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Senate Insurance
Feb. 28, 2023
Sen Murdock: This meeting will come to order. I see we have a quorum. Thank you, members. I know there’s a lot going on. Now, everybody just come in at the same time. We’re going to just change to 10:15 then we’ll be– good to see everyone this morning. We know a lot is going on. You’re having to run bills in different places. Senator Hill is doing that himself. So we’re going to get started. Our first bill will be Senate Bill 94. Senator Hammer, you’re here and you’re recognized. Let me check on something here. Hold on, Senator. Yeah, go ahead. Go ahead. You okay? No, you okay with your time? Okay. Senator Hammer, you’re recognized.
Sen Hammer: Thank you, Mr. Chair. Senate Bill 94 has a amendment that should be engrossed in it after the last meeting. It’s still a good bill, may be better, but it’s still a good bill. And just for the sake of time, I’d like to yield to Booth to give the finer points. I think, Mr. Chairman, there may be some folks that signed up to speak on this bill. So respectful of time, if that’s okay, we’ll recognize Booth to speak. Kim Hammer, State Senator, by the way, District 16.
Sen Murdock: You’re recognized. Please identify yourself and you’re authorized.
Rand (AID): Thank you, Senator Murdock. This is Booth Rand, General Counsel, Arkansas Insurance Department. Let me sort of explain to the Committee what you have before yourself. Senator Hammer about a year and a half ago asked the Insurance Department and pharmacies what sort of improvements we can make to the PBM Licensure Act. We advised him, one of the more significant loopholes or problems the Insurance Department has had with PBM enforcement relates to health plans that are issued outside of Arkansas, but which have subscribers in the state or employees in this state. Under the current language of the PBM Licensure Act, it only applies to PBMs who are administrating health plans in this state. And so if an employer resides in Illinois and has 40 or 50 employees in Arkansas, our current language would not apply our PBM requirements or consumer protection issues for the Arkansas employees. And so one of the things that we did in this proposed bill is to apply it to all health plans that are issued outside of Arkansas with Arkansas resident subscribers. This is much like Senator Irvin did recently with her prior authorization bill, where she modified that to apply to all subscribers in the state.
So this is common. In the insurance code, we also have an extraterritoriality provision that applies our insurance mandates to policies issued outside the state which have residents in this state. So one of the more significant things this bill does, it regulates PBMs which are administrating health plans that have employees in Arkansas just for those employees. That’s the first thing it does. The second thing it does is it increases fines amount per violation from $1,000 to $5,000 per violation. We originally proposed a $10,000 fine. However, after meeting with PCMA and the PBMs, we sort of split the difference here and came up with $5,000 after the original bill was filed. The other thing this bill does is it removes a reporting requirement for rebates and spread pricing. It simply allows the Commissioner to audit for that. Senator Hickey and Senator Dismang, I think Senator Irvin last time we met were concerned that we not remove the powers of the Insurance Commissioner or reduce or alter his powers to audit or examine PBMs. And so we submitted to Senator Hammer to BLR an amendment. You’ll see it in the proposed bill that says essentially that nothing in this subchapter shall limit or alter the powers of the Insurance Commissioner to conduct an examination. So we tried to be responsive to members’ issues the last time this was up. I’ll be glad to answer any questions.
Sen Murdock: Thank you. As a matter of record, I, too, share that same concern that those Senators did as it relates to AID’s authority to make sure we audit and administer that. Colleagues, members, are there any questions? Yes, sir?
Sen Hickey: Just one. So from what you just said, is this y’all’s bill?
Rand (AID): It is not officially an Insurance Department bill, but we support it because we are trying to make improvements for Senator Hammer. He asked us to. So I think he met with the pharmacists as well.
Sen Hickey: Okay. There’s been a little bit of talk going around about that this was actually y’all’s bill that you actually initiated and come up with. So I just kind of wanted to get that record straight.
Sen Hammer: And let me echo in, if I may, Senator. I approached them and I asked them to help craft this because one of the things that continues to happen is the outcry from pharmacists. And so this was 100% initiated at my effort, asking them to help be able to pull this together. So I accept full responsibility for that.
Sen Hickey: Thank you, Senator Hammer.
Sen Hammer: Thank you.
Sen Murdock: Senator Johnson, you’re recognized.
Sen M Johnson: Thank you, Mr. Chairman. Just a quick question. Senator Hammer, anytime I see the word pharmacy benefit manager in a bill my ears perk up, and I feel like that we’re back to playing that old game of whack a mole. But ever since I’ve been in the Senate, we’ve been dealing with this. Is this in response to what some people might call a moving target and that we are constantly needing to tweak the law because they change the way they operate? Is that a fair statement?
Sen Hammer: In my opinion, it would be. And I would add to that, Senator Johnson, that this bill is not going to have an effect on anybody except for those that continue to try to move the pieces to their advantage and create a unfair level field. And so this bill is in reaction to that. Companies that are doing fine, the companies that are recognizing that and coming alongside, try and be good partners, I don’t think this bill is going to affect at all. There’ll be some adjustment maybe in some policies that’ll have to be readjusted according to this. But for the ones that are doing what they’re supposed to be doing, it will not hurt. I would also point out to support what you just said, Senator Johnson. Last time around, we had to add additional staff to the Insurance Department because of the number of claims that continue to come in. And so our goal and objective is that if we can send a clear message that we want you to be partners in the State of Arkansas, but we want you to be good players like some of the other companies are being good players. Then hopefully, we’ll minimize the workload on the agency and kind of level this thing off a little bit.
Sen M Johnson: Okay. Thank you, Senator. Thank you, Mr. Chairman.
Sen Hammer: Thank you.
Sen Murdock: Just piggybacking a little bit on his comment and your response, has your assessment moved? Does it say that we have gotten better over the years with some of the complaints? Have they reduced? What have you seen as a trend over since we started this process?
Rand (AID): We have seen significant, significant PBM improvement in complying with the maximum allowable cost law and our safety net reimbursements, quite significant. However, one of the problems that you’ve got is that a lot of the Act currently does not apply to outside the state plans. I forgot to mention to the Committee– in the last 14 months, to give you an idea how many out of state plans that use PBMs for insurance for Arkansas employees, we had over 27,000 drug prescription claims declined because the law right now will not apply to out of state plans. So this is a significant loophole before you that we feel is imperative for the legislature to shore up, in my opinion.
Sen Murdock: Thank you. Any other comments? Members, any other questions? Seeing none, is there anyone in the audience to speak for? Well, I do have one to speak for, a couple of you. Blake Torres, West Side Pharmacy, you’re recognized to speak for. Please introduce yourself and you’re recognized.
Torres: Thank you, Mr. Chairman. My name is Blake Torres. I’m a pharmacy owner from Benton, Arkansas, as well as have other sites across the state, Danville, Forrest City, Conway, and Little Rock. Thank you for your time today and allowing me to speak for this bill. I think it comes down to three things in my opinion. The first is in regards to what Mr. Booth said. The aspects that companies that reside outside of the State of Arkansas can utilize their million dollar lawyers and their piggy banks to allow circumventing the intent of the legislation. And so this bill is just, in my opinion, a cleanup bill that allows for closing those loopholes to circumvent what this Committee and what this legislative body’s intent was to ensure a fair and level playing field. As a practitioner, to give you an example, if I want to care for patients in Missouri and I want to ship medications into Missouri, I must become licensed in Missouri. Upon getting licensed in Missouri, I am agreeing to follow Missouri pharmacy law. Just because I reside in Arkansas does not mean I get to pick and choose which laws I want to basically abide by.
The second point in regards to the fine and fee structure. Right now it’s set up where in theory there is a $50,000 cap, right? So in theory, the PBM can violate that, hit the $50,000 cap, and then they are free to basically adjust their NADAC payments below to in theory one cent and then recover that entire $50,000, plus money on top of that for the duration of that penalty statement. So for that reason, this reminds me of when I tell my kids, my twin boys, Cooper and Charles, hey, we’re not watching TV. I want you to go outside and play. I walk outside 10 minutes later, they’re not shooting hoops, they’re on their iPad watching TV basically. These lawyers, their PBMs, they’re going to find everything they can to circumvent our laws. More power to them. What I’m asking the Committee today is for a good vote to close those loopholes and stand with providers and patients in the State of Arkansas. Thanks for your time. Happy to take any questions and comments.
Sen Murdock: Thank you. Committee, is there any questions? Seeing none, thank you for your testimony. Next, we’ll have speaking for, John Vinson, CEO, Arkansas Pharmacy Association. Please introduce yourself and you’re recognized.
Vinson: Thank you, Mr. Chairman, members of the Committee. I’m John Vinson, CEO of the Arkansas Pharmacists Association, representing 2,400 pharmacists and student pharmacists and affiliate members in the State of Arkansas. I just want to go on record to say our organization is supportive of this legislation to close loopholes. We appreciate the bill’s sponsors, appreciate the members of this Committee. And I can’t really add anything above and beyond what Dr. Torres shared, but just wanted to go on record in support. So thank you. Appreciate it.
Sen Murdock: Thank you. Any questions from the Committee? Seeing none, thank you so much for your testimony. Senator Hammer, would you like to close for your bill?
Sen Hammer: I think everything that needs to be said has been said, Mr. Chairman. And I think Blake, who is a constituent of mine, runs a pharmacy in Benton and other locations, kind of summarized it all. And I couldn’t probably top what he said. So with that, Mr. Chairman, I’m closed. Appreciate a good vote.
Sen Murdock: Thank you. Committee, we have a motion? Motion do pass by Senator Johnson. Second by Senator Irvin. Any discussion on the motion? No discussion. What’s the will of the Committee? All in favor say aye. Any opposed. Congratulations, your bill has passed.
Sen Hammer: Thank you, Mr. Chairman. And thank you, members of Committee. 178, I’d like to pass over. There is an amendment that’s going to be coming down. I want to have it engrossed in member’s own. That way when it comes to Committee, I’ll be able to read it. It is an agreed-upon amendment that I think is going to bring support to the table or at least minimize or reduce the opposition at the table. So that’s the way I’m going to handle 178, and I’ll let it run through the process of member’s own.
Sen Murdock: Thank you.
Sen Hammer: Thank you.
Sen Murdock: Next, we’ll have House Bill 1349. Senator Dotson.
Sen Dotson: Thank you, Mr. Chair.
Sen Murdock: As the AID team exits and all of his associates. Insurance is a whole lot of people. You’re recognized, Senator Dotson.
Sen Dotson: Thank you, Mr. Chair. House Bill 1349 is legislation regarding e-sports tournaments in the State of Arkansas. So what this legislation does is it defines e-sports tournaments and clarifies that paid e-sports tournaments do not constitute gambling under Arkansas law. E-sports, essentially in the world of competitive– there are competitive video games like Halo, multiplayer games, maybe Madden or various things like that rather than physical sports. You get a bunch of kids together and maybe even college-age and beyond. It’s a competitive industry where they get together, pay a fee, win prizes, that sort of thing, kind of like if you’re having a bass fishing tournament or any other type of sport. This would just define it within Arkansas law that as a game of skill, that these are allowable. It’s an industry that’s growing throughout the country in popularity. In fact, over 80 schools in Arkansas offer e-sports as an extracurricular activity. And the Arkansas Activities Association has categorized it as a competitive activity. Colleges are also getting in on the act. Colleges nationwide now offer tens of millions of dollars in sports scholarships. And six Arkansas colleges offer e-sports scholarships. So it’s becoming a bigger deal. And just making sure that everybody knows that it’s a competitive industry. But it’s not a gambling bill, is important. As far as I know, there was a lot of discussion about this in the House. Representative Ray worked with the various interested parties and came to a compromise. So as far as I know, there’s no known opposition at this point. More than happy to try to answer any questions.
Sen Murdock: Senator Boyd, you’re recognized.
Sen Boyd: Thank you, Mr. Chair. So I know you said this, but will you just say it again? This is not for games of chance. This is for games of skill, correct?
Sen Dotson: Right. Games of skill.
Sen Murdock: Senator Johnson, you have one?
Sen M Johnson: Thank you, Mr. Chairman. Senator Dotson, I’m leaning toward supporting this bill. I had to look this word up to find out exactly what it was about. And I generally like to think I’m up on new things and all this. But I want to use a non-digital analogy and see if I’m seeing this right. If Senator Dismang and I go to an area that’s having a really good golf tournament on a good course and we pay a $100 entry fee to play golf. And if we do well and win, we might get a golf bag or a new driver or even a prize that’s not necessarily cash, but equivalent. But it would be based on how well we score. Is this the digital equivalent of that?
Sen Dotson: Absolutely. Multiplayer game where competitors come in, instead of a golf club, they have a remote control in their hand and they’re playing maybe golf on TV or on a screen or some other type of tournament type game competing against each other.
Sen M Johnson: Okay. And the only real, I won’t even call it a problem, but want to clarify. On page 3, lines 29 through 32, that seems to imply that the casinos that are licensed in Arkansas can make book on these games. Is that correct?
Sen Dotson: Just, if there were to be any wagering done on games of chance or games of skill in the state, only casinos would be the ones authorized. And it clarifies that under this law.
Sen M Johnson: So you have no knowledge either in favor or against that the casinos are looking at making book on e-sports tournaments. But if anybody could in-state, it can only be those that were franchised.
Sen Dotson: To my knowledge, only casinos would be the ones authorized. And that was one of the concessions that was added to this piece of legislation to make sure that there was no question that only casinos are the ones that could possibly do that. I don’t know if they’re currently offering that on high school teams or what. I don’t think they are.
Sen M Johnson: We haven’t forbid them. I tried to do it four years ago to say that you couldn’t bet– you know, in Las Vegas, you can’t bet on UNLV basketball, but you can bet on everything else. But I’m cool with the bill. I like the fact that these people are being competitive and kids have fun with it. I guess adults too. Let them make a few bucks or whatever. But I really want to sometime revisit the thing about casinos, because years ago when I really was into horse racing many years ago, I read a book by a very smart person that said that if you can bet on it, you can fix it. And that’s why I’m always looking when I see something like this so that there’s not that kind of abuse, but otherwise, it looks like a good bill. Thank you, Senator. And thank you, Mr. Chairman.
Sen Murdock: Senator Dismang, you’re recognized.
Sen Dismang: Thank you. And so I just want to make sure I understand. So this is a bill that allows gambling, monopolized gambling on e-sports in Arkansas? So is that– if that’s fair, just to make sure that that’s what we have here.
Sen Dotson: It doesn’t allow any additional ability for anything that is not currently allowable.
Sen Dismang: It’s a little out of your lane, I think.
Sen Dotson: Yeah. No, this is not a statement on gambling as far as whether or not it’s allowable or it’s not allowable. But just as far as this is all about the e-sports tournament aspect of things, to make sure that that portion of the industry is allowable under Arkansas law and defined in Arkansas law.
Sen Dismang: Well, I mean, except for 23-118-103(a)(2). But I do appreciate you bringing the bill. I think I understand generally what you’re trying to do here and enjoyed your presentation.
Sen Murdock: So along those lines– let me let Senator Hickey go first.
Sen Hickey: Along the lines of that, I was wondering if we possibly, Mr. Chair, could try to get some past video of Mr. Dotson dancing, cause I have no issues with this. But yes, sir, anytime that a casino could be involved in a situation like that, that in my opinion, would be considered gambling. Now, I think that we went down this road and that’s where we’re at on the thing. I have no issues with your bill. But in the end, if there can be bets placed on the thing, then it would definitely be gambling. So that’s where I’m at. Thank you.
Sen Murdock: Yeah, one thing is if it was simply an entry fee and there was no possibility of anyone making money based on the result, meaning a wager on who wins or loses, which is the gambling part of this and that’s what a casino would book, if you will. If they took this book of business, they would be booking on who wins. And they would put some type of risk assigned to the people that are competing. And that’s what the lines allows for. So I guess this, it is what it is. Simply, if it was, you pay a fee and you participate and that’s the end of it, then there’s no possibility of gambling. But you’ve allowed for that with that sentence. But anyway, that’s just a comment. I don’t have a question. Any questions from the Committee? Is there anyone in the audience who would like to speak for or against? I have Logan Horton from e-sports. You’re recognized to speak for House Bill 1349. All right, Logan, don’t complicate it for him now. Please introduce yourself and you’re recognized.
Horton: Thank you, Chairman, and members of the Committee. I am Logan Horton. I’m the head e-sports coach and director at Hendrix College in Conway, Arkansas. I’m honored to appear before you today to testify on the importance of e-sports in education in our state. For the past seven years, I’ve been committed to promoting the growth and development of e-sports in Arkansas through my work and curriculum to coaching championship winning teams. I’ve been given the opportunity and invaluable asset, and the transformative powers that e-sports can have in students. And as an educator, I firmly believe that e-sports has the potential to make a real difference in our community. E-sports is an inclusive activity that provides students that may not have an interest in traditional activities a place. It promotes teamwork and communication and life skills while creating space for students to connect with something much larger than themselves. Something that we associate like being a fan of football or anything else, you support your teams and your activity. The community and culture of esports played a vital role in success of countless students across the state, but one in particular, Kevin, a student I adopted in 2018, is definitely a result of e-sports success. Under McKinney-Vento, Kevin was classified as a homeless student, which allowed him to continue his education in my care. He played e-sports for me. He played a title called Rocket League, which is essentially soccer with cars.
Through this program, Kevin not only improved his grades from being in an alternative learning environment to improving his self-esteem and confidence, to later graduating high school on time and following his passion to finding a community of gamers, which now he works and lives in Illinois. And that is a direct result of playing that game. Kevin’s story is one of many that demonstrate the incredible power that e-sports in education has to change lives. However, with the current wording, this limits the potential impact of e-sports in our state and prevents students like Kevin from accessing the opportunities that they could to thrive. That’s why I’m here today as a representative of the e-sports community to urge you to support HB 1349. This bill will help us create framework for e-sports that allow us to hold safe and successful student events across the state. And by supporting this bill, you are helping students and paving the way for growth and development for e-sports as an industry in the state. E-sports is more than a game, it’s a community, a culture, and a passion. It brings people together, developing life skills for the future. Thank you for your time and consideration.
Sen Murdock: Thank you. Senator Johnson, I think, was first.
Sen M Johnson: Thank you, Mr. Chairman. Coach, I am flabbergasted to hear that Hendrix has an e-sports team. It is my alma mater, and I have to tell you, when I was there, we had one computer on campus and it used punch cards. So I know I’m seriously dating myself, but I have learned today that this is not just an interesting thing. It is obviously something that can reach young people. As you’ve mentioned, the gentleman that is now in Illinois. I applaud this, but I have to– I was not shocked at what Senator Dotson said about the bill. But when you said we have a team at Hendrix, that I’m the coach, that’s when I was– my whole horizon opened up to the potential. But I just, I want to thank you for finding a new avenue to help young people. I appreciate that. And, Mr. Chairman, the only thing I want to add to that is I should have known something was up when they said that the AAA wants to sanction it. So anyway, thank you, Mr. Chairman. And thank you, Coach, for coming in today.
Horton: Thank you.
Sen Murdock: Senator Irvin, you’re recognized.
Sen Irvin: Just a quick question. Do you know if in any other state, and this might be for Senator Dotson, but do you know if this framework exists in other states? I’m assuming that it probably does. But do other states also have the language in there about allowing it for gambling purposes?
Horton: There is no e-sports legislation that exists.
Sen Irvin: There isn’t? There’s no e-sports legislation in other states? This would be the first?
Horton: This is the first.
Sen Dotson: This is the first.
Sen Irvin: Okay. I was just– okay. All right. Okay, that’s interesting. And I appreciate what you’re saying. And just for Mr. Chair, I know we have some students here, hi. I don’t know if we– hi. So just a second to let them know this is a bill that might affect you guys. So you’re here in the Committee room, and I just want to take kind of this a little bit of a personal opportunity to welcome you to the Committee, but also to understand that this is a piece of legislation that may or may not affect you individually as students. They’re sitting behind you. So I just thought it might be interesting to hear from them if they play e-sports and what that might be like in their life because that might be kind of a fun thing to have them be part of this process for a second. And Senator Hickey has a question, but if y’all, if the Committee would give me some latitude here to ask these students– I’m totally putting you on the spot, but this is how you learn. Welcome to the process, and welcome to the Committee.
Sen Murdock: Please introduce yourself first and then you’re allowed to collaborate with Senator Irvin.
Wright: Yes, sir. My name is Carl Wright. I attend East Arkansas Community College in Forrest City, Arkansas.
Sen Murdock: Oh, that’s mine. Okay. Come on.
Wright: Yes, sir. I did do e-sports in high school. It was a newer thing, so it only came around my junior year and I graduated in 2021. So it was a newer thing. But I went to a small high school, Palestine, Arkansas. And we only had maybe 10 people on the team, but I also played other sports and so the other sports was like super populated, but like the kids that play e-sports wasn’t involved in any other activities. There was like some kids only did e-sports. So it’s definitely an avenue where other kids can meet other people. And like he’s a college coach. Like I know there is a few colleges with teams and like just in general, e-sports, video games in general, has been very inspirational to me and I’ve been playing them my whole life. They just help me a lot.
Sen Irvin: Okay, cool. What’s your favorite game?
Wright: Probably Halo.
Sen Irvin: Halo? Okay, cool.
Wright: Yes, ma’am.
Sen Irvin: Well, very brave of you to step up to the mic and to be on public record, to be part of the process of the Committee meeting. And so I applaud you for that. Thanks for stepping out.
Wright: Thank you.
Sen Irvin: Thank you for your testimony.
Sen Murdock: Is that all you had, Senator Irvin?
Sen Irvin: Yeah, absolutely. Thank you.
Sen Murdock: Okay. Are there any other questions from– excuse me, I’m sorry, Senator Hickey?
Sen Hickey: Yes, sir. Unlike my last question, where I’m just poking fun at my colleague Senator Dotson. I do have a legitimate question here. Just so that I’ll know, and I just want to think on it a little bit. So let’s just say that somebody does get in there, they’re very good at this. They’re winning the prizes. Have we seen through other states or anything, have there been additional like sponsorships or anything like that that have came to those students who have done this? So in other words, I understand we’re sitting here saying with this bill that it’s limited to the prize money. However, has there been other compensation that we’ve seen or we thought that out, or do we have any type of and I don’t know if we want them. I mean, but would we want any type of parameters on that? Anything that y’all have looked at?
Horton: I’m not sure if that’s a question for me in this circumstance. I’m not as familiar with the bill or the legal dealing and that side.
Sen Hickey: Okay. And maybe that would be a question for somebody else. And again, I don’t know how I feel on that. It’s just if that is transpiring, there is other type of compensation that’s coming in because of that. And possibly that’s good. I’m not sure. But I just want us to flesh that out to make sure that we’re all good with this since we’re looking to put this in a statute.
Sen Murdock: Senator Dismang.
Sen Dismang: Yeah. And just to comment on that. I think I can answer that. I mean, these gentlemen in the back, I’m sure have watched the videos. There are tons of sponsorships that are associated with e-sports. And there’s YouTube pages dedicated to watching other kids play video games, the re-runs of what they’ve done. Those are all sponsored by somebody for content, millions of views. And so, yeah, it’s incredibly popular. I mean, in some venues you can pack out a football stadium to watch e-sports more so than you could the football game itself. It’s incredibly popular with kids. So but yeah, there is a ton of sponsorship that occurs and there’s been some young men and women make fortunes off of e-sports and their talents in gaming.
Sen Murdock: Senator Irvin.
Sen Irvin: Well, to that point, I mean, it may, and I don’t know this again, would be to the sponsor of the bill and how this is written. But to that point of sponsorships, it may create a situation where if a casino was a sponsorship for a tournament or for an individual player and they were the only ones allowed to be able to place wagers on these, that might create some sort of a conflict. I don’t know. You might need to think through that, Senator Dotson. I mean, I love e-sports and the whole framework around that. I agree with you, 100% agree with what the student said. But that might be an area that you might need to look at before we pass this out. I don’t know.
Sen Murdock: I think the question may be it has nothing to do with the participation and what it’s done for you individually, for your skills and all that’s good. But now we’re getting into something else and the control mechanism, where the fences are and how we make sure this is a tight and right piece of legislation. Because there may be, as we say in this business, unintended consequences. It’s not the intent of the sponsor of this, I’m sure, to have any of these things to go off the rail. But whenever you have these terms inside of a bill, it can. And then you’re the first one. We’re the first one, excuse me. We will be the first one. So there are just some concerns that we want to make sure that we do it the right way. And that’s what the Senators are bringing up these points for. Nothing against what e-sports is. Your sponsor left the end of the table, that’s why I’m looking over at him. Senator, you want to go back to the table? Are you through? Do you have any questions?
Horton: I’m done.
Sen Murdock: Thank you so much for your testimony. I have another. Jackson Acuff, with Americans for Prosperity. He’s going to speak for. If you will, introduce yourself.
Acuff: Yes. Thank you, Chairman, and Committee. My name is Jackson Acuff, I’m here with Americans for Prosperity. I’ve helped put this bill together since the beginning. I’d love to address some concerns that I’ve heard while sitting over there. So the purpose of the bill was never to involve gambling at all other than to separate the paid e-sports tournament from gambling. The line before the one that you guys were concerned with, which is line 27, speaks on wagering on the outcomes of all e-sports tournaments are not affected in this bill. So we are not trying to affect any gambling legislation. That is not the purpose of this bill. That’s what we were very open with in the beginning. On the House side, it was stated that we did not want to be a part of that. We had some individuals who didn’t like that, and we made some concessions to further that away. So that– state the record. Give me one second. There is also, this would be the first legislation in the nation for e-sports. And part of that could be looked at as scary or why are we doing this? But really, it’s meant to show the nation that Arkansas wants to lead in innovation and lead in e-sports and that we’re open for business and we want more tournaments. We want more organizations here spreading tech and innovation in the state.
There is also currently a law and it is 5-66-104. And that is talking specifically about gaming devices. And it is stating that it is unlawful for a person to set up, keep or exhibit any gaming table or gambling device. But then it also speaks on– let me try and find it. Essentially, using a video device or a digital device and getting something in return, utilizing that device is not allowed. So that could be stated that that is very similar to e-sports. But I just wanted to clarify a few of those things. I’ve been in the e-sports scene since I was a kid. I was unlucky enough to be there prior to when e-sports was in high schools and colleges. So sadly, I never got to experience that in my schooling. But I did experience it in my hobby and everyday life and am very passionate about the growth of it and would love to see it grow in Arkansas.
Sen Murdock: Well, Mr. Acuff, why was it necessary, in your view, to put this last line in there as it relates to casinos?
Acuff: Yes. So the issue with that was that the specific individuals were worried that by stating, by putting this law forward and this legislation forward, that it would open up gambling. And so we just wanted to clarify that we have no effect on that. So currently, those who are registered for any gambling activity in the state, those would be the ones who would be able to if that was the case. Now, specifically speaking on again on this bill, the goal was never to even get involved in any gambling legislation. Our goal was not to affect gambling legislation at all. But it was just in that last line, it was to preface that those who are already registered in the State of Arkansas to gamble are able to do what they would need to do. Essentially, again, just pushing ourselves away from the regulation of this.
Sen Murdock: Okay. Senator Johnson, you’re recognized.
Sen M Johnson: Thank you, Mr. Chairman, Mr. Acuff. From your standpoint, certainly, this is Senator Dotson’s call and Representative Ray’s call. But would y’all have a problem– would your organization have a problem with on line 29 of page 3, if we change the word only to no? Where then it would read “no casinos licensed and regulated by the Arkansas Racing Commission, under the Arkansas Casino Gaming Amendment of 2018, Arkansas Constitution Amendment 100 may conduct wagering on the outcome of an e-sports tournament.” Would y’all be okay with that?
Acuff: I’m not opposed to that. The big thing that I think is important is again just that I want e-sports to thrive. I don’t want people to be scared of it. So the further away from any gambling or gambling legislation, that’s fine with me. I think the important thing is that it is very clear that the bill is not meant to affect any gambling legislation.
Sen M Johnson: I understand. You’re trying to distance yourself from the gamblers?
Acuff: Yes, sir.
Sen M Johnson: And I appreciate that very much. A whole lot of money has been bet, let’s use the Super Bowl, for example. The NFL, at least they claim they’re not involved in gambling. At least they used to say that. I don’t know if they still do. But it’s an event that happens. I mean, British bookmakers make book on who’s going to be elected president of the United States. And certainly, our electoral process is not directly involved in that. I guess somebody out there that will make book on whether it’s going to rain tomorrow or not. And again, it’s legal in that area, it’s fine. But I wanted to make sure y’all were okay with if we basically said, okay, you Arkansas casinos, this is not something that you can bet on. I worry about it both just from corrupting your sport, which is, I think, all of our concern, and you’ve expressed that and the way you’ve discussed gambling.But the other point is that, as I said earlier, if you can bet on it, you can fix it. And I worry that– my daughter is a computer person. She crafts apps for phones and things, and she has kind of educated me that you’d be blown away with some of the things that hackers can do. And so I’m not saying that they’re hacking your tournaments and skewing the results. But again, if you could bet on it, somebody would probably try to. So Mr. Chairman, I would leave it up to Senator Dotson, whether he would like to make that little tweak or not. And that was just I wanted to bring that before the Committee. Thank you.
Sen Murdock: Thank you. Senator Irvin.
Sen Irvin: Yeah. I’m sorry, I have to run, but I am not opposed to gambling, okay? And I actually would disagree because I don’t want an outside. Right now only the casinos are the ones that are able to do different things within our state because of the way that amendment, the constitutional amendment is written. So I don’t mind that language and I don’t mind gambling on e-sports, I really don’t. I mean, if you’re a free market person, I mean, that’s free market and they gamble on football. And I don’t think it’s corrupted football or basketball or if it has, and then those measures have been taken to eliminate that. So I’m not opposed to that. I just, those two statements, lines 27, 28. Those are in conflict with one another the way that it’s written. And so I just, I think you just need to make a decision about what you want to do with it, Senator Dotson. And because if you did no casinos, then you might be opening it up to outside of the State of Arkansas gambling folks, which is not what Amendment 100 talks about and maintains. So I would just, I would work through it.
Sen Murdock: Senator Dotson, would you like to respond?
Sen Dotson: If I may, Mr. Chair. I’ve got an amendment for the Committee to consider that will strike lines 29 through 32 on page 3. And the only other thing it does is it changes on line 27, it strikes through the one. So it’ll just be a (b) under that. So it’ll strike the last four lines of the bill. And I think that should take care of the concerns that I’ve heard here. It’ll leave it just as it is right now with any other. We’re not changing the Constitution, we’re not changing what casinos can or can’t do, but it will remove the explicit authorization of casinos to only conduct wagering on the outcome of e-sports tournaments.
Sen Murdock: Okay. You have a question?
Sen M Johnson: Yes, sir. Thank you, Mr. Chairman. And Senator Dotson, thank you for this amendment. I just–
Sen Murdock: Well, let me ask you this, Senator. Is your question on the amendment?
Sen M Johnson: It is on the amendment.
Sen Murdock: So let’s get the motion and then have discussion, do it in discussion.
Sen M Johnson: Shall we go ahead and adopt it and then we can just? I would move the adoption of the amendment. Hold on, I’ll defer to Senator Hickey.
Sen Hickey: Here’s my thing, we’re sitting in here, and whenever we first started, and I’m talking about the amendment. We kind of, the more we’ve hashed through this, I think there are some other questions. And I think there’s some good things about this, I really do sitting here. The whole thing’s new to me. Maybe I’m dating myself. I mean, not really knowing about this type of stuff. Personally, I would like for us to kind of hold up on the amendment, make sure that we’ve looked through everything. Thought all of this out to make sure that our amendment is correct. Because I personally don’t know what’s everything that might be included under Amendment 100. I want to make sure that there’s not some language in there. I heard what Senator Dotson said, but that there’s not some language in there where we’re required to do something or not required to do something whenever it comes to this type of stuff. I just think that it needs a little bit more vetting on the outside of this Committee before we bring it back. That’s where I’m at.
Sen Murdock: So the question becomes, is there a motion for this amendment? If there’s no motion. Okay, go ahead.
Sen Dismang: But I think the question is, I mean, what are we driving for? I mean, I read (b)(1) differently than maybe others. It said wagering on the outcome of an e-sports tournament is not authorized under this chapter. It doesn’t say that it’s prohibited. It just says that this chapter doesn’t authorize gambling. It’s mute other than that. I think you were maybe covering yourself by trying to say, I’m not trying to authorize gambling. It may happen somewhere else in code, but that’s the way that I read that. I’m not even sure that that’s a necessary piece of language, period. I don’t think it accomplishes anything if the concern is gambling. I mean, I think it all goes to I mean, should we have a further discussion? You feel comfortable with your level of understanding of the bill?
Sen Dotson: I mean, my level of understanding of the bill is now with that particular part off– I agree with the Committee, it’s something that obviously was added to since I agreed to run the bill. And I didn’t realize that that last line was specifically– or I didn’t read it that it specifically authorizes casinos to do gambling. So as it stands right now, I’m not running the bill like it is without an amendment on it to fix it. But item (b) there, I don’t think it changes the status quo. If casinos can offer wagering on this type of sport right now, they still can. If they can’t right now, they can’t. But it doesn’t change the status quo one way or another. It just makes sure that this section of the law doesn’t explicitly authorize or prohibit it from happening.
Sen Murdock: Senator Johnson.
Sen M Johnson: Thank you, Mr. Chairman. First of all, Senator Dotson, thank you for being willing to fix this. I just, I’m sorry, Senator Irvin is not still here. I wanted to respond to something she said and I’m not per se disagreeing with her, I just want to point out something that. And as I said a while ago, there are bookmakers around the world that make book on literally everything– is it going to rain tomorrow? And that’s what they do, and that’s fine. But I don’t like the implication of bringing Arkansas casinos into this but this would. There are gambling sites where you can bet on sports in other states from Arkansas on your phone and all that. My only concern is we can’t do anything about those types of things, but we can do something about what happens in Arkansas. And I would one, I appreciate your amendment and I would like to maybe rather than leave it, take it complete– the lines 29 through 32 completely out. But actually just make it clear that Arkansas casinos can’t take bets on the e-sports tournament simply because there are going to be possibilities and I’ll leave it at that, possibilities that there could be some fixing or other type of thing. Not that the e-sport tournament operator is corrupt, and not that even the Arkansas casino would be corrupt. But the person that’s placing the bet and some hacker in Eastern Europe that could come in and maybe slow down that real good player’s ability to make his moves in the game or something through a hack or something could corrupt it. I mean, people that are familiar with stories of some of the point-shaving scandals in basketball, most of them in the 1950s and early 1960s. But they still happen, they caught people doing it. And the gamblers involved were not in any way affiliated with a specific, anyone related to the sport. So the coaches, the referees didn’t know about it, but the players, one or two players are paid off by a mafia boss. And they put a whole lot of bets around the country. Las Vegas, of course, being the place at the time to do it. And could win because they had a way to fix the game. So that’s the only thing that I’d like to keep our Arkansas casinos cleaner and not allow them to do this. But it is your bill, Senator Dotson, you amend it, and I will vote on it depending on how good I think it is. But the concept of e-sports, I’m now a believer, and I appreciate you bringing the bill.
Sen Dotson: Thank you.
Sen Murdock: Okay, let’s set the table straight. We have an amendment that’s been presented for adoption. What’s the will of the Committee? Senator Penzo has made a motion to adopt. A second? Second by Senator Johnson. Any discussion on the motion? Senator Boyd.
Sen Boyd: So I kind of feel like I’m moving forward having heard from the Senate sponsor that right now the bill seems to be in his possession and he doesn’t want it to go forward without the amendment. So I guess as we move forward, that’s what I’m thinking.
Sen Murdock: Okay. Any other discussion on the amendment? Okay, all in favor of the amendment say aye. Those opposed. The amendment is adopted. Okay. So now we’ll move to is there any discussion. Any questions on the bill as amended or do you want to close? Do we have any discussion, further discussion on where we are now from the Committee?
Sen Dotson: As far as for my part, I’m closed and would appreciate a good vote on the bill as amended.
Sen Murdock: Well, before you close, I’m sorry, let me see if there are any other questions now that we’ve had an amendment adopted. Go ahead, Senator Hickey.
Sen Hickey: Right. So just for clarity for everybody that’s watching this or whatever. What we are removing with this amendment is the line where it said that the casinos may conduct wagering on the outcome of e-sports tournament. We’re totally removing that. So that’s not in the legislation anymore, correct?
Sen Dotson: Correct.
Sen Hickey: Okay. And again, I can read this, but I want to make sure. Everybody gets confused with what’s going on whenever they don’t know what’s going on. And what is being left is the one line that says wagering on the outcome of an e-sports tournament is not authorized under this subchapter, which Senator Dismang kind of made that clear that we’re just saying that it’s not authorized. I guess that does mean that it could still happen?
Sen Dotson: Correct. Yeah, it’s not authorized.
Sen Hickey: It is allowed under Arkansas law somewhere.
Sen Dotson: So if it’s allowable now, it’s allowable, but it’s not specifically authorized because this passed.
Sen Hickey: Right. And I kind of liked what Senator Johnson was saying, with the “no, but,” with us deleting this and everything, I’m going to go ahead and vote for it. But I’m also going to trust that you’re going to delve into this just a little bit more before it comes to the Senate floor. Would I be correct with that?
Sen Dotson: You probably would be correct with that.
Sen Hickey: I know you. Thank you, sir.
Sen Dotson: Thank you.
Sen Murdock: You don’t have a question? And I guess, along those lines, just going to Amendment 100. With wagering being allowed at certain places in this state, then what authority do we have to determine what book of business those places authorized under Amendment 100 to allow for this? I mean, I’m sure there’s some parameters somewhere. And so it could be something worth looking at to see again if there’s no unintended consequences. Okay, on the amendment, is there anyone in the audience want to speak for or against the amendment? Okay. So nothing from the audience. Now we have a motion. Senator Penzo, a motion do pass as amended. Second, Senator Johnson. Is there any discussion? No discussion. All in favor say aye. Those opposed. Congratulations, your bill has passed.
Sen Dotson: Thank you, Mr. Chair. Members of the Committee.
Sen Murdock: Okay. Do we have any other business before us? Seeing none, we are adjourned. Thank you.