Legislature(2003 - 2004)

04/19/2004 09:16 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 19, 2004                                                                                           
                         9:16 A.M.                                                                                              
TAPE HFC 04 - 86, Side A                                                                                                        
TAPE HFC 04 - 86, Side B                                                                                                        
TAPE HFC 04 - 87, Side A                                                                                                        
CALL TO ORDER                                                                                                                 
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 9:16 A.M.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Hugh Fate                                                                                                        
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Representative   Harry    Crawford;   Tom    Wright,   Staff,                                                                   
Representative   John  Harris;   Perry  Green,  Perry   Green                                                                   
Leasing, Anchorage;  Guy Warren, Stated Clerk,  Presbytery of                                                                   
Alaska;  Make  Barnhill, Assistant  Attorney  General,  Civil                                                                   
Division, Department  of Law;  Bob Loescher, ANB  #2, Juneau;                                                                   
George  Wright,  Operator,  Awesome   Eats,  Anchorage;  Josh                                                                   
Cozby, Gustavus; Mike Olney, Bear Track Inn, Gustavus                                                                           
PRESENT VIA TELECONFERENCE                                                                                                    
T.J.  Fescher, Cornerstone  Enterprises,  Las Vegas,  Nevada;                                                                   
Richard Heacock, Fairbanks; Robert  Poe, President, Anchorage                                                                   
Economic  Development  Corporation (AEDC),  Anchorage;  Larry                                                                   
Cash,  Chairman, Anchorage  Economic Development  Corporation                                                                   
(AEDC), Anchorage; Ed Moeglein,  Alaska Non Profit Charitable                                                                   
Organizations, Kenai                                                                                                            
HB 467    An  Act establishing  an Alaska Commemorative  Coin                                                                   
          Commission  to develop the  design concepts  and to                                                                   
          make recommendations  regarding the final design of                                                                   
          the   Alaska   quarter    under   the   50   States                                                                   
          Commemorative  Coin Program Act; and  providing for                                                                   
          an effective date.                                                                                                    
          HB 467 was SCHEDULED but not HEARD.                                                                                   
HB 552    An Act relating to gambling and gaming.                                                                               
          HB 552 was HEARD and HELD in Committee for further                                                                    
HOUSE BILL NO. 552                                                                                                            
     An Act relating to gambling and gaming.                                                                                    
Co-Chair  Harris  explained  that   HB  552  is  a  "work  in                                                                   
progress", sponsored by the House Finance Committee.                                                                            
TOM  WRIGHT,  STAFF, REPRESENTATIVE  JOHN  HARRIS,  explained                                                                   
that  HB 552  would establish  an  Alaska Gaming  Commission,                                                                   
designed   to   regulate,  oversee   and   enforce   statutes                                                                   
pertaining to gaming, as defined  under AS 05.15 and gambling                                                                   
established within the bill.                                                                                                    
The bill would also set in place  new statutes that authorize                                                                   
the  commission  to  issue  a  license  to  own  and  conduct                                                                   
gambling  games  at  a specified  gambling  facility  in  any                                                                   
municipality within  the State with a population  of at least                                                                   
Mr.  Wright pointed  out that  the commission  through a  new                                                                   
chapter, AS 05.18 as provided  in the bill, would administer,                                                                   
regulate and enforce  licensing for a gambling  facility, the                                                                   
employees  and  the  suppliers.   Fees  and  taxes  would  be                                                                   
collected by the commission and  placed into the State gaming                                                                   
fund,  consisting  of  all  revenue  received  from  gambling                                                                   
activities.   The  fund would  then be  used to  pay for  any                                                                   
activity conducted  by the commission  and other  agencies as                                                                   
they relate to gaming and gambling.                                                                                             
The State would collect a 17%  tax on adjusted gross receipts                                                                   
received  from gambling  games.  The  municipality where  the                                                                   
gambling facility  was located,  would be  able to  collect a                                                                   
tax  of not  more than  3% of  the amount  of adjusted  gross                                                                   
Mr.  Wright  continued, HB  552  establishes  a new  Class  C                                                                   
felony  and  Class  A  misdemeanor   for  crimes  related  to                                                                   
associated  gambling operations  and  activities.   He  added                                                                   
that  currently,  48 of  the  50  states  have some  form  of                                                                   
legalized gambling,  with over  half having casino  gambling.                                                                   
The proposed legislation is intended  to provide the tools to                                                                   
ensure  strict   supervision  of  any  gambling   and  gaming                                                                   
activity authorized by the Alaska Gaming Commission.                                                                            
Co-Chair  Harris   asked  what   had  occurred  to   date  on                                                                   
legalizing  gambling.   Mr. Wright noted  that Mike  Barnhill                                                                   
from the Department of Law was  working on the legal analysis                                                                   
requested  by the Committee.   There  are communities  within                                                                   
the State, Metlakatla, Kake and  Klawock that are eligible if                                                                   
gaming and gambling is established in the State.                                                                                
Representative Fate pointed out  the fiscal note, questioning                                                                   
the  effect given  Alaska  population  numbers.   Mr.  Wright                                                                   
deferred those comments to the Department of Revenue.                                                                           
PERRY  GREEN,  PERRY  GREEN LEASING,  ANCHORAGE,  voiced  his                                                                   
appreciation for a scheduled a  hearing of HB 552.  He stated                                                                   
that the bill  would create the Alaska Gaming  Commission and                                                                   
allow them  to issue a single  site casino gaming  license in                                                                   
Anchorage.  He noted that it has  been his dream to develop a                                                                   
world-class  casino operation  in the  vacant Alaska  Seafood                                                                   
International  (ASI) building  that  is  currently owned  and                                                                   
maintained, at a loss, by the State.                                                                                            
In a recent survey  by KTUU Channel 2, viewers  were asked if                                                                   
they favored  or opposed  the single  site casino concept  in                                                                   
Anchorage.  Mr.  Green found the results startling,  with 67%                                                                   
in favor, 32% opposed and 1% undecided.   He claimed that the                                                                   
over  500 respondents  were  informed viewers,  watching  the                                                                   
newscast; people  who understand  and care about  the State's                                                                   
economic situation. Mr. Green  discussed that the State needs                                                                   
new sources of revenue and good jobs for the residents.                                                                         
Mr. Green pointed out that 48  states currently use gaming as                                                                   
a revenue source  and that new revenue and  industry has been                                                                   
revitalizing  cities, counties,  and  even states.   Not  one                                                                   
state  that   has  established  gaming  has   reversed  their                                                                   
decision.  After  5 years, the State of Louisiana  decided to                                                                   
have  a  referendum  to determine  if  they  should  continue                                                                   
statewide  gaming.     Seventy-six  percent  of   the  voters                                                                   
approved the referendum, sending  the message that gaming had                                                                   
operated successfully.  Voters  in that state understand that                                                                   
this clean industry provides good jobs.                                                                                         
Mr. Green pointed out that in  the very conservative State of                                                                   
Mississippi,   gaming  began  in   Tunica  County,   an  area                                                                   
experiencing   over   25%   unemployment.      Today,   their                                                                   
unemployment is under 4.3% as  new jobs were created for many                                                                   
residents who had  never before had the opportunity  to work.                                                                   
Food  stamp  recipients   decreased  by  70%.     The  casino                                                                   
sponsored  programs that  educated these  people on  not only                                                                   
the  importance of  doing  their jobs,  but  in life  skills.                                                                   
They learned  that things  like being  timely for their  job,                                                                   
dressing  properly and  carrying out  proper hygiene  are not                                                                   
complicated  but necessary in  order to get  and keep  a job.                                                                   
The mayors of  those cities realized that employment  was far                                                                   
better  for the  souls of  their citizens  than welfare,  and                                                                   
that  the resulting  benefits  far out  weighed any  concerns                                                                   
they had.                                                                                                                       
Mr. Green  pointed out that it  could be asked  what benefits                                                                   
could result  with just one casino  in Alaska.  He  offered a                                                                   
projected 10-year estimate:                                                                                                     
 1.  The  State of  Alaska would  receive a  minimum of  $200                                                                   
     million  dollars in revenue.   The  bill proposes  a 17%                                                                   
     tax  on the adjusted  gross receipts,  more than  double                                                                   
     the amount currently collected  by California (8.5%) and                                                                   
     triple that of Nevada (6.7%).                                                                                              
 2.  The Municipality of Anchorage  would receive $50 million                                                                   
     dollars  in  taxes,  which would  include  the  assessed                                                                   
     worth  of the valuable  ASI property.   The bill  allows                                                                   
     the municipality  to tax up to 3% on the  adjusted gross                                                                   
     receipts.   The City currently receives  no revenue from                                                                   
     that State owned property.                                                                                                 
 3.  Increased retail  sales of $3 billion  dollars statewide                                                                   
     would  result.  Local  sales taxes  and bed taxes  would                                                                   
     increase  for   other  communities  from   Ketchikan  to                                                                   
     Barrow,  when  new tourists  traveling  statewide  visit                                                                   
     those cities.                                                                                                              
 4.  Without  using  any  State  funding,  the  casino  would                                                                   
     generate  millions of dollars  worth of marketing  value                                                                   
     by promoting this destination  to state travelers in the                                                                   
     Far East and other coveted markets.                                                                                        
 5.  During  the  renovation of  the  facility,  construction                                                                   
     jobs worth $100 million dollars would be created.                                                                          
 6.  An  education program  would be  created in  conjunction                                                                   
     with South  Central Foundation or established  religious                                                                   
     organizations for  many Alaskans, who currently  have no                                                                   
     working  experience.   Employment would  be 98%  Alaskan                                                                   
     and those  that are  in need will  learn life  skills in                                                                   
     addition to job training.                                                                                                  
 7.  A childcare  facility would  be established  for working                                                                   
     single parents  on site,  which will allow  Alaskans who                                                                   
     cannot afford  to work outside of their  home previously                                                                   
     because  of concerns  over  the expense  and quality  of                                                                   
     childcare, to seek employment.                                                                                             
 8.  Additional  work  would be  available  for many  trained                                                                   
     professionals,    including    local    musicians    and                                                                   
     stagehands,  as  star attractions  would  be  performing                                                                   
     regularly at the facility.                                                                                                 
 9.  Cost savings would be realized  by local law enforcement                                                                   
     agencies  because  existing  illegal  after-hours  clubs                                                                   
     will disappear with the onset  of regulated legal casino                                                                   
 10. Alaskan  businesses  will be  given  the opportunity  to                                                                   
     provide services and supplies to the casino.                                                                               
Mr.  Green  stated that  one  of  the  main reasons  the  ASI                                                                   
facility was chosen  for the project is to  relieve the State                                                                   
of an  expensive and  underutilized facility.   The  proposal                                                                   
requires  little from  the  State  in the  form  of money  or                                                                   
government  jobs, as  all costs  of the  Commission would  be                                                                   
borne  either by  the  license holder  or  through the  taxes                                                                   
collected from the facility.   It would create a valuable new                                                                   
tourism  infrastructure that  could  be of  great benefit  to                                                                   
everyone in the visitor industry.                                                                                               
Vice  Chair Meyer  asked  if passage  of  the  bill would  be                                                                   
contingent  on  the  Alaska  Seafood  facility.    Mr.  Green                                                                   
responded that would be a competitive  process.  He mentioned                                                                   
Hammond,  Indiana, and  the changes that  have occurred  with                                                                   
casino construction.   Vice Chair Meyer asked  if Mr. Perry's                                                                   
company was  willing to pay fair  market value or  go through                                                                   
the competitive process to buy  the Alaska Seafood Processing                                                                   
facility.  Mr. Green replied that they absolutely are.                                                                          
Co-Chair Harris asked  Mr. Green to explain  how the proposed                                                                   
project would be helpful to the  entire State of Alaska.  Mr.                                                                   
Green noted an  article in the Las Vegas  newspaper regarding                                                                   
their monorail activity associated  with tourism.  He pointed                                                                   
out  that  Nevada  has  no  oil   income.    By  passing  the                                                                   
legislation for a place like Valdez,  the sport fishing would                                                                   
benefit from  the extra tourism  associated with  the casino.                                                                   
The casino would  create one more major  statewide attraction                                                                   
and the  industry would create  many offshoot jobs.   At this                                                                   
time, 1.3 million visitors come  to Alaska every year and the                                                                   
largest percentage  is brought  by the cruise  ship industry,                                                                   
which pretty much controls their  own passengers.  The casino                                                                   
would attract the free, independent travelers.                                                                                  
Mr.  Perry  advised  that  recently,  the  Anchorage  Visitor                                                                   
Bureau  had to lay  off three  of their  long time  employees                                                                   
because tourism  and convention  business was down.   Putting                                                                   
in a  casino in  Alaska would  sell tourists  on Alaska.   He                                                                   
pointed out  that Palm Springs has  five casinos in  a city a                                                                   
little larger  than Anchorage.   He did  not think  anyone in                                                                   
that area  was opposed to the  casinos.  What the  casino has                                                                   
done for  the people  of that  area has  brought first  class                                                                   
entertainment  and  something  for  people to  do  at  night,                                                                   
making it  a tourist destination.   He acknowledged  that not                                                                   
everyone  would enjoy  a casino but  recommended that  Alaska                                                                   
should  not throw  away an  opportunity to  create new  jobs.                                                                   
The industry brings in willing  taxation by more industry and                                                                   
Representative Stoltze  pointed out that the  manner in which                                                                   
the bill was  written would only effect Anchorage.   He asked                                                                   
if  the  affected   community  councils  and   the  Anchorage                                                                   
assembly  had  testified  regarding  the issue.    Mr.  Green                                                                   
responded  that in  the proposed  area,  house values  should                                                                   
increase by  20%.  He added  that there would be  a nineteen-                                                                   
acre buffer  zone  and that it  would create  a $100  million                                                                   
dollars in Union construction jobs.                                                                                             
Representative  Stoltze interjected that  he had  asked about                                                                   
the  community  councils and  the  Anchorage  assembly.   Mr.                                                                   
Green responded  that he had  meetings with Mayor  Begich and                                                                   
that  a  "good  majority"  supports   the  legislation.    He                                                                   
maintained that  it is a clean,  good business and  will help                                                                   
Alaska's economy without any new  taxation.  The casino would                                                                   
be widely accepted  and done in a tasteful  and non-intrusive                                                                   
manner to any neighborhood.  He  predicted that workers would                                                                   
buy homes  in the area.  Mr.  Green noted that he  had spoken                                                                   
with members from  the Anchorage Assembly, who  wanted to see                                                                   
the  action taken  by  the  Legislature before  making  their                                                                   
commitment.   Representative Stoltze  asserted that  was rare                                                                   
that the Anchorage  Assembly had not taken a  position on the                                                                   
Co-Chair Harris inquired if Mayor  Begich was in favor of the                                                                   
project.   Mr. Green  replied that the  mayor is  not opposed                                                                   
and  wants  a  guarantee  that  it  will  be  a  first  class                                                                   
operation.    Mr. Green  said  that  having only  one  single                                                                   
casino, the  State will  be able to  control who  the patrons                                                                   
are.   The  casino would  be the  "tip of  the iceberg"  with                                                                   
regard  to  what can  happen  when  working in  a  legitimate                                                                   
Co-Chair Harris clarified that  it is very important that the                                                                   
Mayor  of  Anchorage  is  strongly   on  board.    Mr.  Green                                                                   
commented  that  the Anchorage  Economic  Development  (AEDC)                                                                   
group  would be  testifying  on the  plan.   Co-Chair  Harris                                                                   
asked if there had been any contact  with the local community                                                                   
councils  in the  affected  areas.   Mr.  Green replied  that                                                                   
there has not.                                                                                                                  
Representative  Hawker  focused  on  the  broader  regulatory                                                                   
provisions of  the bill.   He asked  if it was  intended that                                                                   
the commission could regulate  more than the proposed casino.                                                                   
Mr. Wright  responded that the  commission would  address any                                                                   
legal   and  authorized   gambling   operations  and   gaming                                                                   
activities throughout  the State.   There have  been concerns                                                                   
expressed about having the commission  oversee the charitable                                                                   
gaming industry.                                                                                                                
Representative Hawker pointed  out that initially there was a                                                                   
proposal  for a  regulatory commission  without the  sidebars                                                                   
proposed  in HB 552.   The  bill before  the Committee  would                                                                   
provide the sidebars  as well as the proposed  guidelines for                                                                   
the  casino.   Mr. Wright  responded  he did  not know  other                                                                   
gambling  statutes and  regulations  from other  states.   He                                                                   
maintained that  the proposal  before the Committee  contains                                                                   
strict   guidelines  for   the  licensing   oversight.     He                                                                   
reiterated that  there needs to  be some refinement  and that                                                                   
the sponsors  intend to  meet with  the Department  of Public                                                                   
Safety  for  background  checks   of  all  applicants.    The                                                                   
requestor intends  to make the  bill as tight as  possible in                                                                   
hopes of creating a pure industry.                                                                                              
Representative Hawker  concurred that the bill  goes in depth                                                                   
regulating the industry.   He asked if there  was anything in                                                                   
the bill  that would  authorize gaming  activity that  is not                                                                   
already  in statute.   Mr. Wright  did not  think there  was.                                                                   
The bill  lays out the type  of gambling activities  that may                                                                   
be conducted within  a State casino.  The  regular charitable                                                                   
gaming activities continue to be in the bill.                                                                                   
T.J.  FESCHER, (TESTIFIED  VIA  TELECONFERENCE),  CORNERSTONE                                                                   
COMPANY, LAS VEGAS, NEVADA, testified  in support of the bill                                                                   
noting that he  was part of a prominent casino  family in Las                                                                   
Vegas.   He stated  that he  was looking  forward to  getting                                                                   
into the  casino business  in Alaska,  pointing out  that the                                                                   
opportunity in Alaska  is great.  Mr. Fescher  indicated that                                                                   
he  owns casinos  in other  states and  has grown  up in  the                                                                   
industry.   The economic  impact has  been dramatic  in those                                                                   
communities  through  the casinos.    He emphasized  that  it                                                                   
would be a wonderful opportunity for Anchorage.                                                                                 
Mr. Fescher  projected that the  initial investment  would be                                                                   
between $80  and $120 million  dollars.  He anticipated  $100                                                                   
million dollars in revenue generated  from the slot machines,                                                                   
table games  and poker tables.   He anticipates  between 600-                                                                   
700 employees  hired with a starting  wage of $5.50  per hour                                                                   
and including  tips, the  hourly amount  could be around  $15                                                                   
Mr. Fescher  spoke to the benefits  of casino gaming  and the                                                                   
impacts of gaming on those areas,  noting that a casino could                                                                   
positively affect many markets statewide.                                                                                       
RICHARD HEACOCK,  (TESTIFIED VIA TELECONFERENCE),  FAIRBANKS,                                                                   
testified in  opposition to the  legislation.  He  noted that                                                                   
in 1960,  there was  a casino gambling  lobby that  came from                                                                   
Nevada  and Chicago  that  tried to  get  Alaska to  legalize                                                                   
casino gambling.  The Alaska Association  of Churches alerted                                                                   
churches throughout  the State and they  overwhelming opposed                                                                   
the  expansion of  gambling.   Recently,  churches adopted  a                                                                   
regulation  to oppose  gambling because  of the social  costs                                                                   
associated with it.  Mr. Heacock  urged that serious research                                                                   
be  done  on  the issue  identifying  the  social  costs  and                                                                   
consequences.   He  foresaw big  problems, including  marital                                                                   
problems,  suicides, divorce,  and  alcohol  and pointed  out                                                                   
that  75%  of  the  respondents   to  the  survey  issued  by                                                                   
Representative  Pete Kott  were  opposed to  Las Vegas  style                                                                   
casino gambling in Alaska.                                                                                                      
ROBERT  POE,   (TESTIFIED  VIA  TELECONFERENCE),   PRESIDENT,                                                                   
ANCHORAGE    ECONOMIC   DEVELOPMENT    CORPORATION    (AEDC),                                                                   
ANCHORAGE, offered  to answer questions of the  Committee and                                                                   
requested  that Mr. Cash,  Chairman for  AEDC testify  on the                                                                   
LARRY CASH,  (TESTIFIED VIA TELECONFERENCE), CHAIRMAN  OF THE                                                                   
BOARD,  ANCHORAGE  ECONOMIC DEVELOPMENT  CORPORATION  (AEDC),                                                                   
ANCHORAGE, voiced  support for the  bill.  He noted  that the                                                                   
Board  had not  taken a  position on  the bill  and that  the                                                                   
following comments  were his personal  ones.  He  pointed out                                                                   
that the  Board would be  taking the  issue up at  their next                                                                   
Mr.  Cash  thought   that  a  casino  would   complement  the                                                                   
Anchorage  economy and  that there is  already a  substantial                                                                   
tourism infrastructure  developed.   The casino is  likely to                                                                   
make Anchorage  a more attractive  place to visit.   He noted                                                                   
that  gambling  has become  very  common  in America.    Many                                                                   
cities have  benefited from the  evolution of  Indian gaming.                                                                   
It has become one  of the fastest growing aspects  of a major                                                                   
segment  of many  state's  economies.   With  the expanse  of                                                                   
casinos,  jobs  are  expanded.   Generally,  gaming  has  not                                                                   
resulted in an increase for crime.                                                                                              
Mr. Cash  concluded his  testimony, stating  that passage  of                                                                   
the  bill could  help improve  Alaska's fiscal  picture.   He                                                                   
offered to answer questions of the Committee.                                                                                   
REPRESENTATIVE HARRY  CRAWFORD commented on his  own personal                                                                   
experience regarding  the increases in crime  with the coming                                                                   
of casinos  and gambling.   He  noted that  in his  hometown,                                                                   
when the  casinos opened then  came prostitution,  drugs were                                                                   
sold and  burglaries increased.   He emphasized  that casinos                                                                   
are associated with a tremendous amount of crime.                                                                               
Mr. Poe interjected that statistics  show that the per capita                                                                   
percentage of  crime does not  go up.  Population's  increase                                                                   
and consequently, some crime increases.   He claimed that the                                                                   
most  important  thing to  consider  is the  negative  social                                                                   
impacts associated with unemployment.                                                                                           
TAPE HFC 04 - 86, Side B                                                                                                      
Mr. Poe added that there are many  statistics associated with                                                                   
unemployment   such  as   suicides,   child  abuse,   marital                                                                   
problems, drug  abuse, and alcohol.   Mr. Poe argued  that it                                                                   
is rare  to find an industry  that pays their own  way, while                                                                   
making a contribution to the community.                                                                                         
GUY  WARREN,  STATED  CLERK, PRESBYTERY  OF  ALASKA,  JUNEAU,                                                                   
voiced opposition  to HB 552.   He noted that  the Presbytery                                                                   
of Alaska consists of 15 member  churches of the Presbyterian                                                                   
Church.   The  bill  represents  a significant  step  towards                                                                   
situations,  which will not  be in the  best interest  of the                                                                   
State or the citizens that it serves.                                                                                           
Mr. Warren knew that while approval  of the legislation could                                                                   
provide  new  funding  to  meet the  financial  gap  and  new                                                                   
employment, the  Presbytery also believes that  the costs the                                                                   
State would incur  attempting to repair the  social ills that                                                                   
gambling  brings  will more  than  consume that  funding  and                                                                   
would remove  any real  benefit from  the employment.   Those                                                                   
social  ills  include increased  domestic  violence,  various                                                                   
psychological and social problems  and an increased incidence                                                                   
of  suicide.    He pointed  out  that  these  issues  already                                                                   
trouble  Alaska,  and  that no  additional  encouragement  is                                                                   
Mr.  Warren recommended  that the  Legislature seek  detailed                                                                   
and independently  researched estimates  on such costs.   The                                                                   
legislation will  see serious  casino gambling introduced  to                                                                   
Alaska prior to  the research.  He noted that  the Presbytery                                                                   
submitted a resolution approved  last fall, to the members of                                                                   
the  Legislature  expressing  their  specific  opposition  to                                                                   
gambling.   The  reasons  are  provided in  that  resolution.                                                                   
(Copy on File).                                                                                                                 
Mr.  Warren strongly  urged  members  of the  Legislature  to                                                                   
remember  who they represent,  namely  the people of  Alaska.                                                                   
The people of the  State have loudly spoken on  the matter of                                                                   
gambling.  A proposal to set up  an Alaska Gambling Board was                                                                   
presented  in 1990  and was  defeated by  over 40,000  votes,                                                                   
nearly a 2-1 margin.                                                                                                            
Co-Chair Harris  asked if there  was any form of  gaming that                                                                   
the  Presbytery would  support.   Mr.  Warren responded  that                                                                   
what is  being proposed  is not gaming,  but gambling.   When                                                                   
there is money  on the table and lost that is  gambling.  The                                                                   
Presbytery  does not support  any increased  gambling  in the                                                                   
Co-Chair  Harris  asked  if  the   Presbytery  supported  the                                                                   
elimination of  other types of  gambling such as bingo.   Mr.                                                                   
Warren responded that the Presbytery  had not discussed that.                                                                   
Representative  Fate asked  if Mr. Warren  could qualify  the                                                                   
social costs associated with gambling  across the State.  Mr.                                                                   
Warren  responded  that  the Presbytery  has  not  undertaken                                                                   
specific research,  as they  do not have  the resources.   He                                                                   
submitted that should be the work of the State.                                                                                 
BOB  LOESCHER, (ALASKA  NATIVE BROTHERHOOD)  ANB #2,  JUNEAU,                                                                   
noted  that he  represented charitable  gaming  organization.                                                                   
He indicated his support for the  concept of the legislation.                                                                   
Mr.  Loescher  commented  on some  provisional  concerns  not                                                                   
impact  charitable gaming  as currently  known.  The  current                                                                   
status  of  the statutes  and  regulations  are in  the  best                                                                   
interests for  Alaskans and charitable gaming  statewide.  He                                                                   
noted  that  his  group  is working  with  the  committee  on                                                                   
taxation issues for charitable gaming.                                                                                          
Mr. Loescher pointed  out that the bill before  the Committee                                                                   
has specific provisions that would  affect charitable gaming,                                                                   
and  he  requested   those  provisions  be  excluded.     The                                                                   
provisions   would   increase   the  costs   for   background                                                                   
information bonds.   There are  many costs that  a non-profit                                                                   
is not able to  afford.  He noted that the  ANB has also been                                                                   
working with the  sponsor of HB 509, regarding  the structure                                                                   
included in  the Alaska Statutes.   He said that HB  509 is a                                                                   
good  bill and  HB  552 differs  in  the composition  of  the                                                                   
commission.   The  ANB prefers  the structure  written in  HB
509, reiterating  concern that charitable gaming  be excluded                                                                   
from the bill.                                                                                                                  
Representative  Stoltze  asked about  placing  the casino  in                                                                   
another community.   Mr. Loescher  elaborated on  the economy                                                                   
of scale concern and that only  Anchorage would be big enough                                                                   
to  support   such  an  endeavor.    Representative   Stoltze                                                                   
mentioned      the  number of  people coming  off the  cruise                                                                   
ships in Southeast Alaska.                                                                                                      
In  response to  a  question  by Representative  Hawker,  Mr.                                                                   
Loescher compared  the proposed  legislation to  HB 509.   HB
509   provides  for   a  larger   commission  consisting   of                                                                   
disinterested  Alaskans and two  ex-official members;  HB 552                                                                   
proposes  a  limited  entry commission  style  in  which  the                                                                   
commissioners would be paid.                                                                                                    
GEORGE WRIGHT, OPERATOR, AWESON  EATS, ANCHORAGE, stated that                                                                   
he  did not  object  to  the casino  concept,  but  expressed                                                                   
concern with  the inclusion of  charitable gaming.   He spoke                                                                   
in support of  a larger commission such as  the one contained                                                                   
in HB 509.  He did not think that  an increase in crime would                                                                   
be  a  major  problem  and  agreed  with  the  importance  of                                                                   
creating new jobs.                                                                                                              
JOSH COZBY, SPORT FISHING, GUSTAVUS,  testified in support of                                                                   
the legislation.  He stated that  he operates a sport fishing                                                                   
business in Gustavus and addressed  the importance of tourism                                                                   
marketing statewide.   Mr. Cozby  observed that  Alaska could                                                                   
then be marketed  in Las Vegas if  it had a casino.   He felt                                                                   
that his business would be positively impacted.                                                                                 
MIKE OLNEY,  BEAR TRACK  INN, GUSTAVUS,  spoke in support  of                                                                   
the legislation.   He  pointed out  the decrease tourism  has                                                                   
experienced  since  he  moved  to  the State  in  1992.    He                                                                   
asserted that additional marketing would help.                                                                                  
Representative  Crawford  reiterated  his opposition  to  the                                                                   
legislation.    He  maintained   that  gambling  would  bring                                                                   
degradation  to the  State of  Alaska.   He  stress that  the                                                                   
intent of  the operators  is to  "separate people from  their                                                                   
money" and  make the owners rich.   He advised  that Gambling                                                                   
Anonymous  is a  thriving business  in his  hometown of  Tree                                                                   
Port, Louisiana.   In  1974, a  thorough breed racetrack  was                                                                   
proposed in Tree  Port, Louisiana and that he  was supportive                                                                   
at the time,  but since has  come to see the  negative impact                                                                   
of that industry.  Gambling brings many social ills.                                                                            
Co-Chair Harris inquired if a  gas pipeline would be bringing                                                                   
similar  ills.   Representative  Crawford  acknowledged  that                                                                   
construction of a  gas pipeline might bring  social ills, but                                                                   
pointed out  that they would  go away after the  construction                                                                   
period was over.  He maintained  that gambling would rule the                                                                   
Legislature once established.                                                                                                   
Co-Chair   Harris  referred   to  horse   racing  and   other                                                                   
activities where  gambling exists.   He questioned  where the                                                                   
line  would be  drawn  between entertainments  and  gambling.                                                                   
Representative  Crawford acknowledged  the difficulty  of the                                                                   
issue.  Las  Vegas attracts people from all  over the country                                                                   
and  world.    Alaska  will  be  a  self-contained,  seasonal                                                                   
market,  skimming all  the expendable  income out of  Alaska.                                                                   
Following the  initial flurry  of activity, the  economy will                                                                   
begin to shrink as the economy moves to other places.                                                                           
ED  MOEGLEIN,  (TESTIFIED  VIA  TELECONFERENCE),  ALASKA  NON                                                                   
PROFIT CHARITABLE  ORGANIZATIONS,  KENAI, spoke about  gaming                                                                   
in Anchorage.   He recommended  that there be  an independent                                                                   
study  indicating  both  positive  &  negative  impacts  that                                                                   
casino  gambling   involves.    The  negative   impact  could                                                                   
outweigh the positive  effects.  He stressed  that before any                                                                   
informed decision  can be  made, a  business study  should be                                                                   
Representative   Stoltze  asked   the  affiliates   that  Mr.                                                                   
Moeglein   represents.     Mr.  Moeglein   replied  that   he                                                                   
represents the  Veterans of Foreign Wars (VFW),  the American                                                                   
Legion, Elks, Eagles, and the Viet Nam Veterans of America.                                                                     
Co-Chair  Harris   acknowledged  that  this   is  "charitable                                                                   
gambling",  as money  would be  exchanging hands.   He  noted                                                                   
that if  a person was against  gambling, they  would probably                                                                   
be against gaming  as well.  Mr. Moeglein commented  that was                                                                   
not  a fair  assessment  because when  it  is benefiting  the                                                                   
communities and  organizations and done by volunteers  of the                                                                   
charitable  organizations,   there  is  a  difference.     He                                                                   
recommended that a study be done  on casino gambling.  He did                                                                   
not  know how  it would  affect  the charitable  non-profits.                                                                   
The individuals do a lot of the  charitable gaming from those                                                                   
organizations and  the money raised from the  organizing goes                                                                   
into  community  service.    It is  a  means  of  continually                                                                   
raising funds for the communities.                                                                                              
Co-Chair Williams  indicated that  statewide testimony  would                                                                   
be closed.                                                                                                                      
MAKE   BARNHILL,  ASSISTANT   ATTORNEY  GENERAL,   COMMERICAL                                                                   
SECTION, DEPARTMENT  OF LAW, offered  to answer  questions of                                                                   
the Committee regarding the gaming bill.                                                                                        
Co-Chair  Harris  commented  that   federal  law  allows  for                                                                   
reservation  status for Indian  groups to  have some  type of                                                                   
gaming, as  the State would allow  by law.  He asked  if that                                                                   
would  open  up the  opportunity  for  any Native  groups  in                                                                   
Alaska to qualify to open a full-scale  casino.  Mr. Barnhill                                                                   
replied  that  it  would.   He  elaborated  that  the  Indian                                                                   
Gambling Regulatory  Act provides  for three types  of gaming                                                                   
on  Indian  lands.    The  first   type  is  Class  I  gaming                                                                   
consisting  of traditional  Indian games,  social games  with                                                                   
prizes.  That  type of gaming  is not subject to any  kind of                                                                   
regulation, federal  or State.  The second kind  of gaming is                                                                   
Class  II gaming,  consisting  of bingo,  pull-tabs and  some                                                                   
card  games.   That kind  of gaming  is also  not subject  to                                                                   
State regulation but is subject  to regulation by the federal                                                                   
government.    Everything  else  falls  into  the  Class  III                                                                   
gaming, the kind of gaming done in casinos.                                                                                     
Mr.  Barnhill continued,  in order  to conduct  Class III  on                                                                   
Indian lands,  there are  several requirements.   It  must be                                                                   
conducted  on  Indian  lands within  the  definition  in  the                                                                   
Indian   Land  Regulatory   Act.     That   included   Indian                                                                   
reservations, trust lands or restricted  lands over which the                                                                   
tribe  is  exercising  governmental power.    Barrow  applied                                                                   
several  years  ago and  was  denied because  the  particular                                                                   
parcel that they  submitted to conduct gaming  on, the Gaming                                                                   
Commission  found that  they did not  exercise federal  power                                                                   
over the parcel.                                                                                                                
The second requirement is that  the tribe has to authorize an                                                                   
ordinance.  The  national Gaming Commission must  approve the                                                                   
ordinance.  The third requirement  is that the state in which                                                                   
the  Indian  lands are  situated  must  permit that  type  of                                                                   
gaming.    The  State  and  the   tribe  must  enter  into  a                                                                   
negotiated  compact   to  agree  that  the   games  would  be                                                                   
In   response  to   Representative   Stoltze,  Mr.   Barnhill                                                                   
understood  that when  a question comes  before the  National                                                                   
Commission on Gaming,  they would go the Commissioner  of the                                                                   
Department of the Interior for  legal questions, which can be                                                                   
appealed to the  District Court.  He added that  the State of                                                                   
Alaska has participated in that  process with the decision in                                                                   
Representative  Stoltze listed  the  past scandals  involving                                                                   
the   Department   of   Interior    and   improper   campaign                                                                   
contributions.   He commented  that the proposed  legislation                                                                   
was not necessarily a pure process.                                                                                             
Representative  Croft  asked  if under  the  requirements  of                                                                   
Indian Gaming Act, would the proposed  legislation constitute                                                                   
the State authorizing  gaming under Class III.   Mr. Barnhill                                                                   
responded that the legislation  does not authorize gaming and                                                                   
that  it is  an  open question.    For the  authorization  of                                                                   
purpose under the regulatory act,  an argument could be made.                                                                   
Representative   Croft   commented   that  passage   of   the                                                                   
legislation  may   authorize  Indian  gaming  but   when  the                                                                   
Commission does exercise  the issue of license,  it is clear.                                                                   
Mr. Barnhill  understood that the legislation  would delegate                                                                   
the power to the Alaska Gaming  Commission and that it is not                                                                   
certain that the Commission would approve all the games.                                                                        
Representative Croft  thought it was indicated  that only one                                                                   
license could be  issued.  Mr. Barnhill advised  that was not                                                                   
correct.  The State permits any  person, anywhere, to conduct                                                                   
gaming.  If the Alaska Gaming  Commission licenses the gaming                                                                   
that would be enough to conduct  the activities assuming that                                                                   
all other requirements are approved.                                                                                            
Representative Croft  mentioned Metlakatla, Kake  and Klawock                                                                   
and their "grandfathered in" status  exception.  Mr. Barnhill                                                                   
responded that  there is a difference between  Indian country                                                                   
and the statutory definition of Indian lands.                                                                                   
TAPE HFC 04 - 87, Side A                                                                                                      
Representative Croft asked for  information on the difference                                                                   
between  Indian  country  and  Indian lands.    Mr.  Barnhill                                                                   
offered to get back to Representative  Croft on that concern.                                                                   
He  understood  that  the  definition  of  Indian  lands  was                                                                   
broader than the definition of Indian country.                                                                                  
Co-Chair Harris  asked the Department  to address  the issues                                                                   
regarding increased  crime and the type of  concerns involved                                                                   
with that  activity.  There  might be increased  business for                                                                   
the Department  of Public  Safety and  the Department  of Law                                                                   
with criminal  activity.  Mr.  Barnhill stated that  he could                                                                   
not speak  for the Department  of Public Safety,  but thought                                                                   
that since  it would be only  one casino, the issues  are up-                                                                   
front.  He could not address the idea of increased crime.                                                                       
Representative Fate commented  on the disposition of land and                                                                   
village  lands.    He  understood   that  village  lands  are                                                                   
currently  under  private  councils  and that  there  are  26                                                                   
separate  tribes  in  the  State of  Alaska.    Mr.  Barnhill                                                                   
thought that  the critical part  of the definition  of Indian                                                                   
lands is  that the  tribe has  to exercise jurisdiction  over                                                                   
the  land in  question.   The  numbers  of  parcels that  the                                                                   
tribes  are actually exercising  jurisdiction  is small.   In                                                                   
most  cases,  the  federal  government   is  exercising  that                                                                   
jurisdiction.  He offered to research it further.                                                                               
HB 552 was HELD in Committee for further consideration.                                                                         
The meeting was adjourned at 10:56 A.M.                                                                                         

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