House Labor & Commerce, 4/17/26, 3:15pm

This meeting of the House Labor and Commerce Committee will come to order. The time is 3:20 PM on Friday, April 17th. Present are Representative Carrick via online, Representative Colombe, Representative Freer, Representative Nelson, Co-Chair Fields, and myself, Co-Chair Hall. We have a quorum. Please silence your cell phones.

We're asking that staff and members of the audience not approach the table. If you need to pass a note to committee members, please get the attention of my committee aide, Joan Wilkerson, and she will take care of it. I'd like to thank Zach Lawhorn from the Juneau LIO for tech and teleconferencing support, and Andrew Magnuson, the Labor and Commerce Committee Secretary, for being here. We will consider the following 4 bills today. Representative Sadler is here at— joins us at 3:20 PM.

The 4 bills we are hearing today are HB 292, Insurance Pediatric Neuropsych Disorders by Representative Colon, where we will have some invited testimony. House Bill 324, Virtual Currency Kiosks by Representative Moore. We will have invited and public testimony. HB 244, CNA Training by Representative Underwood, where we will hear public testimony. And HB 386, Gaming Electronic Pull Tabs, a committee bill where we will be hearing invitation, invitation-only testimony.

We will now move on to our first order of business today. Our first hearing is our bill hearing is HB 292, Insurance Pediatric Neuropsych Disorders. Representative Colom and aide Emily Skavog, please join us at the table and identify yourself for the record and begin your presentation. Thank you for being here.

Good afternoon, Co-Chairs Fields and Hall and members of the committee. For the record, I'm Representative Julie Calhoun serving District 11, South Anchorage Hillside. I'm honored to introduce HB 292 after recently hearing from one of my constituents, Rebecca Pullens, about her son Finn. She talked me through her family's journey with PANDAS and PANS, which are neuropsychiatric disorders. And their fight with insurance companies who deny medically necessary care.

She and the team of advocates who met with me asked for my help to ensure Alaska's children who need this care are not left behind. H.292 is about putting kids first and making sure parents can be there for their children and get the treatments they need. And I'll go ahead and introduce. For the record, my name is Emily Skovhogg. I am staff to Representative Julie Calhoun.

Today we do have, if the committee would like, a presentation that is very brief, and also I can go through the sectionals. That would be great. Thank you. Okay. Can we do a brief at ease?

Brief at ease.

Okay, we are back on record. Miss Skafhog, I will get it right hopefully, um, please begin your presentation. Perfect, thank you, and that was correct. Uh, for the record again, my name is Emily Skafhog. I am staff to Representative Julie Kollum.

I'm just going to go through a brief PowerPoint quickly. So HB 292 proposes insurance coverage for pandas, pans, kiddos.

What are PANDAS and PANS? PANDAS is Pediatric Autoimmune Neuropsychiatric Disorders Associated with Streptococcal Infections, also known as PANDAS. PANS is Pediatric Acute Onset Neuropsychiatric Syndrome. Both of these disorders that you see before you today result in inflammation in a child's brain from immune system dysregulation causing life-altering symptoms.

This has recently gone all over social media as Finn's Bill, so I wanted to bring that to you guys' attention today. This is our constituent's son Finn, and we wanted to just bring awareness to his face today, bringing a name to the face that is treatment not covered. So up until recent years, insurance companies have had a lack of billing codes, also known as ICD-10 codes, going over PANS and PANDAS up until as far as October of 2020. However, this still only potentially covers first-line defenses for children and families, not treatments thereafter.

Treatments like IVIG, intravenous immunoglobulin therapy, which is proven for overall positive long-term impact of treatment on a child's life, including behavior, cognition, and physical health. This treatment currently costs families out of their own pockets up to tens of thousands of dollars. The purpose behind HB 292 is to put into state law that insurance companies must cover the costs of these life-changing treatments.

And we can answer any questions, otherwise we do also have invited testimony, and I have a sectional as well if you you would like. Ms. Skovhogg, if you could please read through the sectional, and then we'll turn to invited testimony, and then we will go to committee discussion. Yeah, I think—. Thank you.

So I'm gonna go through the most updated sectional. This is going to be version I to version G, which is the CS from HESS. Section 1, AS21.41, is amended by adding a new section to read coverage for pediatric autoimmune neuropsychiatric disorders. Relating to medical assistance for pediatric autoimmune neuropsychiatric disorders. This new section ensures that the state of Alaska, a healthcare insurance plan, would require providing coverage for prophylaxis, diagnosis, and treatment of pediatric disorders of PANS and PANDAS.

Subsection A ensures children who are diagnosed with these severe illnesses can get the medical treatment that they need. Coverage must include the current standard of care of treatment as prescribed by their treating provider, with their insurance company now providing coverage for said treatments. Subsection B requires that insurance companies provide coverage for treatments prescribed in a timely manner, ensuring that no unnecessary delays take place. Subsection C makes it easier for PANS and PANDAS children diagnosed with —this to be able to obtain treatment, making sure they are not underserved. Subsection D ensures that insurance companies are not to undermine coverage by using higher costs for families affected by PANS or PANDAS, are not financially punished due to said diagnoses.

Subsection E defines uniform terminology for PANS and PANDAS to ensure that treating providers, insurers, and families all have shared language for understanding insurance coverage for needed treatments. Subsection— or excuse me, sections 2 through 5 adds Medicaid into the bill language to ensure that children and families are covered. And Section C simply sets a January 1st, 2027 effective date. Great. Thank you, Ms. Skovhaug.

With that, we will turn online for invited testimony and we will begin with Rebecca Pullen. Ms. Pullins, would you please put yourself on the record and begin your testimony? Testing. Can you hear? We are looking for Ms. Pullins, Rebecca Pullins.

I think I see you online there. Anybody hear me? Ms. Tang, Dr. Tang, we will— you are third in the queue, and so we will come back to you. We're going to begin invited testimony with Ms. Rebecca Pullins.

And so, Ms. Polenz, if you could pull yourself off mute, um, and begin, that would be great. We're going to take a brief at ease.

All are muted. We are, we are back online. We can hear you, Miss Pullins. Are you— is it time for—. Yes, it is time for your testimony now.

Yes, yes, Miss Pullins, please put yourself on the record and begin your invited testimony.

Ms. Pullins, can you hear me?

Ms. Pullins, we're going to take another brief ease.

Thank you, everybody, for your patience. We are back on the record. We're going to figure out some technical issues that we're having with Ms. Pullins right now. Next, we're going to go to the second invited testifier, Michelle Hayworth. Ms. Hayworth, if you can hear me, I hope, will you please put yourself on the record and begin your invited testimony?

Uh-oh.

Ms. Hayworth, can you hear us?

Brief it is.

Alright, we believe we've figured out our technical issues. So we will roll back up and we will begin with hearing from Ms. Rebecca Pullins. Ms. Pullins, hopefully you can hear us. Um, if so, will you please identify yourself for the record and begin your invited testimony?

Yes, thank you. Uh, Chair Fields, Chair Hall, and members of the committee, for the record, my name is Rebecca Pullins and I live in Anchorage. I'm a constituent of Representative Colombe and I want to thank you for allowing me to testify today. My son Finley has always been a sweet, happy, bright boy. He loves his people, especially his little sister, and he could make her laugh like nobody else could.

As a young boy, he met all milestones and developed appropriately. Shortly after he turned 7, the boy I knew was gone. On April 29, 2023, he was himself The next day, everything came crashing down. He became terrified of more and more things, all of them irrational. Suddenly he had OCD.

His body moved in uncontrollable ways. He couldn't touch anything yellow. Getting dressed took 45 minutes. He couldn't eat. He couldn't play with his sister.

Every part of his day was interrupted by some kind of ritual. That he had to get just right. Otherwise, he would have to start over. If he tried to interrupt these compulsions— if we tried to interrupt these compulsions, he would become terrified and go into a fit of rage. He would kick, flail, and bite.

And then when his body was finally calm, he would sob, "I'm sorry. I didn't want to do that." These are just a few of the symptoms that we saw. We thought we had lost our son. Our daughter had lost her playmate and best friend. We were terrified we would never get him back.

All of these changes happened in the span of 2 months. Finn had a strep infection and we didn't even know it because his immune system attacked his brain instead of the strep. PANS and PANDAS act fast. Within a matter of days, my son couldn't function in his daily life without assistance. Without a quick diagnosis, my son would have needed IVIG.

It is still always possible that it becomes a need because this doesn't just go away. The kids affected by PANS and PANDAS have so much to offer the world if only we could quiet their brains and heal their immune systems. Access to IVIG is so important for these kids. Please support our future by supporting Finn's Bill.

Thank you, Miss Pullins. Next, we will turn to Michelle Hayworth. Miss Hayworth, will you please identify yourself for the record and begin your invited testimony? Thank you, Chair Fields, Chair Hall, and members of the committee. For the record, my name is Michelle Hayworth, and I've lived in Alaska for over 20 years.

I want to thank you all for your time. It means a lot to be able to tell our story. In 2025, my 14-year-old son was taken to McLaughlin Youth Center in Anchorage after a terrifying escalation of behaviors. While he was there, I learned about PANS, PANDAS, and autoimmune inflammation of the brain triggered by infection. Juvenile detention was the only option available to us after repeated denials to any other psychiatric or medical facility in Anchorage.

My son wasn't a criminal. He hadn't gone through any acute trauma or been neglected or abused. He was a child experiencing severe brain inflammation, but no one knew that yet. For years, we had searched for answers. We saw dozens of professionals, Medicaid-funded allergy workups, gastrointestinal care, neuropsychological evaluations, crisis response calls, emergency room visits, even police and fire department calls.

Still no one recognized the pattern of recurring autoimmune inflammation attacking his brain. When he was released 4 days after admission to McLaughlin Youth Centre, we started him on maximum dose around-the-clock ibuprofen. Within 72 hours, the violent irrational aggression was gone. Gone. When our medical provider ran comprehensive labs, almost everything was abnormal.

Inflammatory markers, autoimmune indicators, infectious titers, hormone disruption, and so much more. It took more than a decade to find treatment. It's hard to adequately express the type of trauma and injustice this experience inflicts on a family. The cost financially and emotionally is staggering. I hold a master's degree.

I can only work a flexible low-wage job because of my children's care needs. We rely on Medicaid for healthcare, subsidized housing, and food assistance. The financial cost to our family and to the state of Alaska in the last decade likely approaches half a million dollars for care that wasn't addressing the real problem. Months after my son's diagnosis, my daughter began exhibiting symptoms of PANS. Because I now understood PANS, I recognized the behavior immediately.

We treated her with anti-inflammatories within days of onset. Her symptoms resolved in less than 48 hours.

Early recognition and treatment changed her life. She will likely never see a psychiatric emergency room or juvenile detention facility. We are not the only family in Alaska experiencing this devastating condition, and if you are looking for answers as to why Alaska has such a big mental health crisis for youth, we have brought you one significant piece of the puzzle today. We must start recognizing and treating this with the urgency it requires. Please support HB 292 so that all of the Alaskan children affected by PANS and PANDAS have access to treatment for this devastating condition before it destroys lives.

Thank you. Thank you, Ms. Hayworth. Next, we will turn to Dr. Tang. Dr. Tang, if you could please identify yourself for the record and begin your invited testimony. Hello, can you hear me okay?

You're a little soft. Okay, how is this? Is this any better? Yes, that is better. Okay, hi, my name is Dr. Angela Tang, and I, I have several different things I need to identify myself as.

First and foremost, I am a doctor. I'm an adjunct professor. I work with the Stanford PANS Clinic. Secondly, I'm a mom of a PANS son who got sick in 2018. And number 3, my day job is that I actually work for a large insurer in utilization management.

Because of all of these roles together, I found myself a 4th role a few years ago, and I have been trying to advocate to make this path a little bit easier for children who have followed mine. I could restate the experience that my son went through, but in order to keep this fairly short, I will not, except to say, oh, I'm so sorry, my dog became lame yesterday and she has— she's lying here on the floor next to me, so I'm sorry about that. But rather than restate what the parents have said, I'll tell you that it is every bit as bad as they say, and if not worse. And, and it was that way even though the I was a physician. I knew how to navigate the system.

I worked for my son's insurance. And my son actually, he failed everything and he wound up with IVIG at about 7 weeks from when he got sick. So despite all of that, despite the fact that my suffering was much briefer than the two moms that you have heard from, it's that life-changing that, that you wind up finding yourself testifying for Alaska a few years later. So I think where I have the most use for you guys is to answer any questions, but also to paint for you a little bit of the cat and mouse game that starts when a physician decides that expensive medicine is needed for PANS/PANDAS between the insurance and the doctor. So, um, as you have heard, the kid starts out with an abrupt, devastating behavioral neuropsychiatric illness.

Very often the doctor maybe doesn't know very much. They'll try to refer the child to a specialty clinic. The insurance will deny that. You have to see the in-network doctor first. They don't know anything.

Very often there's a misdiagnosis, as you've heard. It can be traumatizing and lead to child abuse allegations and things like that. For the select children who don't respond to easy treatment or have severe cases, they may need the expensive medicine like IVIG. And in that case, when the prescription makes it to the insurance company, it is basically auto-denied. Um, what happens is every insurance company, with the exception of one, has a policy that they write on their own.

Usually it's a PharmD or somebody who's anonymous that works for the company, and they, um, the policy will state, oh, you know, this medicine is not necessary, it's experimental, and therefore denial. We're just not gonna pay for this. So, um, the reason this happens is that they realize that very few people will actually go on to appeal. It's less than 1%. It's probably a little higher in this disease because that's how bad it is, you have to appeal.

But if you go through the multi-stages of appeals and get all the way to the independent medical review at the regulatory level, most cases will actually side with the family. But it is a many, many, many month delay, often even further delayed when you request as a physician expedited review, and what you get is bumped back to routine processing. It's, um, it's very difficult. So it's normal for kids, once the decision is made that they're severe enough to need IVIG, to need to wait 6 to 12 months to get the medicine. And, you know, this is despite the fact that greater than 4 weeks is considered to be very delayed treatment.

In the meantime, the child's not in school, or they're needing special ed, the parents are not able to work. If you're lucky enough to have finances, you can enter financial ruin to try to pay for this yourself. And then there are potentially lasting neurologic consequences and even death. There is a brain bank at Georgetown in D.C. that has been established with children who have died from this disease, and every year they get a few more. So once your child gets IVIG, a long, slow recovery begins, but it is a, it is a good, solid recovery.

My son was just accepted to medical school. He'll be starting in the fall. From the insurer viewpoint, as I've mentioned, they will— the initial denial is often by a non-MD. I'm sorry, I'm throwing things at my dog, trying to keep her quiet. Often by a non-MD based upon their own policies.

If you do get to a peer-to-peer, it's almost 100% of the time by a doctor who's never heard of the disease, and they just are tasked with following the company guidelines, so you get another denial. So, you know, they're basically banking on the fact that the patient doesn't know, or the doctor doesn't have time to fight this. Once they're told it's not medically necessary or experimental, the patient goes, "Oh, okay, guess— oh." And this is despite the fact that since 2017, there have been established, published expert consensus guidelines led actually by Stanford, where I work now, and many clinical trials since that time that continue to support the use of some of these important immune modulators to save these kids' lives. In California, I was very involved in the passage of AB 2105, which is our law that basically mandates that the insurance companies follow standard of care. That's kind of all it says.

And since our law went into effect in 2025, our IMRs— we had a handful every year— we have had none. So, in fact, it's ending up saving the state processing time as well as all of the sort of more indirect costs. As a result of all this pressure in 15 or 16 states now with laws, Aetna is the first insurer to change its policy, and they will now cover IVIG. So everybody running, get Aetna insurance. There's currently an effort to get FDA approval, but this is not required for insurance coverage for medications.

I can give you plenty of examples of that, but it is often falsely cited in denial letters. This isn't FDA approved, therefore we're not going to pay for it. It's not true. Navigating this maze requires doctorate-level education, preferably an MD like me, so you can get your kid better and then go on to medical school and not wind up at Georgetown. So basically, you know, I beseech you, this is your choice today.

Please support this important bill. Please vote aye for HB 292, and I'm happy to answer questions. Thank you, Dr. Tang. I also want to note that we have Director Heather Carpenter from the Division of Insurance available to help answer questions, and I believe we have— we— at ease.

All right, we are back on record. So the person we have available to help answer committee questions is Director Heather Carpenter from the Division of Insurance. Dr. Tang, we have a question from Co-Chair Fields for you. Thank you. Through the chair, Dr. Tang, I know IVIG is used to treat other autoimmune reactions, low platelet count, for example.

Could you give us some additional examples beyond PANS and PANDAS where IVIG is the appropriate treatment? Yeah, I mean, it's used to treat, um, for example, uh, yeah, ITP, low platelets. It can be used to treat Kawasaki's. It's been used for immune deficiency to replace, um— a lot of these kids will actually have more than one thing going on. A lot of them will have immune deficiency and then they'll go get PANS because their immune system is just really, just really dysregulated essentially.

So a lot of rheumatologic diseases and hematologic things. If I could follow up. Follow up. Do you see the same delays in insurance for these other applications where IVIG would be appropriate, or is it particularly delayed in the case of PANS and PANDAS? I think that it's delayed, you know, I mean It's delayed for everything, right?

But the insurer policies will spell out certain diagnoses that they will allow it for. For example, you can see Kawasaki's listed a lot of times. But generally speaking, PANS is listed on the opposite. It's listed as a, you know, you will not cover for this condition. And so the delays become extreme because now you're fighting their own policy.

I do have a question for Heather. Okay, Director Carpenter, would you please join us at the table?

Thanks. Through the chair, Director Carpenter, I'm guessing some parents never figure out what's going on with their kids, though recognizing that there may be underreporting. What can you share about the history of pants and pandas and interactions with your office over the last few years? Do you have any window into how common this is? For the record, Heather Carpenter, Director of the Division of Insurance.

I don't have any stats with me on consumer complaints or external healthcare review specific to PANS or PANDAS. I will say, and we're always trying to share and educate the public, that the Division of Insurance, for fully— plans we fully regulate, so individual markets, small group, large group, we are what Dr. Tang referred to as that regulatory body that a parent, a patient can appeal to for a final external healthcare review. And we have contractors that are not associated with the insurance company. They get all the files, the providers can share that information and they will look at it and they will determine if no, a kiddo should have gotten this medication, they will overturn it. Turn and ensures denials so a kid can get that.

I will acknowledge that is a frustrating process for any insurance, whether it's regulated by the division or if it's a self-insured plan. Having to appeal to that final decision-making can take a lot of effort, and when you have other things going on with your kids, that's exhausting. So I do recognize that. Guys, follow up. How about I use the VIG?

Beyond PANS and PANDAS, it is used to treat other autoimmune issues. Do you see that being an issue that you hear about in the department? Through the chair, Representative Fields, we have not heard anything specific to the lack of IVIG being approved. I am not a doctor, so I'm going to be awfully careful. If providers have run into problems, again, we encourage them to tell us so we can have those conversations with insurers.

And I did, after Dr. Tang testified in House Health and Social Services, I did have Aetna send me their updated bulletin of coverage. So it's nice to see that Aetna has made that change. Last question. Representative Fields. Through the chair, I do support the bill.

I just wonder if there are any technical fixes you see that we need to address. Before moving it on. Through the Chair to Co-Chair Fields, there are some items that were going to be considered in House HESS, and the committee ran out of time. So I believe Representative Colon has those technical things that the division pointed out. Okay.

Thank you. Great. Further questions from the committee? Okay. Seeing none, we will set this bill aside and set an amendment deadline.

We will set the amendment deadline for Thursday, April 23rd, at 5 PM.

Thank you, Representative Klum, for presenting the bill to the committee today, and thank you to our invited testifiers as well. Thank you. We're gonna take a brief release.

Okay, we are back on record. The next bill we are hearing today is HB 324, Virtual Currency. It is sponsored by Representative Alexi Moore, um, and her staff is here, Inti Harbison. Um, Representative Moore is unable to join us today, so we have Inti, or Mr. Harbison, would you please put yourself on the record and start your presentation? Uh, yeah, for the record, Intimayo Harbison, staff to Representative Moore.

She apologizes for not being able to be here today. House Bill 324, an act relating to virtual currency kiosks. Virtual currency kiosks, you should think of them— there's a picture of them, one of them down in the corner there. It's basically an ATM that you're able to put money into in order to transfer that into a cryptocurrency of some sort. Um, I'll just go through a little background on the problem here.

Um, what we are seeing across the United States is that cryptocurrency is now the number one preferred method of criminals. Um, and recent lawsuits, um, in places like Washington, D.C., have made claims that 93% of the transactions that are occurring specifically on these cryptocurrency kiosk devices are the result of fraud.

So this is an article that was done, an investigative piece done by CNN, and in it they are alleging that cryptocurrency kiosks are not completely complicit in this sort of crypto fraud that seems to be occurring on their devices. These companies are taking between 20% and 30% markup on, on these purchases and then pocketing that. And so what that looks like is, you know, there's a a sample transaction receipt here from a cryptocurrency kiosk in, I believe, Arizona. But, you know, the price of Bitcoin on here is $67,000, but the sales price is $83,400. That difference in price there is what the cryptocurrency company is taking for themselves as a profit on these transactions.

So it at least appears that they have a vested interest in large transactions occurring on these machines, because as these transactions occur, they make— seem to make a larger profit. Former Cryptocurrency Kiosk employees have said that if there was a way to prevent 100% of the scams that were occurring on these kiosks, this industry would not be able to survive. And then again, a few months ago in Washington, D.C., their attorney general alleged that upwards of 90% of the deposits that were occurring on these crypto kiosks are the result of fraud.

And it's not just Washington, D.C. We're seeing, you know, across across the country, states' attorneys general are starting to take action. In Iowa, their state's attorney general has filed cases against a number of cryptocurrency companies. They allege similar numbers to the Washington, D.C. lawsuit. You know, half of the transactions that are occurring on these kiosks are the result of fraud, and then upwards of 90% of the total monetary value brought in is the result of that fraud as well. For example, CoinFlip's top 20 users in the state of Iowa were all fraud victims.

A regulator in Maine denied a license application for these kiosks on the grounds that they are— they cause an unacceptably high number of Maine consumers to suffer financial loss and that that disproportionately affects elderly customers. Accounting for more than 70% of the money transmitted within these machines. It's not just something that is occurring in the United States. Other countries, for example the United Kingdom, have outright banned these machines. In Australia, there was recently another study that was done.

Australian authorities contacted the top 90 people who transacted on cryptocurrency kiosks, and they found that 85% of them were scam victims.

These machines are also a perfect vector for money laundering.

Individuals are able to bring money, any amount of money, from anywhere and put it into this machine and, and, and turn it into a cryptocurrency of some sort, and in essence launder that money right there in that transaction. They're able to then take that cryptocurrency and out in other cryptocurrency apps, things like that, and in essence wash it. The bulk of cash that is deposited on these machines, we've— the FBI has found, have ended up on exchanges overseas. And they say that the prevalence of such overseas transactions raises the Questions about the company's claims that it's only a small minority of their users' transactions that are illegitimate. And that's because, you know, if that money is going to overseas markets, it is likely the result of a fraudulent transaction and not a transaction of you behaving in a legitimate manner.

It is also You know, according to Secret Service officials who are heavily involved in the enforcement of this, it's likely a money laundering indicator if a large fee is charged for a transaction of this type. So 20 to 30% fee being charged on a transaction and having somebody still willing to pay that fee even though there are other mechanisms. I could go to online crypto exchanges and pay a 2% fee instead of a 20% or 30% fee. And so because individuals are still willing to pay that high fee, it's also an indicator of illegitimate transactions.

CryptoKiosks throughout this whole process have really claimed no liability, so far as arguing in state supreme courts that they really are just a sort of a middleman. They are providing a service. They're not involved in this fraud in any way, and really they're doing everything that they can in order to stop this fraud, including putting disclaimers and warnings on their machines Um, but then that's sort of a catch-22, because then they're using those warnings and disclaimers in those Supreme Court cases to argue that these individuals who are being coached past this screen by somebody who's scamming them, um, because they've done that, they have, in essence, consented to the company's requirements, and those Supreme Courts have found those arguments to be compelling. And so, um, because these individuals are bypassing these screens, they're not really entitled to any sort of refund on the other side.

Scammers in some states, they have put in place cryptocurrency laws. For example, in this bill, there's a 48-hour hold law on new accounts. And in theory, that's a good idea, but what we're seeing is that scammers are coaching these individuals to use already established accounts that the scammer has set up. And so they're able to sort of bypass this 48-hour restriction or this new account restriction.

And again, Because the individual has bypassed the security and put the, you know, however much money into this scammer's account, the cryptocurrency company is saying, hey, we're not liable, we had no part in this, and they're fighting in court giving any sort of refund to individuals.

So a number of states have already enacted cryptocurrency legislation. And in a number of those states, what they've been able to do is actually seek refunds for fraudulent transactions from those crypto kiosk operators. And so this is just a non-comprehensive list— excuse me— of states that have put in place some sort of crypto language, and then their state's attorneys general have been able to seek some sort of refund for individuals who've been defrauded by these companies.

So this is a map from AARP of states that currently have put in place cryptocurrency legislation or currently looking at cryptocurrency legislation. You see Alaska has a bill introduced and hopefully soon we see Alaska changed to dark red.

So what happens after legislation at the— we're actually missing a slide here, but I just wanted to very quickly highlight what this legislation does and the number of different protections that are in this legislation. So it This legislation would require a virtual currency kiosk to hold a money transmission license, and they would be required to be registered and approved by the department. It would require a 48-hour hold on first-time users. It would report— require reporting of transactions every 45 days to the department. It would require disclosures and warnings on the kiosk itself.

It would have some fraud and anti-money laundering protections. It would provide for refunds in the cases of fraud. It would require or put in place a $1,000 daily transaction limit and a $10,000 monthly transaction limit. It would put in place a 3% fee cap, so these kiosks couldn't charge a 20 or 30% fee. They would be capped at 3%.

And then it requires Access to Information for Law Enforcement and Investigations.

And I just, I sort of want to get out ahead of an argument that these cryptocurrency kiosk companies have made throughout this process. And that's that legislation restricting their ability to perform the business that they do would put them out of business. They've said that this 3% fee is something that they wouldn't be able to— they wouldn't be able to continue operating in Alaska if that were something that were to go through. And that's unfortunate. Our office feels that these are pretty simple consumer protections and something that we want in place in order to protect Alaskans from being defrauded by bad actors.

Workers, really. So lastly, I just, you know, what happens if these companies were to leave? You know, they say this legislation wouldn't allow them to operate. So in other places, they have enacted similar legislation. There have not been any complaints that we've seen from the general public.

And in Some places they've gone so far as to just have an outright ban on these kiosks. That's not something that we're proposing, um, but in those places where they have had an outright ban, so for example Spokane, Washington, um, the, the member that carried that legislation on that city assembly has said that they've had no complaints about the removal of these kiosks. So it's, it's really not something that I think that the general public is concerned about losing access to, as there are many different ways to, to be able to purchase cryptocurrency if that's something that you're interested in. Okay. Co-chair Fields, uh, through the chair.

Oh, okay. Um, seems like this is a really easy way for drug dealers to launder money. How much evidence do we have of that happening? Obviously the drug dealers aren't going to come to this hearing and complain about how we're making it inconvenient for them to operate. Through the Chair, Co-Chair Fields, yeah, I don't have any specific numbers on what would be considered, you know, quote-unquote, like, drug money that was moving through these kiosks.

It's possible that Department of Public Safety might have some, some better estimates. But from what I've seen, these kiosk operators are not super forthright in, in, I guess, divulging that information. And even in cases where they are, it's not always clear where this money is going, whose wallet it has gone to. A lot of times it gets bounced from wallet to wallet to wallet. And so it becomes really difficult to say say that that specific transaction was something that was done in a fraudulent way.

But what we are able to say is that, you know, as a volume total, that, you know, 90% of the money that is moving through this system seems to be because of fraud. And so half of the people that are transacting on them are because of fraud, and then 90% of the volume of cash is because of fraud. Follow-up? Um, through the chair, I wonder— and I totally support the bill, I mean, widely documented why we need it. Um, I'm just curious if the 48 hours is sufficient.

I mean, typically with elder fraud, an elderly person is manipulated, they're taken to this kiosk, a day or two later they tell their children, their children are deeply concerned, they try to get the money back. I mean, I wonder if we need like more like 4 days, 5 days a week So that typically the kids of defrauded elders have an opportunity to get that money back. Yeah. Through the Chair, Co-Chair Fields, that is something that Representative Moore would definitely be open to. The 48-hour restriction was an amendment that was put in in the last committee.

We did raise some concerns, as we noted in this presentation here, that bad actors coach individuals around that new account restriction. And so what we had, what we were recommending at that, at that moment was possibly applying it to all accounts. Whatever, whatever hold you're putting on, apply it to all account transactions. Okay. Yeah, through the chair, if I might follow up.

I would wonder if we could do that and maybe make it like 5 days, and that would again just give children of their elder parents a greater opportunity to recover that money. And maybe my staff can work with your boss on that amendment and any others that might be necessary to further strengthen the bill. Thank you, Co-Chair Fields. We're going to turn to Representative Kallum, and then we will turn to Representative Nelson, and then Representative Sadler. Thank you, Chair Mr.

Chair, so I'm still getting up to speed on what these things are. What is the legitimate use for this machine? What would someone actually go there to do if it wasn't fraud? Through the Chair, Representative Kellom, that's a good question. I am not a cryptocurrency kiosk operator, so personally I don't I don't see many instances where these machines exist in a space for anything that's not necessarily nefarious.

The kiosk operators, at least from what I've heard, argue that there is an individual in the United States who for one reason or another cannot exist or chooses not to exist within the US banking system. They don't want to put their money in a bank. Perhaps they have outstanding tax issues, whatever.

Their argument is that they're catering to these individuals who can't take their money to a bank for one reason or another are able to put it into this, this machine, buy some cryptocurrency, and then do with that cryptocurrency what they will.

So they follow up— follow up. So you just put money in and you're buying crypto. This is for the people that don't want to be a part of the regular banking banking system. I mean, that's, that's what they say these are for. Yeah, through the chair.

Yeah, theoretically it, it just a vending machine that you feed money into and then yeah, that takes up. And could I have one other? Representative Klum. I just want to clarify because I see ARP is all over this. Can you tell me what the intersection, this machine and elderly people?

Yeah, so You know, in the state of Maine and a number of other states, when their state attorneys general have looked into this issue, what they're finding is that 70% of the individuals who are being defrauded out of this money are 60 years of age or older. And so because such a high number of elderly individuals are being defrauded out of large amounts of money, sometimes their life savings. AARP has taken notice. They have, I believe, you know, specific fraud departments. And so they've been going around the United States advocating to different legislatures about this issue and trying to raise awareness because it's something that is— it's a relatively new issue.

If you look at the FBI IC3 data, Even back in, in 2022, this, this kiosk fraud is not something that, that was a very prevalent issue. And it, year over year, you've seen 100%, 200% increases in the number of fraud transactions on these machines. So one follow-up or clarification? Follow-up. 60 And up.

I better be careful, I guess. So So, okay, so I'm just trying to connect the dots for the public. So it's not that seniors are going to the machines and buying a bunch of crypto. You're saying that someone outside is saying you need to go deposit money in this machine for some other reason, and the seniors don't understand that it's fraud. Through the chair, Representative Kolumba, yes, I see what you're getting at now.

This is, um, you get a text message on your phone that says that you have an outstanding warrant, or phone call, somebody spews a series of Alaska statutes at you, says you missed your jury duty, um, the police are coming to get you right now, you have to go get, you know, however much money out of your bank account and put it into this machine, um, and, and they walk these individuals through that entire process. And it doesn't have to just be, um, that sort of fraud. There's also, um, like, I believe it's called, like, IT fraud. Um, so you Google, um, you know, like, Best Buy or Amazon or whatever, and the first result that comes up in Google might not necessarily be what you're actually looking for. It might be a secondary website or some scam website.

And they're sort of doing this, the same thing on the, you know, this cryptocurrency kiosk. So like if you go into that, that fraud website and then, you know, you get a phone call from— they spoof like Amazon's warehouse and they're saying like, oh, you have, you know, some bug on your computer and it's, it's impacting all of your banking stuff. And, you know, then they hang up up, and now they spoof a call from like Bank of America because you've told them that your banking stuff is with Bank of America or whatever on that previous phone. So they sort of continue this series of fraud through a number of different aliases, I guess. And that can really run the gambit for everything from this IT fraud like I'm saying.

Sometimes they'll call, and if they have enough information and enough background on you They will try to pretend to be like a family relative, or, you know, it's really a lot of different types of this sort of fraud can really be funneled into these machines in order for these scammers to be able to receive those funds that they're trying to get. It doesn't have to be— it's not like, go to the store and buy the credit card and tell me the back of credit card anymore. Now they are doing this method. Okay. Great.

Thank you. Thanks for the clarification. I just want to remind the committee, looking at the time, we do have a stacked-up queue, plus we still have invited testimony as well, and then public testimony as well. And so, for the committee's awareness, we also have Tracy Reno, who is the Director of the Division of Banking and Securities, online to help answer questions And I think I'm going to put a pause in things right now so we can hear from the invited testifier. So with that, we're going to turn to Ms. Clark Flint Barr.

Ms. Flint Barr, if you could please put yourself on the record and begin your invited testimony. Thank you.

Thank you. I'm going to see if I can share my screen.

We can see your screen. Wonderful. Thank you so much, Chair Fields, Chair Holland, members of the committee. For the record, my name is Claire Flint Barr, and I am a Government Affairs Director with AARP. Thank you for inviting me to testify today.

Before joining AARP 2.5 years ago, I worked for a company that built cryptocurrency investigation Fraud detection software. So I spent a lot of time looking at how cryptocurrency can be and is used in fraud. And before that, I worked for the FBI where I was an intelligence analyst and I looked at darknet marketplaces and how they were used to sell, you know, fake IDs that could be used to defraud people as well as drugs. So there's a lot of crypto investigations there as well.

So to the question earlier asked, why is AARP working on this? AARP has a Fraud Watch Network which does consumer education and awareness on different fraud issues. We also run a helpline for victims of fraud and for their family members, and we get about 100,000 calls a year from these victims. And one of the things that we have been hearing for 3 or 4 years now, over and over, is that people are being coerced into putting cash into these machines and then they're having it stolen from them. And I want to be clear, AARP is not anti-cryptocurrency.

We simply want to make sure that there are adequate protections in place to prevent fraud victims from being sent to these machines by criminals and having their hard-earned money stolen from them. So as was stated earlier, Cryptocurrency kiosks can often look and operate like bank ATMs, but they lack the consumer protections that we expect from our traditional financial institutions. And what makes these machines uniquely devastating when they're used by criminals is the combination of speed— the money can move from the victim to the criminal almost immediately— irreversibility— cryptocurrency transactions are not reversible. So, this means that once the money is sent, there is frequently little or no recourse for the victims, and a lack of meaningful protections at the state level in many jurisdictions. And what you'll likely hear from industry is that only a fraction of the transactions with their machines are the result of fraud, but this really could not be farther from the truth.

Inti spoke earlier about the investigation that the D.C. Attorney General did. The Attorney General of Iowa and Alabama have also done investigations, as has Maine and a number of other states. And in one of these analyses, they found that 94% of one of the operator's transactions were the result of fraud or scams. And that operator is one of the top operators in Alaska. So let me repeat that: 94% of their transactions were the result of scam victims being coerced or convinced into sending money via these machines.

Only 6% of their transactions were from willing customers, knowing customers. And for the other operator, also a leading operator in Alaska, the number was even higher. It was 98% of their transactions. And these numbers are horrifying and they really show the scale of the fraud that's happening here. And how kiosks have become a perfect tool for scammers.

And this has real consequences not only for individual victims, but also for communities, because criminals are stealing an average of $40,000 from older victims in crypto kiosk-related fraud nationwide. And that's— I mean, that's the kind of loss that's really devastating. That's years of groceries, housing costs, medical costs that otherwise would be circulating in our communities.

I wanted to share a few key data points from the FBI's Internet Crime Complaint Center, or IC3, report. They put out annual reports and they released an updated one earlier this month, and they highlighted the, the amount of illicit activity happening in the cryptocurrency ATM or cryptocurrency kiosk space, noting that in 2025 they got nearly 14,000 complaints related to fraud and cryptocurrency kiosks totaling almost half a billion dollars. And it's really important to understand, too, that these figures are a significant undercount. These figures are best understood as a floor of the amount of fraud that happened, not a ceiling. Underreported because the FBI IC3 data really, it only captures the reports that were made to the IC3.

And many victims report locally rather than through federal channels. And only 10 to 15% of victims of fraud report at all. So we know the true scale of the fraud that's happening here is much, much larger. I also wanted to share the Alaska data. We don't have the 2025 data for the state crypto kiosk fraud yet, but in 2024, IC3 recorded 48 complaints involving cryptocurrency kiosks in Alaska with reported losses of more than $900,000.

And this is a huge jump from 2023 when IC3 reported only 2 complaints with reported losses of $36,000. So you can see there's a concerning pattern. It's a very sharp increase. And as it was discussed earlier as well, I want to point out the age groups in this chart. And you'll see from the numbers that are reported, the fraud data shows that older adults are disproportionately impacted from this particular type of fraud, as they are for most types of fraud and financial exploitation.

So what exactly are these machines? They're sometimes called crypto ATMs, Bitcoin ATMs, BTMs, virtual currency kiosks. Again, they look like ATMs and they allow you to exchange cash for cryptocurrency. And you'll find them in everyday locations, convenience stores, gas stations. My supermarket has one.

And they look like traditional bank accounts, or sorry, bank ATMs to the extent that like I've heard from people who I've said, you know, I went to the convenience store and I was trying to take money out of the ATM and I realized, oh no, this isn't even a real ATM, this is a crypto ATM. But the way that it works is a person, usually a fraud victim as the data has shown here, will approach the kiosk and they choose a type of transaction that they want to do, whether they want to buy Bitcoin or Ether or another type of cryptocurrency, and the kiosk will ask them to provide a destination or an address for the cryptocurrency. So they're looking for a digital wallet address that the money is going to be sent to in cryptocurrency. And once that's been provided, the funds— the person will feed the cash into the machine and then the funds move very rapidly. And it's very easy for criminals to quickly continue moving that money.

And as Andy said, move it offshore to offshore exchanges. Nigerian and Chinese offshore exchanges are particularly common with this type of fraud. At the federal level, cryptocurrency kiosk operators are regulated as money services businesses, and they have to register with the Treasury Department. But it's not a licensing regime, it's a registration regime. So there's a lot less oversight than you would have with your typical financial institution.

And many states, although this is changing, have not yet put additional protections in place for consumers beyond money transmitter licensing. I also want to note that, that these machines are different from the larger mainstream cryptocurrency businesses that you see advertising in flashy Super Bowl ads like Coinbase or Kraken, Gemini. For one thing, if you were to exchange your your cash for cryptocurrency on one of the mainstream exchanges, you pay 1 to 2% in transaction fees while cryptocurrency kiosks charge some— charge people somewhere between 7 to 50% is the spread that we've seen. But it's usually around 25% to 35% in transaction fees. So even if you're not a victim of fraud and you're simply using these machines to invest getting a pretty big haircut on the money that you're putting into these machines.

And that's a, you know, pretty big cut to your investment. Ms. Flint-Barr, this is Co-Chair Hall. We are starting to run short on time, so I'm hoping that you could maybe wrap up your invited testimony in the next like 2 to 3 minutes because we still have to go to public testimony and committee questions. There is a lot of interest in this bill and quite a lot of support. So with that, Please, if you could, just give it a couple more minutes.

Sure, thank you. Thank you. Um, I'm going to skip then to, um, the legislative provisions that I think are particularly critical. Uh, the first is the daily transaction limit. Uh, the proposed bill has a daily transaction limit of $1,000 per day or $10,000 in a 30-day period.

And this provision is really key. It slows down The scam, it stops the bleeding, it ensures that people are not facing these massive losses that they have been. And it's an approach that we've seen be very successful in a number of states, including Iowa, Maine, California. And I want to anticipate here something that you're going to hear from industry if they, if they testify. They often testify that a low daily transaction limit— and I'll say, I don't think $1,000 is very low because What we hear from kiosk operators is that their average transaction size is somewhere around $300, $350.

So I think $1,000 for a daily transaction limit is pretty generous. But they will argue that a low daily transaction limit will result in a lack of reporting to law enforcement. And this is simply not accurate. There's no threshold for filing Suspicious Activity Reports, also called SARs. To the federal government.

The 31 CFR 1022 makes it very clear that these reports can be filed on any amount of money that's suspicious. $2,000 Is when these, these companies are required to file these SARs. So if a cryptocurrency business is not filing SARs on amounts less than $2,000, that's a business decision that they have made. And I just want to underscore, implementing higher limits simply allows victims to lose money more quickly with very little chance of recovery. And we've seen this in states like Minnesota, which initially put a daily transaction limit of just $2,000 for new customers, and it was so ineffective that Minnesota is currently trying to ban the machines entirely.

I also want to emphasize that the daily transaction limit is really key whether there's an initial hold period or not. Scammers are really patient. These scams often last 5 months, 6 months. They groom their victims for such a long time, they are happy to wait 3 days, 5 days, however long to get their money. So a hold is fine as a point of friction, but a low daily transaction limit, or relatively low daily transaction limit, is much more impactful at stopping people from having tremendous amounts of money stolen from them.

So, um, yeah, I, I will stop there. See if you have any questions. Thank you very much, uh, Ms. Flynnbar. We have a question for you from Representative Nelson. Thank you, uh, Madam Co-chair.

Uh, Ms. Flynnborn, uh, I appreciate your testimony. Um, I— my grandma with Alzheimer's has been a victim of scam, not necessarily through this, but through a gift card scam. Can you, or do you have any data on how extensive the Bitcoin ATM fraud is when compared to, say, gift card scams or wire transfer scams or some of the more well-known ones through prior history?

Yes. Thank you for the question. So the top— across all scams with older adults, the top ways that the money is moving is cryptocurrency and wire transfers. The difference between the two of those is that wire transfers take time and there's a bank looking at it doing— you know, there's a regulated entity that is looking at the transactions and going, well, that suspicious. So we're going to, we're going to call them and we're going to see what's going on here.

Whereas with cryptocurrency, there's no— I'm with these machines. There's nobody who's looking at those transactions, stopping them if they're suspicious. And so the money can move very quickly. It's irreversible. It can go abroad really quickly in a way that you just can't do that with normal wire transfers.

And with gift cards, there is a lot of states have put greater protections in place for gift cards. There is also pretty significant limits on how much you can buy in gift cards, and that is another point of friction that has proven really effective in helping to tamper down that fraud. Just one quick follow-up. Follow-up. Thank you.

Through the Co-Chair to Ms. Flynn-Barnes, no, I appreciate that, but I'm talking directly linked to the Bitcoin ATMs or the depots or whatever these are. What's the percentage of them that can be traced to say, hey, this is how many were scammed through the Bitcoin ATMs when compared to utilizing the gift cards, utilizing bank wire transfers? Do you have an idea of where that kind of lies? I think that's data that we could get through you. Either through the FTC or the FBI, but I don't think we have direct comparison of kiosks to give cards to other specific types of money transfer immediately available.

But we can get that. Yeah, if you could, that would be perfect. Thank you. Ms. Flint Barr, if you could please share that with my office servers and Representative Field's office, we can distribute that to the committee fully. Additional questions?

Yeah. Sorry, I would just underscore that these are the same scams, but crypto, like, that we see with all of these different payment methods, but cryptocurrency and cryptocurrency kiosks are really just one of the, the choice methods of moving it because of how difficult it is to claw that money back. Thank you. Thank you, Ms. Flint Barr. With that, I'm going to turn to public testimony.

Public testimony is Now open. I'm going to limit public testimony due to our time constraints to 2 minutes. Is there anybody in the room who would like to testify? Seeing none, I will turn online, and I see one person online to testify, Mr. Jed Roffers, the Director of Law Enforcement Relations with CoinFlip, calling from Appleton, Wisconsin. Mr. Roffers, would you please put yourself on the record?

Your 2 minutes will begin as soon as you begin speaking.

Uh, yes, thank you. Can you hear me okay? Yes, we can.

Okay, great. Um, good afternoon and thank you for the opportunity to speak today. My name is Jed Ruffers. I am the Director of Law Enforcement Relations for CoinFlip, which is a cryptocurrency kiosk company that's headquartered in Chicago. Uh, before joining CoinFlip, I spent 18 years in law enforcement, which included 13 years as a special agent with the Wisconsin Department of Justice.

I also served as a federal task force officer during that time. And during my time as a criminal investigator, I became a subject matter expert in crypto-enabled crimes, particularly using blockchain data to trace funds, to identify suspects, and to seize digital assets when the circumstances warranted That experience is really what brings me here today. I do believe that crypto kiosks do serve an important purpose, allowing customers easy access to an ever-growing decentralized financial ecosystem, and that they do play that vital role. CoinFlip is the only crypto kiosk company I considered joining after leaving law enforcement because I had already seen how the company operates. From the outside.

Coinflip prioritizes consumer protection by establishing clear policies, strong compliance programs, and constantly engaging with law enforcement, regulators, and lawmakers to, to solve problems and to deal with these issues head-on. So in my current role, I work directly with law enforcement across the country. That includes helping them understand transactions, responding to inquiries, and making sure that they have have the information they need from us to do their jobs effectively. So this kind of collaboration only works when a company is intentional, uh, about those relationships. And I appreciate the, the opportunity to share my experience, and I'm happy to answer any questions the, the members of the committee may have.

Thank you, Mr. Roffers. Representative Sadler has a question. Thank you, sir. Um, do I understand that these kiosks kiosks let a person put in crypto and get cash out? Is it a two-way street or just a one-way?

Yes, sir. So we do have kiosks available that are two-way, that work both ways. We do offer those services, at least CoinFlip does. I can't speak for any other company in that regard. So you're saying that not all, that only a few do allow you to put in crypto and get cash out?

Correct. We do have those— we call them two-way services. Not every kiosk has those capabilities, but we do offer some that do. With a follow-up asking how many would be appropriate or not. We're gonna turn to Representative Kulum and we'll come back.

And I, again, I am concerned about time. Representative Kulum. Yeah, thank you, Chair, for allowing me to to ask a question. So, Mr. Ruffers, I think it is. So I don't know if you have been listening to the hearing, but I would like to ask you about CoinFlip's service fees.

There seems to be a lot of concern about how much is charged for these services. So what is CoinFlip's policy on that? How much do you guys charge?

Yes, thank you for for asking that question. So our fees, at least CoinFlip's fees, are usually not as high as many of our competitors. We keep here in the kind of the 25 to 30% range. Our fees are not that high. They usually range somewhere between the 12 to 18% range, and sometimes those fees can become even lower when repeat customers use promo codes to knock that down even further.

But as with most industries, our fees reflect the convenience that our machines provide by allowing simple, quick, and secure transactions. The fees, you know, they help support 24-hour customer service. We pay rental fees to local businesses that host the kiosk, which directly contribute to the local economy. The fees help pay for armored car services that transport the cash. And keep in mind, we need to buy the digital assets from another broker.

So it's not like CoinFlip has a bunch of Bitcoin or Ethereum or other digital assets that we are selling directly. We act as, as a middleman between the customer and another company that that we are purchasing the crypto from. So that's the idea behind the fees. Thank you. Representative Sadler.

Just to follow up, what percentage of your— what percentage, Mr. Ruffers, what percentage of your kiosks are two-way?

I apologize, sir. I do not have that exact figure. I just joined the team here. I get that. Coin flip back in January.

I am aware that some of our kiosks offer that capability, but I apologize, I don't know. If you want to let the committee know and they will pass it on to me, that would be great. Thanks. Yes, Mr. Roffers, if you could please submit the answer to that question to my office, then we can make sure that the committee members receive it. Any question?

Actually, that to you, Representative Sadler. Information like that, does that go on BASIS or does it actually get distributed to us? It will be distributed to you and put on BASIS. Okay, uh, not seeing anybody else online. I am going to close public testimony.

Okay, um, I am trying to be very conscientious of the time. Um, are there any final questions at this time. Actually, I believe Representative Nelson, you had a question, I think, for the bill sponsor. Uh, well, one for Mr. Ruffers, but also for the— yeah, I'm picking up the queue from where we left off before we went into invited and public testimony, and I have you next in the queue.

Yeah, perfect. Um, my whole thing was, uh, looking at the mandatory fraud warning section you have in there. I know when purchasing gift cards Uh, nowadays there are a multitude of warnings, uh, and so I was wanting to see what the CoinFlip guy was saying on, uh, what kind of warnings they have for their, uh, systems, and then what this bill would kind of enforce or restrict onto it and see if, if that has any, uh, effect. Uh, through the chair, Representative Nelson, for the record, and Tamia Harbison, staff to Representative Moore. In the previous committee, we were provided some images that showed the different screens that CoinFlip, for example, has.

They do have some screens that have a few different disclaimers on them that individuals do have to click through, but what we've seen is the problem with those screens is that individuals are sort of being coached through on the phone. Oh, don't worry about that. Screen, just click through, click, click next. And then again, that sort of waives the liability for the crypto kiosk company. What this bill would do, it would add some additional language.

That is definitely something that this committee has the ability to work on. In the previous committee, there was some discussion with members about, you know, maybe specific language about like a government 'An entity will never ask you to put money into this machine,' or some sort of language that the committee is comfortable with as an additional disclaimer that would be required for all cryptocurrency operators. And so this is something that CoinFlip does on their own discretion. And so this bill would just mandate that that is something that happens. Presence on all kiosks.

Okay, Representative Satterlund. Thank you. I just— I'm concerned about, uh, well, I'm curious to know how much convenience in trading currency for crypto is necessary. My question is going to be to Mr. Jeffers, or I'm sorry, Mr. Harbison. Do you know what proportion of these kiosks let people put in crypto and get cash out?

And the other question is, what are the other normal ways of trading dollars for currency? For cryptocurrency. Mr. Jeffers might— Ruffers might address that one. Sorry. Yeah, through the Chair, Representative Sadler, in terms of this, the second part of your question first.

So normally you are putting, you know, you're putting money into the Sorry, sorry, could you repeat your question? I guess my question is, what are the other normal ways of trading dollars for cryptocurrency? Yeah, so the other normal ways—. So normally I would have like my bank account on my phone. I use like a cryptocurrency app on my phone, and that has the connection with my bank account.

And I go into that app and I say I want to purchase X amount of whatever cryptocurrency, and it completes that, that transaction. In that transaction, normally there's these additional institutions, as was brought up by Ms. Flint Barr, that, you know, your, your normal banking institution is taking a look at that the same as they do for all of these other transactions. And if anything's sort of out of line, they'll flag that. These cryptocurrency kiosks don't really have any of that sort of regulation. I can put as much money into this kiosk kiosk, and then it goes into my wallet.

And then theoretically, I can access that wallet from my online, you know, put it into my online cryptocurrency on my phone. And again, that's a way to sort of like launder that money, as I was saying earlier. As far as the number of crypto kiosks that you can put money into and get money back out of, sort of that, you know, back and forth transaction, there are a very small number of those kiosks across the country. And what we actually see from reporting is that individuals find that they're— even if it has that functionality, they're not able to actually complete their transaction as advertised and get the money back out of the machine. As far as the number of those machines in Alaska for Coin Flip, I don't believe that they have any.

Thank you. Representative Sadler, we have to move on, and so I encourage you and any other members of the committee to please work with the bill sponsor offline so that your answers can be— your questions can be answered. Mr. Harbison, thank you very much for this piece of legislation. Clearly it's very important, and thank you for your time today. We're going to set an amendment deadline for this bill for next Thursday, April 23rd, at 5 PM, and we're going to set this bill aside for a future date.

Thank you very much, Mr. Harbison. Thank you. Um, Chair? Yeah, I wonder how much cash they can get out.

Please. Oh, I'm sorry.

Okay, we are back on record. Next, we're going to consider the third bill on the agenda, HB 244, CNA training, representative— sponsored by Representative Representative Underwood, and she is here with her staff, Buddy Witt, as well. Representative Underwood, thank you very much for joining us today. Please give a very brief recap of what the bill says. Yeah, thank you for having me, Co-Chair Hall and members of the committee.

Brief recap is that this is a regulatory change for CNA to add more extensive Alzheimer's and dementia training to when CNAs are getting licensed. Okay, thank you very much. We set an amendment deadline for this bill at 9 AM this morning. We received one amendment from Representative Carrick, who I believe is online on Teams. Representative Carrick, do you have a motion?

Uh, good afternoon, Chair. I am not going to be offering Amendment Number 1, but I want to just thank the bill sponsor for working with my us on thinking about this bill. Thank you, Representative Carrick. We did not receive any other amendments, so that concludes our work there. We will now move on to public testimony.

Public testimony is now open.

Representative Sadler. Yes, ma'am. I did not get an amendment. I understand it was not offered, but if there was an amendment, I did not receive a copy. If you have a copy, I'd appreciate knowing I have my personal copy here that I will hand to my staff and she can take care of it.

Okay, anybody in the room interested in providing public testimony? Seeing none, we will go online. And I see Deborah Adams calling from Cordova. Ms. Adams, would you please put yourself on the record? You have 2 minutes for your testimony.

Ms. Adams, are you there?

She's unmuted. Can you hear me now? We can hear you, Ms. Adams.

Okay, thank you. Uh, thanks for taking my testimony this afternoon, um, on HB 244. I live in Cordova, and, um, I had a husband, um, who passed away in 2017 with dementia. So this bill is close to my heart. Just a little bit of background real quickly.

There's probably an estimated 12,000 Alaskans who have— who are living with some form of dementia right now in the state or some form of it. It's not necessarily Alzheimer's. But my husband passed away from what we believe was Alzheimer's. HB 244 would help modernize CNA training requirements. And with respect to my story, I was fortunate that my husband didn't become a belligerent and rageful Alzheimer's patient, so I was able to care for him at home with someone with— who had no training, just simply was a nice person.

But dementia patients have specific care needs that CNAs need to be trained in managing. They need help with the bathroom. They need help with bathing. They need help with dressing and eating. But you need to factor in the fact that an Alzheimer's patient, a dementia patient, might not understand the world around them at all.

And they also might not be able to speak, in the case of my husband. And patients need help with all of their daily life issues in late stages of Alzheimer's and dementia. Specialized care would give them the dignity that they need in the late stages of their life. So skilled CNA would not be flustered by any of these behaviors because sometimes they're frightened, sometimes they're combative. It's an ethical approach to caring for Alzheimer's patients, and I would just urge the committee to support this bill.

Thank you. Thank you very much, Ms. Adams, for your testimony. I'm not seeing anybody else online, so I will close public testimony. What is the will of the committee, Mr. Co-chair?

I move to report House Bill 244, work order 34-LS, LS1207/A as amended out of committee with individual recommendations and accompanying fiscal notes. Okay, hearing no objection, HB 244, Work Order 34-LS1207/A, is reported out of committee with individual recommendations and accompanying fiscal notes. We are going to take a brief at ease so that we can to sign the committee paperwork. At ease.

Okay, we are back on record to our fourth and final bill for the agenda today, HB 386, gaming electronic, electronic pull tabs. Staff to Senator Bjorkman, Conrad Jackson, thank you for joining us here today. I also see that Mix Anderson is with you here too. Would you please put yourself on the record and begin your presentation? Thank you, Co-Chair Hall.

For the record, Conrad Jackson, staff to Senator Bjorkman. Um, and for the record, Evan Anderson, staff to Rep Fields. Thank you. The goal of the bill before you, House Bill 386, is to modernize Alaska's charitable gaming laws to provide maximum benefit for the nonprofits while retaining the limits on charitable gaming that keep it fun but also away from the pitfalls of full-on gambling. Charitable gaming in Alaska is a vitally important piece of nonprofits.

High school and club youth sports, Alaska Baseball League, senior citizen centers, fraternal and service— veteran service organizations all raise money to benefit people across Alaska.

From college scholarships to victims of house fires to natural disasters, from sporting event sponsorships to helping fundraise for our local food banks. All of these are, are helped by the monies raised through charitable gaming, allowing these nonprofits to continue to grow and flourish. Really pays dividends to our state far beyond what could be measured by just mere dollars. This bill is responsible for the modernization of an already established method of gaming, and it has very narrow application. Pull tabs, or rippies, I think as we all know them, are a common method of charitable gaming.

Between 85% and 90% of every dollar spent is given back to the players in winnings. Nonprofits and the businesses who supply and sell pull tabs have to split what remains to make a profit. This split is used to be more than enough to meet the mission of the nonprofit. It's the cost of paper pull tabs used to be really less than a cent apiece. Now they're over 5 cents apiece.

So the rising cost of paper pull tabs, the labor, utilities, all of those things, as we know, are going up in Alaska. And it's made it increasingly difficult for the charities to raise money from paper pull tabs. The electronic pull tabs, the, the, the really the most of this bill, uh, is it really an effective way to modernize pull tabs, uh, to make charitable gaming viable again? E-tabs played on tablets are fun as well as socially engaging. They maintain the spirit of play and the experience of traditional pull tabs while bringing in more revenue to charitable organizations.

As many as 13 other states have already made changes to their gaming statutes to allow for ETABS. And we've taken, we think, the best examples of those models included and included them in the bill. And really finding things that will work well for Alaska. Tried to learn from some of the mistakes of other states.

Those really pro-gaming ideas include playing on tablets to retain that social aspect of Rippy's pull tabs. We avoid the tabletop or freestanding cabinets that lend themselves to more of a casino-type atmosphere. I think that's been one of the, I guess, more hotly debated issues in the conversations about the ETAB bill. And that's been a key piece that I think retains Alaska's charitable gaming, not casino-style gaming thought process. Further, the legislation has a positive fiscal note.

It's estimated by Department of Revenue to, to be bringing in anywhere between $500,000 and $5.5 million into the Treasury. No small change. And the charitable organizations in all of our communities, in your communities, will be the beneficiary of this legislation. So in short, Madam Co-Chair, just a brief summary.

I guess I won't bother you with 55 pages of a sectional, but I'm happy to go through as much as you would like. Thank you, Mr. Jackson. Co-Chair Fields has a question. Thanks.

Well, first I wanted to state that we're getting this bill introduced. The Senate version is moving fast. Faster. So the idea here is start getting educated on the bill so when the Senate version comes over we're more prepared to deal with it. Um, and I was hoping through the chair that, uh, Mr. Jackson, you could walk us through the economics of the split in terms of what the player gets back, charitable organizations get, and what the operators get under paper pull tabs versus under the bill and kind of the key policy considerations that we might want to think about if our shared goal is maximizing revenue for the nonprofits.

Through the Chair, Representative Fields, I do have a little bit of a chart. I don't believe members have it in front of them, but I'm happy to provide that to the committee aide. It might actually make more sense to have it in front of members. Verbally, I've always found numbers they sort of sail over at least my head. I'm sure you guys are much more competent with that.

But if we could have just a couple of minutes, Madam Chair, to just run down the hall and make some copies, I think that might help everyone. That is quite all right. Yes. While we're waiting, Representative Sadler has a question. I could fill some time.

I know you can. You definitely can. So I guess— thank you, Madam Chair, I guess I'm going to be devil's advocate, but you said the freestanding or the floor-standing machines are more casino, and it sounds like it might be possible to maximize revenue or wring more money out of pull-tab players with the tablets. But could they make more if they did go to the freestanding casino-type things? And if not, why not?

Through the chair, Representative Sadler, I I can't say whether one would make more money or the other. The goal of this legislation is first and foremost to provide as much revenue, additional revenue, to the charities, to the nonprofits. Of course, the manufacturers, the distributors, the folks who supply the RIPPEs, electronic in this case, will also see an increase in revenue. The reason for going with with tablets as opposed to a tabletop version or the full-on, really slot machine looking machines, is to maintain what we have now, which is a sociability aspect of the paper Rippies. I don't know how many people play Rippies in the room.

I play very seldom, but it's kind of fun to sit there with your friends, maybe pool the money. Hey, look what I won! Look at that! You can't do that with a machine. They tend to tip over and somebody gets hurt.

The idea is simply a simple tablet, "Hey, look what I won," type of conversation. We're maintaining the sociability in our fraternal organizations, in our veterans service organizations, even in Rippy parlors that may be operated by a multiple beneficiary or an operator, or even some of the local charities in my community. Have a facility that just has a central area and folks go in and play rippees. So, Representative Fields. Through the chair to Representative Saylor, I mean, one of my considerations is we're not trying to tilt the playing field either toward a bingo hall or a parlor compared to a VFW compared to a bar.

I think one of my goals is is trying to support multiple businesses and multiple charitable operators without making one more or less competitive vis-à-vis the other. And just personally, I think that tablets are an advantage in that way. If we were to go cabinets, it would go— that what are now bingo halls would become a little bit more like a casino, and I'm not sure that that is a good thing. I think when you look at the data around availability of gambling, the percentage of people suffering from gambling addiction is strongly correlated to availability of gambling. So New Jersey, for example, has 3 times higher rate of gambling addiction compared to states where gambling is less universally available.

So we have to think about those social costs. So those are some of the things I've thought about. Representative Satterthwaite, for the record, I'm not advocating, I'm just asking the question. I appreciate that. No, I like the idea.

I know that the, the pull tabs is a kind of the state backdoor to facilitate people benefiting charitable organizations without getting involved in raising taxes and distributing taxes. It's an interesting model. Thank you. Okay. With that, I think the committee now has that chart in front of them.

So Mr. Jackson, if you wouldn't mind walking us through it. Sure. Thank you, Madam Co-Chair. As members will see in that left-hand column, there's a breakdown of of each of those dollars spent for RIPI. Starting at the bottom, there's 100%, there's your dollar.

As you move up, you're going to see the manufacturer-distributor getting 35%, the permittee taking that small portion, state sales tax— or state tax, rather, on gaming of 3%, and then ultimately the big winner is the player. So 90 cents out of that dollar bill goes back to that player. Again, this is at a 90%— uh, games, the current legislation shows a 90% cap on those, on, on the prizes. That doesn't mean all games will be set at 90%. I think currently— well, I'll get out over my skis a little bit— I, I think Good way of looking at it is current games, paper pull tabs are probably set with a win ratio of about 82 to maybe 86 or 87%.

The goal with, uh, Rippies, uh, from my, my limited experience, excuse me, the way you make money on Rippies is by selling Rippies. They don't make any money sitting in a box or sitting in the machine. So you have to turn the games, you have to sell the games, you have to sell the Rippies. If players are not winning, they stop playing. They go down the street to the next business that has a higher win ratio.

As you go down the chart, you would see a vendor. Picture a permittee being some charity of your choice and a vendor being, for instance, a local bar.

Again, you've got that $1.

There's a percentage that the bar, the vendor, would take, and then you go back to the same— the distributor, the permittee, up through the tax to the state of Alaska. And you're— again, for this example, 90 cents of that dollar still goes back to the player.

You have similar, similar example just below that with an operator who would take that permit, so to speak, from a permittee and run the gaming for that entity. Again, the breakdown of the percentage, 30% to the operator, the percentage to the manufacturer/distributor, and so on up to the 90 cents.

That is paid out in playbacks. Okay. Co-chair Fields followed by Representative—. Quick question. How does it work in— through the chair and self-directed?

Are these the nonprofits actually running a pull-tab operation? I'm not familiar with that model. Through the chair, Representative Fields, yes. That would be veteran service organizations or a fraternal organization who has the tablets It's behind the bar, behind a counter, or the boxes of Rippys on a shelf. Yes, that's self-directed.

Okay. Okay. Representative Kolumb, can you—. Thank you, Chair. Through the Chair, can you tell me at the top of each of these columns, what is if manufacturers charge to the cap and using only manufacturer to publicly state rates?

I— what does that mean? Through the Chair, Representative Kolumb, as I said, the 90 90 cents on the dollar, the 90% is the cap on the prizes. So if a game was set at 90% playback, 90% win ratio, it doesn't— they don't have to be. That's just the cap. Okay.

And the other column, is that saying the same thing? Using the only manufacturer to publicly state rates? I don't—. Know what that means. You need— you know what I'm talking about?

At the top of the fact—. I'm sorry, my eyes are slowly focusing. It's okay, I didn't explain it very well, but it's the other column that's a little wider than that one. And so this— the header says using the only manufacturer to publicly state rates, and I, I just don't know what that means. We're just— it's just a different formula on what the distributor manufacturer is going to be getting if you compare the two columns just straight across, you're still 90% for the prizes, right?

State tax is still 3%. That doesn't change. Right. Then you see a permittee with 62% self-directed versus a permittee getting 66%. Well, the, the distributor manufacturer gets a little higher, a little lower percentage.

So it just changes those percentages somewhat.

The percentages from the money that would go to the distributor manufacturer versus self-directed, the manufacturers— I'm sorry, manufacturers charging to the cap versus the publicly stated rates. Okay, thanks. Mr. Jackson, I remember learning some information about ETABS last summer during the interim. I think it might be helpful for the committee, unless I'm the only dumb-dumb here, but going back and kind of describing what an operator is, what a distributor manufacturer is.

Can you define what those labels are for the committee? Through the chair, to the chair, Representative Hall, yes. The manufacturers, of course, the company who is actually printing the paper pull tabs or creating the electronic pull tab game. Electronic pull tab games are an electronic display of the paper pull tab. So they're going to look very similar.

There may be some more flashing lights and things like that, but electronically, it's just an electronic representation of that pull tab, that RIPPY. From there, the manufacturer would sell to a distributor. The requirement—. It's very similar to the tiered system that we have for alcohol distribution in the state of Alaska. You've got the manufacturer that creates the product, sells to a distributor.

The distributor then would sell to the permittee, or in this case, there's a provision in the bill that allows a distributor on behalf of a permittee to, to sell, to provide that electronic pull tab to the vendor. The vendor again being a bar or an establishment that is actually selling directly to the public if the permittee is not self-directing their games. Thank you, Mr. Jackson. I just remember last year hearing about all this for the first time, and I had no idea what any of that meant.

And so thank you for the clarity for the committee. We have time for just one more question because we are just about at time. Representative Nelson. Yeah, thank you. Uh, through the chair, to Mr. Jackson.

It would be great for the next hearing on this if we could have an example of actually from a charity of how much they receive and the breakdown from this. I understand this is the overarching kind of viewpoint, but it would be interesting to see how much a direct charity receives for each of their license that they hold? Through the chair, Representative Nelson, a charity or a nonprofit will have one gaming permit. Yes. So the amount of revenue that they would receive really depends on, well, a couple of things.

First, are they running— are they self-directed? Are they— do they have some games in-house? Do they have 1 game, 5 games, 10 games? Are they a big enough facility Do they have a vendor, a bar or two or three in the local community? Then how many boxes are in each one of those vendors?

I'm at a loss to figure out exactly how I can tell you how much a particular charity might make.

Different times of the year, I know in my experience in being a member in charge or an alternate member in charge, which is starting to get into the weeds of gaming. I apologize. There are different times of the year that gaming, charitable gaming, rippies are much more popular. As one might imagine, early October is a great time for rippie sales in Alaska. Follow-up?

Mr. Jackson, I don't think you were finished with your comment. And, and in comparison, this time of year, April 15th, not so good. Representative Nelson. Yeah, thank you, Madam Co-Chair. Mr. Jack, I understand that.

What I'm looking for is, you know, you're saying if we expand this to e-poll tabs that this is greatly going to increase how much one is in the market overall, but how much that the charities are going to intake. And that's what I'm kind of looking for is how much more is each charity going to take in if we were to adopt this piece of legislation. I, I apologize, uh, Representative Nelson, through the chair, uh, I guess I misunderstood the question. Again, what we have to fall back to is what's happened in other states. Um, in other states, I, I can, I can pull up some numbers for you, uh, for some examples of other states.

The charts that I have seen, um, in the states when they have just following legalization of ETABS the sales of electronic pull tabs go through the roof. And in comparison, the sale of paper pull tabs drop off. And over time, those lines come back together. While they may not be exactly parallel— well, I would say, I guess, parallel— but they're not at the same level. Some, one or the other, is always a little higher.

But overall, the gaming dollars that are expended in the state do go up. Alaska is obviously different. We are not connected to any other state. There's nobody crossing Canada to come play Rippies in Alaska. We have a great, a great tourism trade, but I don't expect that we will necessarily see the numbers that you might see in lower 48 states.

Who have enacted ETABS. But I think it's very safe to say we will see an increase in gaming just because of the ease of the— it's a new toy, and it's not the cardboard box that the kids play with after, after Christmas morning. This is a, this is a new way of playing. But I'm happy to pull up some of those numbers from other states.

To just show that increase in overall gaming. Okay, that's fine. Thank you very much, Mr. Jackson. We do have another committee that needs this room in a few minutes. Um, thank you very much for presenting the bill today.

We're going to set it aside for now. We will have it in front of the committee again so that we can have more questions answered. Um, with that, um, we are finished with our business today. The House Labor and Commerce Committee will meet next on Monday April 20th at 3:15 PM. This meeting is adjourned at 5:18 PM.