04/12/1994 09:05 AM Senate FIN

  SB 370:             An  Act  providing  an   exemption  from                 
                      gambling laws for gambling  conducted by                 
                      cruise   ships   for    their   ticketed                 
                      passengers in the offshore water of  the                 
                      state outside of ports; defining `cruise                 
                      ship'; and providing  for the  licensing                 
                      of certain cruise ships before they  can                 
                      conduct gambling in  the offshore  water                 
                      of the state.                                            
                                                                               
                      Tom  Dow,  Vice  President   of  Hotels,                 
                      Princess Cruises,  testified in  support                 
                      of  SB  370.     SB  370  was   HELD  in                 
                      committee.                                               
                                                                               
  CS FOR SENATE BILL NO. 370(JUD):                                             
                                                                               
       An Act providing  an exemption  from gambling laws  for                 
       gambling conducted by  cruise ships for their  ticketed                 
       passengers in the  offshore water of the  state outside                 
       of ports;  requiring certain disclosures  in connection                 
       with  promotions  on  board  cruise  ships  and  making                 
       violation of  that provision an  unfair trade practice;                 
       defining  `cruise ship';  and  providing for  exemption                 
       fees for certain  cruise ships before they  can conduct                 
       gambling in the offshore water of the state.                            
                                                                               
  Co-chair  Pearce announced  that SB  370 would  be heard  in                 
  committee strictly as  an overview.   She  invited Tom  Dow,                 
  Vice  President  of Hotels,  Princess  Cruises, to  join the                 
  members  at the  table.   She  also said  Donald Stolworthy,                 
                                                                               
                                                                               
  Director, Charitable Gaming Division, Department of Revenue,                 
  was in  the audience  and available  for questions  from the                 
  committee.                                                                   
                                                                               
  Co-chair Pearce asked Senator Sharp if he would like to make                 
  a statement  regarding the bill  since it was  introduced by                 
  the Transportation Committee.  Senator  Sharp said there was                 
  a short sponsor statement but he would give the floor to Mr.                 
  Dow in  consideration of  limited time in  the meeting  this                 
  morning.                                                                     
                                                                               
  TOM DOW said that SB 370 would  provide for an exemption for                 
  the  state's gambling  laws for cruise  ships and  in effect                 
  would allow  cruise ships to  operate casinos on  board when                 
  sailing within Alaskan  waters with  the exception of  three                 
  miles off any port  of call.  This bill would restore rights                 
  to cruise  ship operators  which have  been common  practice                 
  within the industry for about 20 years.  He said a letter in                 
  support of SB 370 had been sent to Senator Taylor  and would                 
  be presented to  the committee if it  was not on file.   The                 
  bill would require  a fee  for the exemption.   An  estimate                 
  said that this  bill would raise approximately  $300,000 per                 
  year from  cruise ship  companies.   He  felt that  revenues                 
  would grow in consideration of new ship construction plans.                  
                                                                               
  Mr. Dow went on to say that in the last  20 years Alaska had                 
  become  one of  the   premier  cruising destinations  in the                 
  world, currently ranking  number 2.   During this period  of                 
  growth and development,  there was no evidence  that the on-                 
  board entertainment activities had any impact on any Alaskan                 
  resident or community  because of the way  casinos operated.                 
  The casinos were  open only when  the ship was underway  and                 
  closed when in port.   Access was limited to  passengers who                 
  had paid for  a trip.   He felt  the public policy  concerns                 
  related  to gambling  would  not be  compromised.   He  knew                 
  Alaskans appreciated the importance of tourism to the state,                 
  they  recognized  the  significant  role  that  cruise  ship                 
  companies  played, and  Alaskans did  not favor  prohibiting                 
  casinos.    He  pointed  out that  all  world  class cruises                 
  offered gambling and  passengers now expected  it.  He  felt                 
  there was no public policy opposing gambling on cruise ships                 
  and the state could gain some revenues from those ships that                 
  wished to continue  gambling on its  cruises.  He said  that                 
  this bill effected  a small portion  of time when the  ships                 
  were in Alaskan waters.                                                      
                                                                               
  In answer to Co-chair Pearce, Mr. Dow said that the time the                 
  casinos were  open  varied depending  upon  the ship.    For                 
  Princess cruises, normal operating time  would be from about                 
  10 am  to 2  am in  the morning  excepting when  in port  or                 
  during  a  special  glacier  viewing  or  other  sightseeing                 
  opportunity when the casino would be closed.                                 
                                                                               
  In answer  to Senator  Rieger, Mr. Dow  said that  passenger                 
                                                                               
                                                                               
  participation  depended   on  the   cruise  company,   space                 
  available and demographics.   He estimated 50-60  percent of                 
  Princess cruise  ship passengers participated at  some point                 
  to some extent.                                                              
                                                                               
  In answer to Co-chair Pearce, Mr. Dow said that Princess ran                 
  its own gambling casino.                                                     
                                                                               
  In answer to Senator Kelly, Mr.  Dow said that a preliminary                 
  plan for one  of his ships  said that casinos would  operate                 
  the first two days, the evening the first day and the second                 
  day from 9am  to 2am, the third  would be closed after  2am.                 
  The next two days  would be closed entirely, day  five would                 
  be open from 9:30am  to 2am, and  day six, 2pm  to 2am.   He                 
  said  there was  some ability  to adjust  the time  schedule                 
  depending on the situation but no  one had ever measured the                 
  increment of  activity that would  be prohibited  so it  was                 
  hard to estimate use.                                                        
                                                                               
  In  answer to Senator Sharp, Mr. Dow said that it took about                 
  two days to reach Alaska waters from Vancouver.                              
                                                                               
  In answer to Senator  Kerttula, fees were not paid  to other                 
  states  since Alaska  was  unique in  that  the cruise  ship                 
  hugged the coast for a substantial part of the cruise.   Out                 
  of  Los  Angeles  or  Miami,  by  the  time passengers  were                 
  settled, the ship was  out three miles and gambling  was not                 
  an issue.   He said that there was one  similar situation in                 
  Chesapeake Bay in Maryland and  exempted ships from gambling                 
  so they  could call in Baltimore.   (In a later meeting, Mr.                 
  Dow said that Maryland charged the cruise ships a $25 fee.)                  
                                                                               
  Senator  Sharp noted  that  item 2  on lines  1  and 2,  and                 
  Section 3 and 4 on page 2  which required that any promotion                 
  done on board a ship had to state clearly that it was a paid                 
  advertisement had  been added  to CSSB 370(JUD).   This  had                 
  been requested by vendors up and down the coast.                             
                                                                               
  In answer  to Senator Kerttula  regarding enforcement costs,                 
  Senator  Sharp  said that  in  Judiciary Committee  the word                 
  exemption was changed from the  word licensing thus reducing                 
  the fiscal  notes.  It  was also noted  that the new  fiscal                 
  note for the Department of Revenue was for $43.6.                            
                                                                               
  Co-chair Pearce  announced  that SB  370  would be  HELD  in                 
  committee.