Legislature(1993 - 1994)
02/08/1994 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 240 - GAMBLING DEVICES ON STATE FERRIES CHAIR VEZEY reconvened the meeting at 9:20 a.m. and opened discussion on HB 240. Number 448 REPRESENTATIVE MOSES, sponsor of HB 240, presented a brief overview of HB 240 supplied by his sponsor statement. (See attached.) HB 240 is intentionally crafted to allow the state ferry system to set up and operate or contract out the program. Number 465 CHAIR VEZEY commented HB 240 has been created in a convoluted manner and asked if Commerce and Economic Development has been changed to Revenue. Number 478 REPRESENTATIVE MOSES replied if HB 240 passes "(we) can do whatever we want to it." Number 481 CHAIR VEZEY understood the Commissioner of Revenue would have control over the gambling. CHAIR VEZEY questioned the wording which states "...a gambling device does not include a gambling device as authorized by statutes." "...a gambling enterprise is not a vessel of the Alaska Marine Highway System." He felt the approach of HB 240 seemed backwards and asked if it was necessary because Alaska's gambling was so complicated. Number 492 REPRESENTATIVE MOSES was not very familiar with the technical details of HB 240, but felt the problems could be worked out. Number 495 CHAIR VEZEY began to examine where the gambling machines would be located. Number 503 REPRESENTATIVE MOSES answered the ferries would find room. CHAIR VEZEY noted the different sizes of the ferries and the limited space on the smaller ones. He questioned if HB 240 was practical. Number 514 REPRESENTATIVE MOSES assumed the ferry system would have discretion to put the gambling devices only on ferries where it would be practical. CHAIR VEZEY warned of constituents who are against legalized gambling and wondered how it could be explained to those individuals. Number 527 REPRESENTATIVE MOSES explained a revenue stream would be developed and the winter traffic on ferries would probably increase by 20 percent. CHAIR VEZEY asked if the increase in traffic would be primarily residents of Alaska. REPRESENTATIVE MOSES believed the gambling would be an attraction for the tourist industry. The increased flow of traffic would be very beneficial. Number 539 REPRESENTATIVE KOTT commented some cruise lines have closed down their gaming operations because they were not very profitable. He warned the public may not feel the incentive to take the ferry solely to gamble. He also inquired about the associated costs involved in managing the gaming facilities. Number 554 REPRESENTATIVE MOSES had not seen a projected revenue report and responded to REPRESENTATIVE KOTT gambling would be added attraction to the ferries, not the sole incentive. Number 561 REPRESENTATIVE OLBERG commented the gaming machines must be located in the bar area to limit those under 21 years of age from playing. REPRESENTATIVE KOTT agreed a regulated area must be available Number 572 CHAIR VEZEY added minors are allowed in places which serve alcoholic beverages as long as they are accompanied by a parent or legal guardian. He did not, however, know if the law also applied to gambling facilities. Number 575 REPRESENTATIVE MOSES reaffirmed CHAIR VEZEY and stated minors are allowed inside, however, gambling is not encouraged. REPRESENTATIVE KOTT agreed with CHAIR VEZEY and noted HB 240 has a provision which prohibits minors from entering a gambling area. A ferry's bar area would no longer work as a location for the gambling machines. The alcohol establishment statute would either have to be changed or HB 240 would override it. Number 598 REPRESENTATIVE MOSES thought the liquor laws would have to be incorporated whereby HB 240 would be changed to specify "unless accompanied by a parent or legal guardian." Number 607 REPRESENTATIVE KOTT agreed and mentioned policies of other states. Number 610 CHAIR VEZEY thought other states did not allow minors in alcohol facilities at all. REPRESENTATIVE OLBERG suggested a space be dedicated to the gambling devices and have the access controlled. An overhead would have to be incurred. Number 617 REPRESENTATIVE KOTT commented alcohol and gambling are closely related in other facilities. Number 621 REPRESENTATIVE OLBERG noted the object is to raise revenue. Number 622 REPRESENTATIVE KOTT suggested alcohol and gambling not be separated. Number 625 REPRESENTATIVE SANDERS wanted HB 240 to be worded like the liquor laws where minors may be present if accompanied by a parent or guardian. REPRESENTATIVE OLBERG stated if the gambling devices are not in the bar the overhead becomes self-defeating. An extra employee would be required. Number 634 REPRESENTATIVE SANDERS added the social atmosphere would not be the same in a separate area from the bar. The purpose of HB 240 would be defeated. Number 637 REPRESENTATIVE KOTT did not want minors in the gambling area. He believed it did not facilitate the proper social attitude. CHAIR VEZEY clarified slot machines were not the topic of conversation. The machines used would not distribute coins or cash. Number 660 REPRESENTATIVE OLBERG suggested the use of machines which dispense pull tabs. Number 661 CHAIR VEZEY agreed. Number 663 REPRESENTATIVE B. DAVIS expressed concern for the amount of machines required and the anticipated revenue stream. She then asked if there was not any money coming to the state, would HB 240 be for entertainment purposes only. REPRESENTATIVE MOSES replied entertainment on coin operated machines is common now with two people playing a machine, not exposing their money, but still making debts. TAPE 94-9, SIDE A Number 007 REPRESENTATIVE B. DAVIS asked if these games are already being played on the boats. Number 011 REPRESENTATIVE MOSES said no, but the machines are available and found in bars. Number 022 REPRESENTATIVE KOTT illustrated the fiscal note does state six machines will be put on mainline vessels. CHAIR VEZEY recalled reading the provision of six machines written in the fiscal note. REPRESENTATIVE MOSES stated the amount of machines may increase due to demand for their use. CHAIR VEZEY introduced DONALD STOLWORTHY as the next witness. Number 052 DONALD STOLWORTHY, DIRECTOR, CHARITABLE GAMING DIVISION, DEPARTMENT OF REVENUE, answered questions on HB 240. On July 1, 1993, Charitable Gaming transferred from the Department of Commerce to the Department of Revenue by Executive Order 82. HB 240 states this change is for "house cleaning purposes." Number 072 CHAIR VEZEY recognized this reason. REPRESENTATIVE KOTT asked what kind of machines might be installed on the ferries. MR. STOLWORTHY explained the three classes of gaming: Class 1 - video games, pinball machines; Class 2 - pull tabs, bingo (nonelectronic & nonmechanical sanctioned games); Class 3 - slot machines, electronic pull tab games (District Court 4, District of Columbia, Washington, recently ruled electronic pull tab games as Class 3.), video poker. Class 3 games return either money or tokens from the machine to the player. MR. STOLWORTHY predicted HB 240 would allow electronic pull tab games, video poker, and slot machines which return tokens. CHAIR VEZEY asked for a clarification of the three classes of gaming devices. Number 150 MR. STOLWORTHY offered the three criteria as proposed by the courts which constitute gambling. These three include chance, consideration (i.e. paying money), and prize (i.e. receiving cash). Once past Class 1 the games are considered gambling devices. CHAIR VEZEY questioned if Class 1 games are not gambling devices, why are they classified as a Class 1 gambling device? Number 174 MR. STOLWORTHY replied the Class 1 games are for entertainment purposes only and he could not answer why they are labeled as gambling devices. Number 180 REPRESENTATIVE KOTT noted the difference between Class 1 and Class 2 and 3 combined is no external pay out. He then asked if HB 240 could require the provided slot machines to only emit tokens which could be redeemed on the ferry. Number 201 MR. STOLWORTHY felt REPRESENTATIVE KOTT's request could be included in HB 240, however, he believed the ferries would be more likely to use video poker and video pull tab machines which dispense tokens. Number 213 REPRESENTATIVE SANDERS asked about the use of "set back buttons" on machines he has seen used in bars. Number 222 MR. STOLWORTHY answered "set back buttons" are currently illegal to use in the state of Alaska because the amount of payout by the facility is harder to keep track of. Fraternal clubs, veterans organizations, and bars tend to have machines with these devices installed in them. CHAIR VEZEY inquired if "set back buttons" were used to reduce the chances of winning. MR. STOLWORTHY responded "set back buttons" are merely used to circumvent the law. The game tallies the total amount of games played and can be reset at any time. Computers are available to be hooked up to machines without "set back" devices which give tallies of the amount of free games left on the machines that have been paid back in cash. REPRESENTATIVE SANDERS thought some states had their gambling machines directly wired into the State Department of Revenue and inquired if it would be possible on ferries. Number 282 MR. STOLWORTHY clarified REPRESENTATIVE SANDERS was referring to "on-line technology". States, such as Nevada, have computers which calculate the odds on many machines and print out any discrepancies found. These computers are extremely accountable. He noted paper pull tabs have a wide margin for pay out discrepancies with forged cards and insider trading. Reports are filed quarterly that are matched up with the computer printouts. This process creates a solid accounting system. Number 338 CHAIR VEZEY did not understand the incentive behind only allowing gaming devices that do not dispense coins or cash. MR. STOLWORTHY did not know the reason. CHAIR VEZEY clarified Department of Revenue did not have a preference because the accountability of both types of machines would be close to the same. Number 346 MR. STOLWORTHY replied the money and token dispensing machines are identical devices which merely vary where the money is picked up. Number 348 CHAIR VEZEY asked for a committee member to volunteer to work with REPRESENTATIVE MOSES, sponsor, on HB 240. REPRESENTATIVE B. DAVIS volunteered. Hearing no more testimony, HB 240 was held in committee to be rescheduled. ANNOUNCEMENTS CHAIR VEZEY announced a meeting for the Alaska Railroad Review Committee would be scheduled, possibly Saturday, February 12, and asked for members to relay convenient times. ADJOURNMENT Seeing no more business before the committee, CHAIR VEZEY adjourned the meeting at 10:00 a.m.
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