney general would have authority to deny issuance or renewal of a license for charitable gambling, he said.

The bill also would ensure the attorney general has authority over third-party businesses that run charitable organizations' gambling.

The mandatory study would include evaluations of charitable gambling's economic impact, addiction treatment services, taxes and placement of e-tabs, among other aspects.

Input would come from the attorney general, charitable organizations, cities and counties, gambling equipment distributors and manufacturers, and gambling addiction counselors.

"It's important that we study this because there are a lot of things that we need to find out and that need to inform the next legislative session as to where the guardrails should be on charitable gaming," Koppelman said.

The House on Thursday killed House Bill 1497, which had identical components to Senate Bill 2304.