Legislature(2003 - 2004)

05/07/2004 08:27 AM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               CSHB 552(FIN)am-GAMBLING & GAMING                                                                            
MR.  TOM WRIGHT,  staff  to the  House  Finance Committee,  which                                                               
sponsored HB 552 by request,  explained that the bill establishes                                                               
an  Alaska gaming  commission designed  to  oversee the  statutes                                                               
established  in  the  bill  that pertain  to  gambling.  It  also                                                               
creates new  statutes that  authorize the  commission to  issue a                                                               
license  to  own  and  conduct  gambling  games  at  a  specified                                                               
gambling  facility  in  any  municipality in  the  state  with  a                                                               
population of 150,000 or more. The  House amended the bill to say                                                               
that if a  municipality adopts an ordinance, it  must be ratified                                                               
by a majority of the municipal voters.                                                                                          
MR. WRIGHT  told members that  the new gambling  commission would                                                               
administer,   regulate  and   enforce   licensing  for   gambling                                                               
facilities,  its  employees  and its  suppliers.  The  commission                                                               
would collect fees  and taxes and place them into  a state gaming                                                               
fund, which would  consist of all revenue  received from gambling                                                               
activities.  The fund  will  pay any  activity  conducted by  the                                                               
commission  and other  agencies related  to gambling  and gaming.                                                               
The state would receive a  17 percent tax; the municipality where                                                               
the gambling  facility is located  could also collect a  tax, but                                                               
not  more  than  3  percent  of  adjusted  gross  receipts.  CSHB
522(FIN)am also creates new class  C and class A misdemeanors for                                                               
crimes related to associated  gambling operations and activities.                                                               
Currently 48  states have  some form  of legalized  gambling. The                                                               
purpose  of  CSHB  552(FIN)am  is to  provide  tools  and  strict                                                               
supervision of  gambling and gaming activities  authorized by the                                                               
Alaska gaming commission.                                                                                                       
9:05 a.m.                                                                                                                       
SENATOR  THERRIAULT  asked for  a  description  of the  level  of                                                               
debate that  took place in  the House about the  possibility that                                                               
if  this legislation  passes and  a casino  were to  be licensed,                                                               
that would open  the state up for the spread  of Indian gaming in                                                               
the state.                                                                                                                      
MR.  WRIGHT said  this bill  would allow  gambling operations  on                                                               
certain  Indian lands:  the Metlakatla  reservation and  Kake and                                                               
SENATOR  OGAN said  it was  his understanding  that the  issue of                                                               
Native  allotments  was not  resolved  by  the Venetie  case.  He                                                               
recalled a briefing  given by the former attorney  general to the                                                               
Majority  Caucus  on   that  issue.  That  was   one  reason  the                                                               
legislature did  away with allowing non-profits  to conduct Monte                                                               
Carlo nights.                                                                                                                   
MR. WRIGHT had the same  recollection. He noted that Susan Burke,                                                               
a Juneau  attorney who  has worked on  this issue,  believes that                                                               
Native allotments  would not be  considered as Indian  land under                                                               
the Indian Regulatory Gaming Act.                                                                                               
SENATOR  OGAN surmised  that no  one will  have the  final answer                                                               
until the court rules on the question.                                                                                          
MR. WRIGHT agreed.                                                                                                              
SENATOR  FRENCH asked  if any  discussion has  taken place  about                                                               
potential land swaps for reservation land.                                                                                      
MR. WRIGHT said  he was unable to answer that  question as he did                                                               
not have enough experience in Indian law.                                                                                       
CHAIR SEEKINS referred  to Sec. 05.18.100, beginning  on page 11,                                                               
entitled, Ejection  or exclusion  from facilities, and  noted the                                                             
section does  not clarify  that the provision  is in  addition to                                                               
the  power of  the police  to remove  a trespasser.  It basically                                                               
says  the commission  will determine  that. He  then said,   "The                                                               
next part of that, if I go  down to [Sec. 05.18.120[, on the same                                                               
page, here it  appears to me to subject  the investigative powers                                                               
of  the  state  and  the   local  police  to  the  Alaska  gaming                                                               
commission. It puts it in a subjective role."                                                                                   
MR.  WRIGHT thought  that if  a trespassing  complaint is  filed,                                                               
nothing  would  prohibit  the  local police  force  or  DPS  from                                                               
becoming involved. He was unable  to answer Chair Seekins' second                                                               
CHAIR SEEKINS said Sec. 05.18.220 on  page 18 appears to give the                                                               
Alaska gaming commission  the right to issue  liquor licenses and                                                               
security guard  licenses, which are currently  the responsibility                                                               
of the Department of Public Safety (DPS).                                                                                       
MR.  WRIGHT  said  the  licensed   owner  has  to  apply  to  the                                                               
commission to  hold any license if  the owner is going  to supply                                                               
to  that  gambling  facility. However,  the  bill  also  contains                                                               
supplier license  provisions that say  what can be  supplied, and                                                               
he did  not believe that  includes alcohol or food.  He clarified                                                               
that it applies to all other licenses.                                                                                          
CHAIR SEEKINS said it appears  that the commission has supplanted                                                               
the authority of  DPS in that it says a  license holder may apply                                                               
to the  commission for and  may hold licenses that  are necessary                                                               
for the operation  of a gambling facility,  including the license                                                               
to prepare  and serve  food for human  consumption and  any other                                                               
necessary license.  The commission  will be  putting itself  in a                                                               
position now held by other  state agencies because the owner will                                                               
just go to the commission to get what he needs.                                                                                 
MR.  WRIGHT said  he  believes that  DEC and  some  of the  other                                                               
agencies that  are responsible  for food  preparation inspections                                                               
will still do so.                                                                                                               
CHAIR SEEKINS felt that should be clarified in the bill.                                                                        
SENATOR  FRENCH  referred to  Sec.  05.18.010  on page  2,  which                                                               
pertains to  the commission itself.  He asked if it  will consist                                                               
of three members and how that number was arrived at.                                                                            
MR. WRIGHT  said that  is correct and  that various  numbers were                                                               
floated  around but  three is  the  number the  House decided  to                                                               
adopt. He noted the bill is based on the Indiana gambling law.                                                                  
SENATOR FRENCH  said if this  bill is enacted, three  people will                                                               
decide who will get the one casino license.                                                                                     
MR. WRIGHT  said the bill  contains certain parameters  that must                                                               
be used when determining who will get that one license.                                                                         
SENATOR  FRENCH expressed  concern  that there  may  be a  fierce                                                               
amount of competition for that one casino license.                                                                              
MR. WRIGHT said he could not argue that point.                                                                                  
SENATOR FRENCH said  he would prefer to see  more decision makers                                                               
and a broader  array of interests represented  on the commission.                                                               
He said he appreciates the  fact that the commission will include                                                               
a person  with a law  enforcement background and another  with an                                                               
accounting background  and that the  majority cannot be  from any                                                               
one political  party. He repeated  that his concern is  the large                                                               
amount of power that those three people will have.                                                                              
MR.  WRIGHT   explained  that  one   thing  the   [House  Finance                                                               
Committee] wanted  to exclude  from membership  is anyone  with a                                                               
potential conflict of interest.                                                                                                 
SENATOR FRENCH asked,  given that a fierce  amount of competition                                                               
for the  license is  likely, what the  appeals structure  will be                                                               
for the applicants.                                                                                                             
MR.  WRIGHT said  the bill  contains an  appeals process  that is                                                               
based on the  Administrative Procedures Act that can  be used for                                                               
any disagreement with a decision made by the commission.                                                                        
TAPE 04-67, SIDE B                                                                                                            
CHAIR SEEKINS  questioned why Sec.05.18.450  on page 25  does not                                                               
provide any authorization  for the Anchorage police  to inspect a                                                               
facility;  only the  Department  of Public  Safety or  commission                                                               
employees can do an inspection.                                                                                                 
MR. WRIGHT  did not believe  the local police would  be precluded                                                               
from  doing  an  inspection  and  said  he  was  not  opposed  to                                                               
including that in the bill.                                                                                                     
CHAIR  SEEKINS  said it  appears  that  the forfeiture  provision                                                               
allows  for  the forfeiture  of  property  belonging to  innocent                                                               
suppliers  and might  violate the  substantive  due processes  in                                                               
State v. Wilder [626 P2nd 104 1981].                                                                                            
MR. WRIGHT  pointed out  that a  supplier's license  issued under                                                               
this   chapter  would   allow  a   person  to   supply  security,                                                               
surveillance,   supplies,  money   counting  machines,   gambling                                                               
paraphernalia,  supply  services,  and equipment  to  a  licensed                                                               
owner. Therefore, a supplier's license is limited to that scope.                                                                
CHAIR SEEKINS  maintained that the  forfeiture section  may still                                                               
have due  process problems.  He then  referred to  Sec. 05.18.540                                                               
and  said it  reduces  the  level of  certain  crimes already  in                                                               
Alaska's criminal code, such as bribery.                                                                                        
MR.  WRIGHT said  the new  crimes  established in  the bill  only                                                               
pertain to the gambling operations.                                                                                             
CHAIR SEEKINS said he has a  problem charging a casino owner with                                                               
a lower  criminal charge  than that given  to any  other gambling                                                               
operator or  otherwise. He then  pointed out that (a)(1)  and (6)                                                               
in Sec. 05.18.540  are duplicative. He indicated that  he has not                                                               
had a lot of  time to review the bill but  from his quick review,                                                               
he  has  some serious  concerns.  He  said despite  his  personal                                                               
disapproval of legalized  gambling, as a legislator  he is trying                                                               
to craft a  bill that he could  approve of. He offered  to make a                                                               
list of  the concerns  he has  with the bill  itself so  that the                                                               
sponsor could address some of them.                                                                                             
MR. WRIGHT offered to review the list.                                                                                          
CHAIR  SEEKINS asked  if  members objected  to  setting the  bill                                                               
aside for further review.                                                                                                       
SENATOR THERRIAULT  said he had  hoped to have  a copy of  a memo                                                               
from independent  counsel on  the Indian  gaming issue  today but                                                               
was unable to  reach Mr. Popely. He offered to  provide copies at                                                               
the next meeting.                                                                                                               
CHAIR SEEKINS  said it is not  his intent to prevent  people from                                                               
testifying at  this time but,  rather, he  does not want  to take                                                               
testimony  on the  bill  in its  current form  so  he would  take                                                               
public testimony when some of the concerns are addressed.                                                                       
SENATOR ELLIS asked about the timeframe.                                                                                        
CHAIR  SEEKINS  said  he  intended to  shut  the  committee  down                                                               

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