05/05/1994 01:30 PM House FIN

  SB 370    An Act  providing an exemption from  gambling laws                 
            for gambling  conducted by cruise  ships for their                 
            ticketed passengers  in the offshore water  of the                 
            state  outside of  ports; defining  `cruise ship';                 
            and providing for the licensing  of certain cruise                 
            ships  before  they  can conduct  gambling  in the                 
            offshore water of the state.                                       
                                                                               
            HCS CS  SB 370 (FIN) was reported out of Committee                 
            with a "do pass" recommendation  and with a fiscal                 
            note by the Department of Revenue dated 5/21/94.                   
  SENATE BILL 370                                                              
                                                                               
       "An Act providing  an exemption from gambling  laws for                 
       gambling conducted  by cruise ships  for their ticketed                 
       passengers in the  offshore water of the  state outside                 
       of ports; defining `cruise ship'; and providing for the                 
       licensing  of  certain  cruise  ships before  they  can                 
       conduct gambling in the offshore water of the state."                   
                                                                               
  Representative  Martin   noted   his   concerns   with   the                 
  legislation.  He asked if a three percent tax was charged to                 
  the cruise lines for gaming receipts  or if they were exempt                 
  from paying that fee.                                                        
  DONALD  STOLWORTHY,  DIRECTOR,  CHARITABLE GAMING  DIVISION,                 
  DEPARTMENT OF  REVENUE, replied  that the  State accesses  a                 
  three percent tax on the gross income of charities that have                 
  pull tabs.  The fee structure in the committee substitute is                 
  not based on a percentage of the adjustable income.  It is a                 
  flat rate  fee per  ship based upon  the size  of the  ship.                 
  Representative  Martin pointed out the amount received would                 
  be less than anticipated.                                                    
                                                                               
  Representative Martin asked if cruise  ships were subject to                 
  federal or state law when they sail into state waters.   Mr.                 
                                                                               
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  Stolworthy indicated this  was a  matter of dispute  between                 
  the state and the cruise lines.   Cruise lines maintain that                 
  they  are  not   subject  to  U.S.  jurisdiction   or  state                 
  jurisdiction.   The Division of  Charitable Gaming maintains                 
  that the cruise boats are subject to state law when in state                 
  waters.                                                                      
                                                                               
  Mr.  Stolworthy elaborated that the State  of Alaska and the                 
  Indian  Gaming  Law  expounds that  only  activities  can be                 
  conducted that are  authorized under state law.  The federal                 
  courts  which  regulate  that  act   have  taken  a  broader                 
  interpretation.   The  only time  the  courts have  taken  a                 
  restrictive interpretation was when  gambling activity could                 
  adversely  impact  the   tribe's  income.     The  law   was                 
  specifically established to benefit the tribes economically.                 
                                                                               
                                                                               
  Representative   Brown   clarified   that  the   State   has                 
  jurisdiction  from three miles off  shore and that there can                 
  be no gambling within three miles of a port of call.                         
                                                                               
  Representative Martin asked if the legislation would provide                 
  authority for the first time in which gambling versus gaming                 
  would  be  allowed.   Mr.  Stolworthy  replied gaming  is  a                 
  euphemism  for  gambling.    There   are  three  classes  of                 
  gaming/gambling:                                                             
                                                                               
       1.   Class #1 - For amusement.                                          
       2.   Class #2 - Bingo & pull tabs.                                      
       3.   Class #3 - Banking card games and slot machines.                   
                                                                               
  He  said  that   the  State   of  Alaska  allows   gambling.                 
  Representative Martin  noted that one  could be done  in the                 
  name of "charity" and the other could be done in the name of                 
  "free  enterprise".     Mr.  Stolworthy   replied  that   in                 
  charitable  gaming,  the  proceeds are  dedicated  to worthy                 
  causes which differs  from commercial  gaming.  Cruise  ship                 
  gambling would be strictly a commercial enterprise.                          
                                                                               
  JERRY RHEINWALD,  REPRESENTING SELF,  JUNEAU, requested  the                 
  Committee consider an  amendment.   The issue addresses  "on                 
  board promotions", and  preferential mention, an advertising                 
  scheme that  a lot  of small  merchants find  objectionable.                 
  The proposed amendment would replace the current section (c)                 
  with a total  ban of on  board advertising promotions.   The                 
  language makes it specific that the ban would be targeted to                 
  on board advertising of local merchants.                                     
                                                                               
  THOMAS  DOW,  VICE  PRESIDENT,  PRINCESS  TOURS,  ANCHORAGE,                 
  referenced the letter included in the Committee members bill                 
  packet.   [Copy  on file].    He  spoke in  support  of  the                 
  legislation which  would allow gambling aboard  cruise ships                 
                                                                               
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  within  Alaskan  waters  for   ticketed  cruise  passengers.                 
  Cruise ships would be required to pay a fee to the State for                 
  an  exemption   prior  to  conducting  gambling   under  the                 
  legislation.  He  added that  this is an  activity that  has                 
  been included for passengers  for the past twenty years  and                 
  has  not  adversely impacted  any  community.   The language                 
  specifically prohibits the operation of casinos within three                 
  miles of any port of call.  Mr. Dow spoke in  support of the                 
  amendment.                                                                   
                                                                               
  Co-Chair MacLean MOVED that the version before the Committee                 
  be HCS CS  SB 370 (JUD).   There being NO OBJECTION,  it was                 
  adopted.                                                                     
                                                                               
  Representative Navarre MOVED to adopt Amendment #1 including                 
  Section (A).  Representative Brown recommended deleting "in"                 
  of the title and  inserting "of".  There being  NO OBJECTION                 
  to the title change, the amendment was adopted.                              
                                                                               
  Co-Chair  MacLean MOVED to report HCS CS SB 370 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  There being NO OBJECTIONS, it was                 
  so ordered.                                                                  
                                                                               
  HCS CS SB 370 (FIN) was reported out of Committee with a "do                 
  pass"  recommendation  and   with  a  fiscal  note   by  the                 
  Department of Revenue dated 5/02/94.