Legislature(2023 - 2024)BARNES 124
01/23/2024 01:00 PM House TRANSPORTATION
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB197 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 197 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
January 23, 2024
1:03 p.m.
DRAFT
MEMBERS PRESENT
Representative Kevin McCabe, Chair
Representative Sarah Vance, Vice Chair
Representative Tom McKay
Representative Craig Johnson
Representative Jesse Sumner
Representative Louise Stutes
Representative Genevieve Mina
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 197
"An Act relating to gaming activities on Alaska marine highway
system vessels; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 197
SHORT TITLE: ELECTRONIC GAMING ON AMHS FERRIES
SPONSOR(s): REPRESENTATIVE(s) SUMNER BY REQUEST
05/08/23 (H) READ THE FIRST TIME - REFERRALS
05/08/23 (H) TRA, L&C, JUD, STA, FIN
01/23/24 (H) TRA AT 1:00 PM BARNES 124
WITNESS REGISTER
JOE LURTSEMA, Staff
Representative Jesse Sumner
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 197 on behalf of
Representative Sumner, prime sponsor.
CODY RICE, Majority Staff
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
197.
CRAIG TORNGA, Director
Alaska Marine Highway System
Ketchikan, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
197.
ACTION NARRATIVE
1:03:04 PM
CHAIR KEVIN MCCABE called the House Transportation Standing
Committee meeting to order at 1:03 p.m. Representatives C.
Johnson, McKay, Stutes, Mina, Sumner, and McCabe were present at
the call to order. Representative Vance arrived as the meeting
was in progress.
HB 197-ELECTRONIC GAMING ON AMHS FERRIES
1:05:39 PM
CHAIR MCCABE announced that the only order of business would be
HOUSE BILL NO. 197, "An Act relating to gaming activities on
Alaska marine highway system vessels; and providing for an
effective date."
1:07:01 PM
JOE LURTSEMA, Staff, Representative Jesse Sumner, Alaska State
Legislature, presented HB 197 on behalf of Representative
Sumner, prime sponsor, and paraphrased the sponsor statement
[included in the committee packet] which read as follows
[original punctuation provided]:
House Bill 197 would legalize electronic gaming on the
AMHS Ferry System, and on the Alaska Marine Hwy.
Currently in Alaska Statute, only pull tabs and bingo
are legal forms of gaming. HB197 would legalize
additional games to only be played on vessels, and in
approved waters.
This bill would generate revenue for our failing ferry
system, which has not turned a profit since its
inception. Tourist season in the southeast sees upward
of 1.5 million people pass through per year, with
close to $800 million dollars spent in our great
state. Allowing these tourists, and for the citizens
of Alaska, to enjoy gaming on the ferry system, would
create revenue, jobs, and opportunities for our state
and the people in it.
Other states with similar gaming concepts (i.e.
riverboat gaming, gaming on water) have seen massive
increases in revenue, which result in additional
funding to state's education systems and other
important agencies. The ferry system and the Alaska
marine highway are currently generating a loss of
revenue every calendar year, and House Bill 197 aims
to stop that downward trend.
MR. LURTSEMA added that the ferry system is almost $1 billion in
debt, and new revenue must be generated for the success of the
state.
1:09:06 PM
MR. LURTSEMA gave the sectional analysis to HB 197 [included in
the committee packet] which read as follows [original
punctuation provided]:
Section 1: AS 05.15.020 is amended to add a new
subsection to require an annual permit to conduct
gaming activities on vessels 3 miles from land on The
Alaska Marine Highway. The cost of the annual permit
is $10,000.
Sec. 2. AS 05.15.060(a)(11) is amended to establish
standards for online ticket sales to ensure compliance
with charitable gaming laws, including age and
location verification requires.
AS 05.15.060(a) amends sub-section (12) to include
gaming activities on vessels of The Alaska Marine
highway system;
Furthermore, sub-section (12) of the current statute
changes to (13) without changing the language to re-
organize the syntax of the statute.
Sec. 3. AS 05.15 is amended to include new sections
that define Gaming on Alaska Marine Highway system
vessels.
Sec. 05.15.300. Notwithstanding the current laws
prohibiting gambling in Alaska, this section allows
gaming activities for persons at least three miles
away from shore in designated areas on the vessels
away from dining areas, children, and passenger
cabins. Furthermore, participation in gaming
activities is limited to a person who is 21 years of
age or older.
A person shall pay 10% of their gross receipts less
prizes awarded on gaming activities to the department
of tax in the preceding month by the 15th day of the
following month.
A person conducting gaming activities must maintain
records of all gaming transactions and make the
records available to the department for inspection.
Furthermore, the department may not issue more than
one permit for a vessel. However, a person may conduct
more than one type of gaming activity on a vessel and
may conduct gaming activities on more than one vessel
if the person holds a permit for each vessel.
Sec. 05.15.310 Permits. Notwithstanding the current
laws prohibiting the issuance of gambling permits in
Alaska, the department may issue a permit to conduct
gaming activities on a vessel to a qualifying
organization or a business that is registered and in
good standing with the Department of Commerce,
Community, and Economic Development and has entered a
contract with a qualified organization to operate
gaming activities on behalf of the qualified
organization. Sec.
05.15.320. Penalty. A person who conducts a gaming
activity onboard a vessel without a valid permit
defined in this sectional analysis is guilty of a
class B misdemeanor. Sec.
05.15.320. Definitions. (1) "gaming activity" means
bingo, pull-tab activities, raffles, lotteries, card
games, dice games, slot machines, video lottery
terminals, or other games of chance authorized by the
department; (2) "vessel" means a vessel of the Alaska
marine highway system.
Sec. 4. This Act takes effect July 1, 2024.
1:12:53 PM
MR. LURTSEMA began following a PowerPoint, titled "HB 197
Electronic Gaming on AMHS Ferries." He moved to slide 4, titled
"Current Regulations for Gambling in Alaska," which read as
follows [original punctuation provided]:
In Alaska, gambling is regulated under Alaska Statutes
Title 5 and the Alaska Administrative Code 15 AAC.160,
which establish the process for obtaining a permit to
conduct gaming and outline the procedures and
restrictions for games. Land-based gambling is limited
while online gambling remains unregulated, with local
businesses prohibited from operating online casino
sites.
MR. LURTSEMA continued to slide 5, titled "Economic Benefit,"
which read as follows [original punctuation provided]:
Potential Revenue from Legalized Gambling
1 The introduction of electronic gaming on AMHS
ferries has the potential to generate additional
revenue through fees, taxes, and a percentage of
gaming income, similar to land-based casinos,
contributing to the funding of maritime services.
2 Implementing electronic gaming on ferries could
create diverse job opportunities, spanning roles from
casino staff to managerial positions, benefiting local
employment and supporting the communities served by
the AMHS.
3 Legalizing electronic gaming on AMHS ferries offers
significant economic benefits, including increased
revenue, job creation, and boosted tourism. The ferry
system could profit from fees and taxes while creating
jobs, attracting more tourists, and fostering regional
economic growth through reinvestment of gaming-related
revenue
MR. LURTSEMA concluded on slide 6, titled "Gross gaming revenue
of casinos in the United States in 2022, by state (in million
U.S. dollars)." The slide featured a graph published by
Statista Research Department including several states that have
legalized river boat gaming. He urged the committee to vote yes
on HB 197.
1:14:50 PM
REPRESENTATIVE STUTES expressed a concern regarding verbiage in
the sponsor statement about profits, relating that "it has not
turned a profit since its inception." She added that it is
called the Alaska Marine Highway System (AMHS), which designates
it is part of the state highway system, and she clarified that
she did not know of any highway in the state that has turned a
profit since its inception. She opined that the statement was
disingenuous.
CODY RICE, Majority Staff, Alaska State Legislature, answered
questions during the hearing on HB 197. He expressed his belief
that Representative Stutes had a fair point in terms of the cost
of highway systems.
REPRESENTATIVE STUTES suggested to keep in mind that the AMHS is
the only highway user in the state that pays to get on the
highway in excess of gas tax.
1:16:30 PM
MR. RICE brought attention to a handout [included in the
committee packet], which shows the following assumptions around
cruise ship passengers: estimated gross gambling revenue and how
many adults participate in the activity; averages; historical
data on ferry passenger traffic; and cruise ship passenger
traffic. He further explained the colored bars on the graph as
they pertain to expenses.
1:18:42 PM
REPRESENTATIVE VANCE asked Mr. Rice when he made the analysis
whether he had looked at states that were similar to Alaska in
terms of marine highway systems.
MR. RICE replied there are no other states like Alaska, but the
answer was no.
REPRESENTATIVE VANCE asked whether Mr. Rice had a breakdown of
residents' and nonresidents' spending habits.
MR. RICE said that level of detail was not available. He
further explained that the Department of Transportation & Public
Facilities (DOT&PF) had not published or provided passenger data
yet.
REPRESENTATIVE VANCE requested to receive the information from
DOT&PF to help gather a clear picture of "spendable money"
versus trying to get from one point to another, and to help
utilize the model that Mr. Rice had created.
1:21:47 PM
REPRESENTATIVE STUTES stated that she took exception to some of
Mr. Rice's comments, and she stressed that the AMHS is not
intended to make a profit, just as none of the roads are
intended to make a profit. She said she is not opposed to
generating revenue for the AMHS, but it provides a service and
should not be referred to as a "big money drain."
1:22:53 PM
REPRESENTATIVE MINA asked Mr. Rice how the percentage of
passengers who would be participating in gaming activities is
determined.
MR. RICE explained it is based on a national average. He
directed a comment to Representative Stutes that if there is a
preferred language or terminology that could be used, he would
take suggestions into consideration.
REPRESENTATIVE STUTES responded that she would be delighted to
work with him on that.
1:24:11 PM
CHAIR MCCABE asked whether the money garnered would go to the
state general fund or the fair box recovery and stay in the
ferry system.
1:24:28 PM
MR. LURTSEMA said the revenue would go to the Department of
Revenue's Tax Division.
1:24:43 PM
CHAIR MCCABE noted if a ship is three miles offshore, they can
do gaming. He questioned whether there would be a limited area
of where the gaming could work.
MR. LURTSEMA said outside the 3-mile radius are federal waters
where gaming is allowed. In terms of routes, he explained he is
in the process of talking with an expert for an efficient
answer.
1:26:25 PM
REPRESENTATIVE STUTES commented that she supported the idea and
is a proponent of anything that would enhance the AMHS.
1:26:51 PM
REPRESENTATIVE MINA asked whether the new types of gaming
allowed would be operated off the same definition of current
gaming in the state.
MR. LURTSEMA replied that AMHS is looking to implement
electronic gaming systems such as slot machines.
REPRESENTATIVE MINA noted that the bill pursues new types of
gaming on ferries, and there are specific laws related to
existing types of gaming. She asked whether [the bill] would
extend to electronic gaming.
MR. LURTSEMA said he would confirm with experts and provide the
answer at a later date.
1:28:16 PM
REPRESENTATIVE VANCE said nonprofit organizations have concerns
about how [gaming] would impact AMHS's revenue based upon the
current structure. She asked Mr. Lurtsema what he would say to
advocates in these communities.
MR. LURTSEMA stated he would look into it and provide the answer
at a later date.
1:29:27 PM
REPRESENTATIVE C. JOHNSON asked whether the state could
duplicate the same things that are already legal and not worry
about the 3-mile limit, and "even throw a charity in there."
MR. LURTSEMA confirmed that is also being considered, and once
he had a more definitive answer, he would inform the committee.
1:30:11 PM
CHAIR MCCABE thanked the presenters and asked committee members
for final comments.
1:30:46 PM
REPRESENTATIVE STUTES requested to hear from Mr. Tornga who was
available online.
1:31:30 PM
CRAIG TORNGA, Director, Alaska Marine Highway System, agreed
with a previous statement about grabbing any opportunities, but
this would be applicable only for a few routes. He noted many
vessels are old, and there were no outlets for charging phones
and computers, so there is work to be done. Any modifications
made to the vessels must have an engineer plan that also goes
through the U.S. Coast Guard, he explained.
1:34:11 PM
REPRESENTATIVE VANCE asked whether, providing the bill passed,
the engineering design would make it in time to make the
adjustments for the new vessel to be implemented.
1:34:34 PM
MR. TORNGA replied that the modifications to the current plan
could be made if they have approval. There is time this year,
he said, if it proves to be viable. He added that currently,
all vessel space is dedicated.
1:35:42 PM
MR. RICE offered his time to any committee members that have
questions outside of today's hearing.
1:36:01 PM
MR. TORNGA noted that the writership numbers for 2022 were
posted online now.
[HB 197 was heard and held].
1:36:27 PM
CHAIR MCCABE discussed future business.
1:36:41 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 1:37
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB197 Sectional Analysis Ver. A.pdf |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197A.PDF |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197 Sponsor Statement.pdf |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197 PP.pdf |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197.VerA.FiscalNote.DOT |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197.VerA.SupplementaryGraphs.1.22.24.png |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197.VerA.Supplementary Graph 2.1 - 1.23.24.png |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197.VerA.Supplementary Graph 2.2. - 1.23.24.png |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197.VerA.Supplementary Graph 1.1.23.24.png |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197.VerA.Supplementary Graph 3.1.23.24.pdf |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |
| HB197.VerA.Supplemetary Graph 2.3. - 1.23.24.png |
HTRA 1/23/2024 1:00:00 PM |
HB 197 |