Legislature(2005 - 2006)

04/21/2005 04:28 PM L&C


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04:43:21 PM Start
04:44:27 PM HB272
06:04:15 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 272-CARD ROOMS & OPERATIONS                                                                                                
                                                                                                                                
CHAIR ANDERSON  announced that the  only order of  business would                                                               
be HOUSE  BILL NO. 272, "An  Act relating to card  rooms and card                                                               
operations."                                                                                                                    
                                                                                                                                
4:44:27 PM                                                                                                                    
                                                                                                                                
MICHAEL  O'HARE,  Staff  to  Representative  Kott,  Alaska  State                                                               
Legislature, presented  HB 272 on behalf  of Representative Kott,                                                               
sponsor.    He  remarked  that  popularity  of  poker  has  grown                                                               
significantly in recent years.  He stated:                                                                                      
                                                                                                                                
     Due to  this growth in  interest, the intent of  HB 272                                                                    
     is  to  allow social  card  games  to  be played  in  a                                                                    
     tightly  controlled  public  environment.   Alaska  can                                                                    
     address the trend and bring  this popular pastime in to                                                                    
     compliance  with the  safety  and revenue  laws of  the                                                                    
     state.   The types  of games allowed  to be  played are                                                                    
     nonbanking card games, which  means games where players                                                                    
     play  against each  other, not  against the  house. ...                                                                    
     Games are  played for tokens  or chips,  not negotiable                                                                    
     currency.    And  the games  we're  talking  about  are                                                                    
     poker, pan,  rummy, bridge, and cribbage.   The limited                                                                    
     number of  licenses for card  room operations  would be                                                                    
     only for  municipalities of 30,000 people  or more, and                                                                    
     may not  exceed the total population  divided by 30,000                                                                    
     people.                                                                                                                    
                                                                                                                                
     The  licensee  is  required   to  pay  a  nonrefundable                                                                    
     application  fee  of  $25,000 with  the  Department  of                                                                    
     Revenue.   They are  also required  to post  a $500,000                                                                    
     cash bond at  least 60 days in  advance of commencement                                                                    
     of a card room operation.   They are required to pay an                                                                    
     annual  fee  of $10,000  for  each  card table  in  the                                                                    
     establishment.  They are  required to be fingerprinted.                                                                    
     They  are  required  to  pay  all  investigative  costs                                                                    
     incurred over  the initial $25,000 application  fee for                                                                    
     investigation  of background.    They  are required  to                                                                    
     host   quarterly  tournaments   with  proceeds   to  be                                                                    
     distributed to  a nonprofit educational  institution or                                                                    
     group designated  by the  owner.   The license  is good                                                                    
     for five years.  An  individual cannot get a license if                                                                    
     they're convicted of a  felony, knowingly falsify their                                                                    
     application,  or are  currently a  manager or  owner or                                                                    
     director   or  managerial   employee  of   an  existing                                                                    
     operation, or  the employer  of a  manager or  owner or                                                                    
     director   or  managerial   employee  of   an  existing                                                                    
     operation.                                                                                                                 
                                                                                                                                
MR. O'HARE continued:                                                                                                           
                                                                                                                                
     [House Bill  272] allows for the  Department of Revenue                                                                    
     to strictly  enforce regulations  imposed on  card room                                                                    
     operations,  allowing card  players  to  enjoy a  safe,                                                                    
     regulated playing  environment.  It also  gives back to                                                                    
     the  community by  creating jobs,  supporting nonprofit                                                                    
     educational  charities, and  again bringing  revenue to                                                                    
     the  state.    There  is  a  fiscal  note  as  well  as                                                                    
     sectional analysis  in your packets.   There's  a legal                                                                    
     opinion with  regards to the  effect of this  bill with                                                                    
     regards to Indian gaming.   And there's also an example                                                                    
     spreadsheet giving the example  of possible gross sales                                                                    
     per number of card tables  in the establishment as well                                                                    
     as an estimated employee hiring information.                                                                               
                                                                                                                                
REPRESENTATIVE KOTT pointed out that poker has become very                                                                      
popular.  He reiterated that there would be a $25,000                                                                           
nonrefundable application  fee for the license,  which means that                                                               
if the  department decides  not to issue  the license,  the money                                                               
stays at  the department.  He  noted that there would  also be an                                                               
advisory  board  consisting  of five  members  appointed  by  the                                                               
governor,  and  that  board would  make  recommendations  to  the                                                               
department regarding the operation of the facilities.                                                                           
                                                                                                                                
4:51:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOTT  also pointed  out  that  there would  be  a                                                               
$10,000 fee  required for each  card table  in the facility.   He                                                               
alluded  to  recent  newspaper  articles  about  "the  amount  of                                                               
activity that's occurring around the state in these card rooms."                                                                
                                                                                                                                
4:52:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  noticed that Section 05.18.030  on page 2,                                                               
lines  11-23, required  that the  wagering may  not be  conducted                                                               
with money  or negotiable currency.   She said, "I assume  at the                                                               
end of the day, though, you can cash in the chips."                                                                             
                                                                                                                                
REPRESENTATIVE  KOTT replied  that this  assumption was  correct.                                                               
He  said that  the rules  would be  like those  used in  40 other                                                               
states where people cannot actually take cash to the table.                                                                     
                                                                                                                                
REPRESENTATIVE  LYNN   commented,  "Just  because   something  is                                                               
popular  and  'everybody  does  it,' does  that  mean  we  should                                                               
legalize  it? ...  Should we  legalize everything  that we  might                                                               
possibly get revenue from?"                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT  responded that it  is up to  the legislature                                                               
to determine what activities it  wants to license and make legal.                                                               
He said that it's a policy call.                                                                                                
                                                                                                                                
4:56:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  commented that  if the  bill was  limited to                                                               
boroughs with  a population  of 30,000 or  more, and  allowed one                                                               
card room per  30,000 people, this would mean that  eight or nine                                                               
parlors  could be  in operation  in  Anchorage, two  or three  in                                                               
Fairbanks, and  one in Juneau.   He asked, "But why  are we doing                                                               
this?  Are  we not discriminating against the people  who live in                                                               
the Bush?   Why  can't they  have [a  card room]?  ... Why  do we                                                               
think that people  who live in the villages  are less responsible                                                               
than those who live in the city?"                                                                                               
                                                                                                                                
4:57:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT replied:                                                                                                    
                                                                                                                                
     If you do  the numbers, you can  probably conclude that                                                                    
     there could be upwards of  13 card rooms throughout the                                                                    
     state.  I  think you have to recognize  that it's going                                                                    
     to  take  a  certain  population base  to  provide  the                                                                    
     revenue  that's needed  to run  these card  rooms.   [A                                                                    
     population of]  30,000 was  a number  that we  felt ...                                                                    
     could support a  card room. ... I think  it depends on,                                                                    
     number  one, how  many  card tables  are  in each  card                                                                    
     room,  and  number two,  whether  or  not you  have  an                                                                    
     entity  out  in  rural  Alaska  ...  that  can  post  a                                                                    
     $500,000 cash  bond plus  the $10,000  per table  on an                                                                    
     annual  basis. ...  In addition  to that,  it would  be                                                                    
     extremely  burdensome  on  the  department  to  do  the                                                                    
     required checks  periodically, which in this  bill, the                                                                    
     doors are open to [the department].                                                                                        
                                                                                                                                
4:58:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  said, "Basically  you won't  let competition                                                               
take its  own course....   Why  not have  a certificate  of need?                                                               
                                                                                                                                
REPRESENTATIVE KOTT  replied that  it is  relatively risky  for a                                                               
company to  come up with the  initial revenue to get  a card room                                                               
opened,  and he  didn't think  there was  anyone in  rural Alaska                                                               
with that kind  of upfront cash.  He commented  that if this idea                                                               
proved to  be successful, the  legislature could  make additional                                                               
changes to the law.   He said, "Right now, since  this is kind of                                                               
a  trial, we  should  allow for  the best  degree  of success  to                                                               
occur."                                                                                                                         
                                                                                                                                
5:01:07 PM                                                                                                                    
                                                                                                                                
ED   MOEGLEIN,   Alaska  Charitable   Nonprofits   Organizations,                                                               
commented  that his  organization was  formed last  year to  "put                                                               
things  together  to  make  sure  of  protecting  our  rights  in                                                               
charitable nonprofits and  our ability to earn funds."   He asked                                                               
if this bill  would pave the way to  allowing Native corporations                                                               
to operate casinos in Alaska.                                                                                                   
                                                                                                                                
CHAIR  ANDERSON  asked if  Mr.  MOEGLEIN's  concern was  that  if                                                               
casinos were legalized  in Alaska they might  take from nonprofit                                                               
charitable earnings.                                                                                                            
                                                                                                                                
5:03:35 PM                                                                                                                    
                                                                                                                                
MR.  MOEGLEIN replied  that this  was incorrect.   He  clarified,                                                               
"It's   more  that   if  gambling   is  legalized,   will  Native                                                               
corporations then be able to have casinos on their land?"                                                                       
                                                                                                                                
REPRESENTATIVE KOTT  stated that  Legislative Legal  Services had                                                               
issued the opinion  that the bill would not  impact Indian gaming                                                               
operations in Alaska.                                                                                                           
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked, "Is  that  exclusive  of Type  2                                                               
Games?   Would that not be  allowed in Indian lands  if they were                                                               
permitted under this statute?"                                                                                                  
                                                                                                                                
REPRESENTATIVE KOTT responded, "On Type 2, yes."                                                                                
                                                                                                                                
5:04:19 PM                                                                                                                    
                                                                                                                                
GUY WARREN,  Stated Clerk, Presbytery  of Alaska,  explained that                                                               
the  Presbytery of  Alaska consists  of 15  member churches.   He                                                               
stated:                                                                                                                         
                                                                                                                                
     We  believe that  this  bill  represents a  significant                                                                    
     step  towards  situations  will  not  be  in  the  best                                                                    
     interest  of the  state government  or the  citizens it                                                                    
     serves.  It  will increase the social  problems we face                                                                    
     as  a state  and  it will  results  in decreased  state                                                                    
     control  through the  introduction of  increased Indian                                                                    
     gaming.  ...  Our  research  into  this  would  clearly                                                                    
     indicate  this  would  permit  Class  II  gaming  under                                                                    
     Indian  control, and  I think  it's  important to  note                                                                    
     that that would  be under Indian control.   The various                                                                    
     protections  this  bill  provides for  fees,  licenses,                                                                    
     etcetera ...  would not apply  to Indian gaming,  as we                                                                    
     read that.  The only oversight  of that would be at the                                                                    
     federal level, at the Indian Gaming Commission. ...                                                                        
                                                                                                                                
     The people  of the State  of Alaska have spoken  on the                                                                    
     issue of gambling.  In  1990, a measure came before the                                                                    
     people  to   expand  gambling  and  this   measure  was                                                                    
     defeated by over 40,000 votes,  a two-to-one margin.  I                                                                    
     would  hope  that  the  legislature  would  think  very                                                                    
     carefully  before attempting  to override  the vote  of                                                                    
     the people on that.                                                                                                        
                                                                                                                                
MR. WARREN  remarked that he  is aware  of the popularity  of the                                                               
poker  television shows,  but he  noted  that the  viewer is  not                                                               
seeing the  hundreds of players  who lost substantial  amounts of                                                               
money during the  course of the tournament.    He agreed with the                                                               
earlier comment  that just  because something  is popular  is not                                                               
enough reason to legalize it.                                                                                                   
                                                                                                                                
5:07:39 PM                                                                                                                    
                                                                                                                                
MR. WARREN continued:                                                                                                           
                                                                                                                                
     Our  state's  problems  with illegal  gambling  is  not                                                                    
     nearly so  desperate as to take  the significant gamble                                                                    
     this  bill  proposes.    As   a  means  of  encouraging                                                                    
     tourism,  it  should  be   remember  that  the  natural                                                                    
     attractions we  already have  for bringing  tourists to                                                                    
     our  state  are  unmatched  and provide  a  few  better                                                                    
     reason for traveling to Alaska  than any card room ever                                                                    
     could.                                                                                                                     
                                                                                                                                
5:07:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  asked  Mr.  Warren,  "You  said  your                                                               
opinion  differs  from  the  legal analysis  that  we  have  from                                                               
[Legislative Legal  Services].  I  was wondering if you  had that                                                               
in writing and who that was from."                                                                                              
                                                                                                                                
MR. WARREN replied  that the material that he  had distributed to                                                               
the committee  included several excerpts  from the  Indian Gaming                                                               
Commission  web  site,  where  Class  II  gaming  is  defined  as                                                               
including  nonbanked  card  games  that  are  played  exclusively                                                               
against other  players.  Reading  from the web site  printout, he                                                               
said,  "Tribes  retain the  authority  to  conduct, license,  and                                                               
regulate Class II gaming so long  as the state in which the tribe                                                               
is located permits  such gaming for any purpose."   He noted that                                                               
he  had  also  referenced  two opinions  issued  by  the  General                                                               
Council of  the Indian Gaming  Commission, in which a  poker club                                                               
and  nonbank  poker  are  deemed  to  be  Class  II  games.    He                                                               
reiterated  his   conclusion  that   under  this   bill,  [Native                                                               
corporations] would be allowed to  open card rooms that the state                                                               
wouldn't control.                                                                                                               
                                                                                                                                
5:09:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if Mr.  Warren had any legal advice                                                               
when he  [assembled the material  that he had distributed  to the                                                               
committee.]                                                                                                                     
                                                                                                                                
MR. WARREN  replied that he did  not seek legal advice.   However                                                               
he said  that the information he  found on the web  site was easy                                                               
to understand.                                                                                                                  
                                                                                                                                
REPRESENTATIVE ROKEBERG  agreed that  it appeared that  the games                                                               
listed  in the  bill  would be  considered Class  II  games.   He                                                               
stated, "The question  is whether or not we have  to enter into a                                                               
tribal-state compact, and  what the terms of those  would be. ...                                                               
That's  certainly something  the  committee needs  to look  into.                                                               
There   seems  to   be  more   unanswered  questions   here  than                                                               
answers...."    He asked  Mr.  Warren  if  he  was aware  of  any                                                               
professional-type  illegal poker  games  going on  in the  Juneau                                                               
area.                                                                                                                           
                                                                                                                                
MR. WARREN replied that he  doesn't gamble and therefore he isn't                                                               
aware of any gambling activities.                                                                                               
                                                                                                                                
5:11:43 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON  commented  that  there   were  a  lot  of  legal                                                               
questions, but the commerce issues were pretty straightforward.                                                                 
                                                                                                                                
PERRY GREEN explained that Class  II gaming, in this case, refers                                                               
to bingo  and pull  tabs, and  he said,  "The Natives  could have                                                               
been doing  this many  weeks, months, years  ago had  they wanted                                                               
to."   He said pointed  out that the  recent issue of  the Alaska                                                               
Airlines magazine had an article on  poker.  He commented that in                                                               
the Palm Springs  area, retirees play for hours at  a time during                                                               
the day  and young  people go out  and play at  night.   He said,                                                               
"Everybody enjoys playing poker; to  deny them that in this state                                                               
seems foolish since it's already allowed in 44 other states."                                                                   
                                                                                                                                
MR.  PERRY explained  that there  are poker  games that  now have                                                               
prizes of  up to $800 million.   He commented that  poker leagues                                                               
are forming around the country.                                                                                                 
                                                                                                                                
5:15:35 PM                                                                                                                    
                                                                                                                                
MR. GREEN commented:                                                                                                            
                                                                                                                                
     What  benefit   would  be  to  the   municipality  that                                                                    
     institutes a poker  game?  Well, they  wouldn't have to                                                                    
     go  to the  after-hours places  where ...  you can  buy                                                                    
     drugs,  where you  can  pay  a lot  more  to play,  and                                                                    
     that's  where you  can get  robbed.   In  the past  six                                                                    
     months  we've had  two armed  robberies of  after-hours                                                                    
     places in  Anchorage. ... The  problem is what  we have                                                                    
     now.  By regulating it,  by having a good operation, by                                                                    
     somebody being a card operator  to facilitate an honest                                                                    
     game in  an honest enterprise: that's  what people want                                                                    
     and seek.                                                                                                                  
                                                                                                                                
5:16:35 PM                                                                                                                    
                                                                                                                                
MR.  GREEN  commented  that  many  Alaskans  play  poker  on  the                                                               
Internet and therefore  the money is leaving the state.   He said                                                               
that  money should  stay in  Alaska  to "enhance  the economy  of                                                               
Alaska."                                                                                                                        
                                                                                                                                
CHAIR  ANDERSON   remarked  that   the  National   Conference  of                                                               
Legislative Gaming States reported  last year that there's likely                                                               
over $100  million spent  on Internet  gaming, and  he speculated                                                               
that that number has tripled now because of the popularity.                                                                     
                                                                                                                                
MR. GREEN replied that that  money doesn't stay within the United                                                               
States  but  instead  goes to  Costa  Rica,  Dominican  Republic,                                                               
England, and the Jersey Islands.   He continued, "The question is                                                               
"Why not in Alaska?   What not create some jobs?   Why not put it                                                               
into an  environment where people can  enjoy it?"  He  noted that                                                               
he is not advocating for casinos.                                                                                               
                                                                                                                                
5:19:12 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON commented  that he has been told  that the average                                                               
expenditure on  pull tabs for  regular players is over  $100 each                                                               
session.  He noted that  there are concerns that some individuals                                                               
might have  gambling problems and  ultimately gamble  their money                                                               
away.                                                                                                                           
                                                                                                                                
MR. GREEN remarked:                                                                                                             
                                                                                                                                
     Let  me  talk  about  who plays  poker  and  who  plays                                                                    
     rippies  [pull  tabs].    People  who  play  poker  are                                                                    
     usually  employed.  ...  They're  looking  to  do  some                                                                    
     recreation;  they're  not  able to  ski  anymore,  they                                                                    
     don't have  the time to  go hunting or fishing,  ... so                                                                    
     they go down  and play a few hours of  poker and relax.                                                                    
     ... But the pulltab player  is a different player.  You                                                                    
     don't  play poker  and keep  on losing  and losing  and                                                                    
     losing, and then  say, "I'm going to get  it all back."                                                                    
     You say, "Well, I'm not a  good poker player."  And you                                                                    
     don't find  the problem  gamer as  a poker  player; you                                                                    
     find  losers  and  winners, but  you  find  losers  and                                                                    
     winners when you invest in the stock market.                                                                               
                                                                                                                                
5:21:01 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON  said, "I don't  think you're here to  counter the                                                               
morality of  [gambling]; you're here  ... to state  that probably                                                               
the  majority of  Alaskans, 51,  52,  maybe 60  percent or  more,                                                               
would support  this with regard  to like a state  poll, certainly                                                               
would frequent these establishments."                                                                                           
                                                                                                                                
MR.  GREEN estimated  that  about 80  percent  of the  population                                                               
would think that it was fine to have card rooms.                                                                                
                                                                                                                                
5:22:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD  turned to Section 05.18.230  on page 12,                                                               
lines 5-13, which  require that the holder of  an owner's license                                                               
hold   quarterly  card   tournaments  to   benefit  a   nonprofit                                                               
educational   institution  or   group.     He  asked   who  these                                                               
educational institutions are and how are they chosen.                                                                           
                                                                                                                                
MR. GREEN replied that each  individual operator would choose the                                                               
institution, and  he listed  examples such  as the  University of                                                               
Alaska,  Alaska  Pacific  University, a  church-sponsored  Sunday                                                               
school, or for a scholarship for a  Native group.  He said that a                                                               
smart  operator would  be able  to pick  a different  institution                                                               
each time.                                                                                                                      
                                                                                                                                
5:24:54 PM                                                                                                                    
                                                                                                                                
MR. GREEN recalled that he ran  a card tournament for the chamber                                                               
of commerce about 10 years ago during which he raised $60,000.                                                                  
                                                                                                                                
REPRESENTATIVE  KOTT pointed  out  that the  bill  says that  the                                                               
beneficiary  could only  receive funds  once a  year, and  so the                                                               
operator would be required to alternate beneficiaries.                                                                          
                                                                                                                                
REPRESENTATIVE  CRAWFORD applauded  Mr. Green  for the  good work                                                               
that he has done for the state  over the years, but he stated, "I                                                               
have just never been a fan of for-profit gambling."                                                                             
                                                                                                                                
MR. GREEN opined that there are  have to be the opponents, but he                                                               
has a  right to play  what he enjoys as  long as he  doesn't hurt                                                               
anybody else.                                                                                                                   
                                                                                                                                
5:27:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD stated:                                                                                                 
                                                                                                                                
     We're the  last state  in the  union that  doesn't have                                                                    
     for-profit gambling  of some  form or  shape.   I don't                                                                    
     want to  go there; I don't  want to get to  that point,                                                                    
     because  I   think  that  it  eventually   shrinks  the                                                                    
     economy.  ... We  have  [an]  apparatus for  charitable                                                                    
     gaming in this state.  Why  couldn't we do all of these                                                                    
     things  that  you  want  to  do and  set  it  up  as  a                                                                    
     charitable  gaming operation....    The profit,  rather                                                                    
     than  going  to  the  state, should  go  to  our  local                                                                    
     charities, and run  it just the same way as  we run our                                                                    
     charitable gaming operations today.                                                                                        
                                                                                                                                
MR. GREEN  replied that  under the very  heavy burden  of $10,000                                                               
per table, some operators will lose money.                                                                                      
                                                                                                                                
5:29:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRAWFORD mentioned  that he  has an  amendment to                                                               
lower the fees to the same level as the charitable gaming fees.                                                                 
                                                                                                                                
5:29:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG commented,  "[Charitable gaming]  is one                                                               
of the  most corrupt, messed  up, unfair systems probably  in the                                                               
United  States."     He   stated  surprise   that  Representative                                                               
Crawford,  as an  opponent of  gaming,  would suggest  this.   He                                                               
said:                                                                                                                           
                                                                                                                                
     The whole system  is broken right now but  for the fact                                                                    
     that the  charities lobbied to support  it, it's almost                                                                    
     impossible  for this  legislature to  take on  this big                                                                    
     gorilla  we have  in this  state, which  I think  is an                                                                    
     awful system.  The state  benefits very little, and the                                                                    
     operators drive  it, and the  charities suffer  from it                                                                    
     and don't  get equitable treatment.   So I think  if we                                                                    
     are looking at  an expansion gaming, I  think we've got                                                                    
     to make  sure it doesn't  come under the  same umbrella                                                                    
     of corruption that that system.                                                                                            
                                                                                                                                
5:31:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD  stated that he  does not want  to expand                                                               
gambling, but he thinks it  will probably happen whether he likes                                                               
it or not and  so he was trying to make it  have the least affect                                                               
on  the state.    He said  that he  doesn't  like the  charitable                                                               
gaming  situation as  it is  either, and  he would  encourage its                                                               
reformation.   He  said, "I  don't  want to  have legalized  for-                                                               
profit gambling."                                                                                                               
                                                                                                                                
5:33:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG turned  attention to Article 3  on page 9                                                               
of the  bill, and said that  he was concerned that  if there were                                                               
limitations  on the  number  of licenses,  there  would be  great                                                               
competition for those.   He asked how the state  would choose who                                                               
receives the licenses.                                                                                                          
                                                                                                                                
BRETT  FRIED, Economist,  Tax  Division,  Department of  Revenue,                                                               
deferred to the deputy director of his division.                                                                                
                                                                                                                                
LARRY  MEYERS,  Deputy  Director,  Tax  Division,  Department  of                                                               
Revenue, pointed  out that  Section 05.18.210  on page  10, lines                                                               
12-29,  lists   the  factors   considered  in   granting  owner's                                                               
licenses.   He said that  it is  his understanding that  based on                                                               
these considerations the department  would determine who were the                                                               
best qualified to receive owner's licenses.                                                                                     
                                                                                                                                
5:35:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG  turned to page 12,  lines 5-13 regarding                                                               
tournaments held  where the proceeds  go to charities.   He asked                                                               
if there was  a definition of what proceeds are.   He then turned                                                               
to page 8, lines 6-17 regarding  the transfer of licenses, and he                                                               
commented that this would presumably  create a property right and                                                               
a value  for the license,  similar to  that of a  liquor license.                                                               
He asked if that assumption was correct.                                                                                        
                                                                                                                                
MR. MEYERS  replied, "It does  appear that there is  ... transfer                                                               
and there should be a right.  I  can say that this bill gives the                                                               
department  extensive  privileges  to right  regulations,  and  I                                                               
think that we would partake in that."                                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG commented:                                                                                              
                                                                                                                                
     It's troubled  me over the  years that we  have created                                                                    
     property rights  and all kinds of  things, like limited                                                                    
     entry  permits  for  fisheries,  liquor  licenses,  all                                                                    
     kinds  of   benefits  that  grow  in   value,  and  the                                                                    
     licensees end  up profiting by selling  those licenses,                                                                    
     and the  state gets nothing.   So  I think we  ought to                                                                    
     consider  that   we're  going  to  create   a  personal                                                                    
     property right  and evaluation  in these  licenses, and                                                                    
     if  there's any  alienation  or transfer  that ...  the                                                                    
       state share at least 50-50 in the new proceeds, or                                                                       
     something.                                                                                                                 
                                                                                                                                
5:37:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked the department to  expand on how                                                               
it would  choose between  two applicants  to determine  which one                                                               
would receive the license.                                                                                                      
                                                                                                                                
MR. MEYERS  replied that the only  thing he could do  would be to                                                               
read  what's provided  for  in  the bill  on  the  criteria.   He                                                               
reminded  the committee  that there  is  an oversight  commission                                                               
that would "help in the policy matters."                                                                                        
                                                                                                                                
5:38:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  what  the rationale  is behind  the                                                               
limited entry.                                                                                                                  
                                                                                                                                
MR MEYERS responded that he wasn't  sure if he could address that                                                               
because the department didn't draft  the bill.  He suggested that                                                               
perhaps  Representative  Kott  or  Mr. Green  could  answer  that                                                               
question.                                                                                                                       
                                                                                                                                
5:38:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX restated  her question,  "Why are  we just                                                               
saying that  there can only be  one [card room per  population of                                                               
30,000]?  Why  aren't we letting market forces regulate  it?  And                                                               
if more than one can make a living, that's fine."                                                                               
                                                                                                                                
REPRESENTATIVE  KOTT  replied  that  he  established  this  as  a                                                               
threshold  because he  assume there  would need  to be  a minimum                                                               
population  base of  about 30,000  to support  a card  room.   He                                                               
noted that  if after a while  "it looks like there's  others that                                                               
are interested and if the numbers  justify it, then we could also                                                               
revisit the issue:  amend the section of the bill  that calls for                                                               
a minimum of 30,000 people."                                                                                                    
                                                                                                                                
5:40:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  again reiterated her  question, clarifying                                                               
that she  wasn't questioning the minimum  population requirement,                                                               
but the limited number of licenses.                                                                                             
                                                                                                                                
CHAIR ANDERSON  answered, "I think Representative  Kott's saying,                                                               
because  they wanted  to make  this on  a trial  basis and  prove                                                               
their legislative intent correctly, and  so they wanted to fix an                                                               
amount."                                                                                                                        
                                                                                                                                
REPRESENTATIVE KOTT commented,  "I don't believe that  if you had                                                               
a  population base  less than  30,000 it  would support  multiple                                                               
card rooms in that location."                                                                                                   
                                                                                                                                
CHAIR ANDERSON asked, "But what about  over 30,000?  Why can't we                                                               
have any amount?"                                                                                                               
                                                                                                                                
REPRESENTATIVE KOTT said:                                                                                                       
                                                                                                                                
     It's based on what we  projected; that you need to have                                                                    
     a 30,000  base population for  one [card room]  and you                                                                    
     just layer  that. ... In  Anchorage, for  instance, you                                                                    
     could  have I  think upwards  of eight  card rooms.   I                                                                    
     don't  envision that  happening. ...  I think  the most                                                                    
     you'd probably  have is three  or four ...  because the                                                                    
     market forces would tend to take over.                                                                                     
                                                                                                                                
5:42:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX clarified:                                                                                                
                                                                                                                                
     When  you  have  a  limited number  of  licenses  being                                                                    
     granted  by the  state, ...  those licenses  take on  a                                                                    
     value unto themselves,  which ... could be  worth a lot                                                                    
     of money on transfer.  And  we don't say, when we issue                                                                    
     a  license for  a restaurant,  for example,  that we're                                                                    
     going  to  limit it  so  that  there  can only  be  one                                                                    
     restaurant per every 30,000 people.                                                                                        
                                                                                                                                
CHAIR ANDERSON replied, "We do with liquor licenses."                                                                           
                                                                                                                                
REPRESENTATIVE GUTTENBERG commented that  over the years, because                                                               
of  limited  permits,  he  has  seen  gaming  change  from  being                                                               
controlled by  the nonprofits to  being controlled by  the gaming                                                               
operators.  He asked, "What  has happened to enforcement over the                                                               
years and funding  for enforcement? ... Because any  time we open                                                               
up gaming  in this  state, ...  you're liable  to see  those same                                                               
issues come up."                                                                                                                
                                                                                                                                
MR. MEYERS  pointed out  that the fiscal  note provides  for four                                                               
investigators  currently  and  one head  investigator,  depending                                                               
upon the  number of operations.   He noted, "It is  an unknown at                                                               
this time  because we  really don't  know the  owners we  will be                                                               
licensing or how many card tables."                                                                                             
                                                                                                                                
MR. FRIED clarified the question for Mr. Meyers.                                                                                
                                                                                                                                
MR.  MEYERS explained  that there  are two  investigators in  the                                                               
state dealing  with bingo  and raffles.   He  said that  with the                                                               
funds  from  the  new  tobacco  tax,  there  are  currently  five                                                               
investigators that  are able to go  out in the field  and conduct                                                               
both  tobacco  and  gaming  investigations  simultaneously.    He                                                               
noted, "We  have seen a  marked increase  in our ability  to have                                                               
oversight in charitable gaming."                                                                                                
                                                                                                                                
CHAIR  ANDERSON  commented that  if  there  were an  increase  in                                                               
investigators and  only three  or four card  rooms in  the state,                                                               
those  investigators  could actually  spend  part  of their  time                                                               
investigating pull tab, bingo, and raffle operations.                                                                           
                                                                                                                                
MR. MEYERS responded  that this is a possibility; it  would be at                                                               
the  discretion of  the  legislature whether  there  would be  an                                                               
increase in staff or not.                                                                                                       
                                                                                                                                
5:46:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked  if there  was  any  relationship                                                               
between a  license such as this  and any kind of  Title 4 license                                                               
for  alcoholic  beverages.    He  said, "It  seems  to  me  there                                                               
typically would  be a desire on  the part of an  operator to have                                                               
some  type  of a  beverage  dispensary  or ...  restaurant-eating                                                               
place   type  license   to  serve;   in  terms   of  enforcement,                                                               
prohibitions of either, or any correlation."                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  replied that  right now  he doesn't  see any                                                               
correlation.   He  noted that  each  operator could  apply for  a                                                               
liquor  license  through the  local  controls.   He  stated  that                                                               
because playing  poker takes  strategy, a lot  of the  people who                                                               
play  it don't  drink  much  alcohol.   "This  is  not like  slot                                                               
machines or  pull tabs," he remarked.   He said that  a card room                                                               
may get a  liquor license so that people who  are waiting to play                                                               
can buy a drink.                                                                                                                
                                                                                                                                
REPRESENTATIVE GUTTENBERG turned  to Article 4 on page  17 of the                                                               
bill, which  addresses crimes.   He noted  that on page  18, line                                                               
13, it says that  it would be a class C felony  to cheats at card                                                               
games.  He inquired as to how the state would deal with this.                                                                   
                                                                                                                                
5:51:00 PM                                                                                                                    
                                                                                                                                
MR. GREEN  commented that the phrase  "cheats at a card  game" is                                                               
referring to marking  the cards or something of that  nature.  He                                                               
commented that this  should not occur in the card  rooms that are                                                               
being proposed.                                                                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG stated that  he is particularly concerned                                                               
about the Indian gaming ramifications of this bill.                                                                             
                                                                                                                                
CHAIR  ANDERSON said  that he  will relay  these concerns  to the                                                               
House Judiciary Standing Committee.                                                                                             
                                                                                                                                
CHAIR ANDERSON closed public testimony.                                                                                         
                                                                                                                                
REPRESENTATIVE CRAWFORD  moved to  adopt Amendment 1,  as follows                                                               
(original punctuation provided):                                                                                                
                                                                                                                                
     Page 9, Line 15;                                                                                                           
     Delete, "$25,000"                                                                                                          
     Insert, "$250"                                                                                                             
                                                                                                                                
     Page 11, Line 1;                                                                                                           
     Delete, "$10,000"                                                                                                          
     Insert, "$100"                                                                                                             
                                                                                                                                
     Page 11, Line 3;                                                                                                           
     Delete, "$10,000"                                                                                                          
     Insert, "$100"                                                                                                             
                                                                                                                                
CHAIR ANDERSON objected for discussion purposes.                                                                                
                                                                                                                                
REPRESENTATIVE  CRAWFORD  explained  that  this  amendment  would                                                               
change the license  fees to approximately what it would  be if it                                                               
were under the charitable gaming statutes.                                                                                      
                                                                                                                                
5:54:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOTT commented,  "I think  when you  look at  the                                                               
license  applications,   it's  important  to  recognize   that  a                                                               
substantial portion  of that license  [application fee]  is going                                                               
to  go  to  the  department   during  the  investigation  of  the                                                               
potential licensee.   I can  envision, with  fingerprinting [and]                                                               
background  checks that  the  $25,000  is going  to  be eaten  up                                                               
substantially."  He  said that if an applicant is  willing to pay                                                               
the  $25,000  application  fee,   that  person  is  a  legitimate                                                               
contender.                                                                                                                      
                                                                                                                                
CHAIR ANDERSON  added that the  enforcement officer's  salary and                                                               
the other salaries  and fees that this would be  applied to might                                                               
be affected adversely [if the application fee were lowered.]                                                                    
                                                                                                                                
REPRESENTATIVE  CRAWFORD stated  that he  has a  second amendment                                                               
that would address  this; the second amendment  would provide the                                                               
state with revenues under the  charitable gaming statutes to have                                                               
on going  revenues pay for  regulation and enforcement.   He said                                                               
that his main reason for  offering these amendments is because he                                                               
doesn't want the state to become  addicted to gambling money.  He                                                               
remarked, "It's going  to cause enough of a  disruption in enough                                                               
people's lives as it is without  getting the state hooked on this                                                               
money for our general fund."                                                                                                    
                                                                                                                                
5:56:15 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON maintained his objection.                                                                                        
                                                                                                                                
A  roll call  vote  was taken.    Representatives Guttenberg  and                                                               
Crawford voted in favor of  Amendment 1.  Representatives LeDoux,                                                               
Kott, Rokeberg,  and Anderson voted  against it.   Representative                                                               
Lynn was absent  for the vote.  Therefore, Amendment  1 failed by                                                               
a vote of 2-4.                                                                                                                  
                                                                                                                                
REPRESENTATIVE CRAWFORD  moved to adopt Amendment  2, labeled 24-                                                               
LS0916\A.1, Kurtz, 4/21/05, as follows:                                                                                         
                                                                                                                                
     Page 9, line 9, following "person":                                                                                        
          Insert "that is a charitable organization, a                                                                          
       civic organization, or a service organization, as                                                                        
     those terms are defined in AS 05.15.690,"                                                                                  
                                                                                                                                
     Page 9, lines 19 - 21:                                                                                                     
          Delete "if the applicant is an individual, two                                                                        
     sets of the individual's fingerprints;                                                                                     
               (3)  if the applicant is not an individual,"                                                                     
                                                                                                                                
     Page 10, line 6, following "information;":                                                                                 
          Insert "or"                                                                                                           
                                                                                                                                
     Page 10, lines 7 - 9:                                                                                                      
          Delete "is an officer, a director, or a                                                                               
      managerial employee of a person described in (1) or                                                                       
     (2) of this subsection; or                                                                                                 
               (4)  employs an individual described in (1),                                                                     
     (2), or (3)"                                                                                                               
          Insert "employs an individual described in (1) or                                                                     
     (2)"                                                                                                                       
                                                                                                                                
REPRESENTATIVE  CRAWFORD explained  that  Amendment  2 would  put                                                               
card rooms  under the  charitable gaming  statutes and  "takes us                                                               
away  from the  for-profit gambling."   He  commented, "That  way                                                               
there won't  be ... the impetus  to make this continue  to grow."                                                               
He  shared with  the  committee that  his  hometown in  Louisiana                                                               
started  with  only  a  racetrack  and now  it  has  seven  large                                                               
casinos, which he doesn't want to  happen in Alaska.  He said, "I                                                               
think  this is  a bad  road to  go down  because it's  a downward                                                               
spiral  and  it  shrinks  the   economy  rather  than  grows  the                                                               
economy."  He commented that in  one town the whole economy is so                                                               
hooked on gambling  that the local residents can't  get away from                                                               
it; "there's no way to extricate themselves from that tar baby."                                                                
                                                                                                                                
A  roll call  vote  was taken.    Representatives Guttenberg  and                                                               
Crawford voted in favor of  Amendment 2.  Representatives LeDoux,                                                               
Kott, Rokeberg,  and Anderson voted  against it.   Representative                                                               
Lynn was absent  for the vote.  Therefore, Amendment  2 failed by                                                               
a vote of 2-4.                                                                                                                  
                                                                                                                                
6:00:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG moved to  adopt Amendment 3, as follows                                                               
(original punctuation provided):                                                                                                
                                                                                                                                
     Page 12, Line 6;                                                                                                           
     Following; "with"                                                                                                          
     Insert; "all of"                                                                                                           
                                                                                                                                
REPRESENTATIVE GUTTENBERG stated that  he has long been concerned                                                               
about  the effect  of gaming  on nonprofits.   He  explained that                                                               
Amendment  3  would  ensure  that   all  of  the  proceeds  of  a                                                               
tournament would  go to the  designated nonprofit.  He  said, "If                                                               
we don't say, 'all of,' I'm not sure where it's going."                                                                         
                                                                                                                                
CHAIR  ANDERSON maintained  his objection  and stated  that there                                                               
has  to  be a  fee  that  goes  to  the person  establishing  and                                                               
managing the game.                                                                                                              
                                                                                                                                
REPRESENTATIVE  GUTTENBERG asked  if  the committee  could get  a                                                               
definition of "proceeds" to see if this is gross or net revenue.                                                                
                                                                                                                                
MR.  MEYER relayed  his understanding  that a  certain amount  of                                                               
money would be designated at the front end to go to the charity.                                                                
                                                                                                                                
CHAIR ANDERSON concluded, "And that's a proceed."                                                                               
                                                                                                                                
A  roll   call  vote  was   taken.     Representatives  Rokeberg,                                                               
Guttenberg,  and   Crawford  voted  in  favor   of  Amendment  3.                                                               
Representatives  LeDoux, Kott,  and  Anderson  voted against  it.                                                               
Representative  Lynn  was  absent   for  the  vote.    Therefore,                                                               
Amendment 3 failed by a vote of 3-3.                                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG moved  to report HB 272  out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE CRAWFORD objected.                                                                                               
                                                                                                                                
A  roll call  vote was  taken.   Representatives Kott,  Anderson,                                                               
LeDoux,  and Rokeberg  voted  in  favor of  HB  272, as  amended.                                                               
Representatives  Crawford   and  Guttenberg  voted   against  it.                                                               
Representative Lynn was  absent for the vote.   Therefore, HB 272                                                               
was  reported  out  of  the House  Labor  and  Commerce  Standing                                                               
Committee by a vote of 4-2.                                                                                                     

Document Name Date/Time Subjects