SB 157-AMUSEMENT DEVICES & GAMBLING DEFINITION  2:21:57 PM CHAIR MCGUIRE announced the consideration of SB 157. FORREST WOLFE, Staff, Senator Lesil McGuire, sponsor of SB 157, introduced the legislation on behalf of the sponsor speaking to the following sponsor statement: SB 157 is a housekeeping measure that aims to clarify that restaurants featuring arcade-style amusement games may lawfully operate in Alaska. Elsewhere in the United States, popular restaurant businesses feature arcade areas where patrons play games of skill to win tickets which can then be redeemed for toys and other novelties. Unfortunately, Alaska's outdated laws are so vague that the legality of these operations is far from clear. SB 157 would clarify that playing these arcade-style amusement games of skill, winning tickets and redeeming them for small, non-cash prizes does not constitute gambling under Alaska law. By clarifying this issue, the risk for companies seeking to do business in Alaska will be eliminated. These family-friendly businesses can be significant additions to Alaska's economy. For example, Dave & Busters is seeking to open a location at the Dimond Center mall in Anchorage. It is anticipated that Dave & Buster's will spend approximately $10 million to build said location, and once operational will employ approximately 140-160 workers. Moreover, this addition to the Dimond Center is the keystone to a much larger renovation project for the mall that is anticipated to employ approximately 200 construction workers. In this time of economic uncertainty, this is an effective way to add well-paying jobs to Alaska's economy. Passage of this bill will give businesses like Dave & Buster's the sure-footed legal ground to move ahead with their plans. Finally, it should be made absolutely clear that this narrow bill does not in any way legalize traditional gambling, nor does it legalize casino-style video gambling such as video poker, slots, or roulette. Once again, this bill only clarifies that arcade-style operations that award tickets to be redeemed for toys and other novelties are lawful. 2:24:42 PM HUGH ASHLOCK, owner, Dimond Center Mall (DCM), Anchorage, Alaska, said this is an Alaskan and family-owned shopping center that receives over 12 million visits annually. He explained that DCM is in the middle of a $50 million expansion and renovation project. He reviewed the progress thus far and relayed that Dave and Buster's would be a 44,000 square foot addition on top of the shopping center. "Dave and Buster's will spend $10 million, we would spend an additional $13 million." Aside from the estimated 200 construction jobs, there will be about 100 offsite ancillary construction jobs. He described Dave and Buster's as a serious anchor for the Dimond Center Mall. CHAIR MCGUIRE expressed support for the project, a preference for using both a union and non-union workforce, and providing renewable or sustainable energy systems to the degree possible. MR. ASHLOCK said this will be a highly skilled project and to get that level of talent in Alaska a union shop is necessary. He reported that the project will use the newest energy saving HVAC systems and the parking lot has already been converted to high density, high lumen and lighting. CHAIR MCGUIRE enthused about new building projects that add jobs. SENATOR COGHILL commented that the investment is great and the bill clarifies the issue of gaming. 2:30:04 PM HOWARD TRICKEY, representing Dave and Busters, Anchorage, Alaska, said he would provide background and context to explain the Dave and Buster's business model, and the reason the change in law is needed. He explained that Dave and Buster's was formed in 1982 and is not a franchise. It is currently in 80 locations in more than 30 states and employs [12,000] nationally. The business model is to provide family fun and the establishments are for playing a variety of amusement games. The company has well-developed and effective policies prohibiting guests under age 18 without a parent or guardian. The employees are trained using a nationally recognized program that is known as "Certified to Serve Safe." This is a family-friendly environment designed to have fun while patrons watch sports games, play games, or enjoy fine dining. Dave and Buster's offers two types of games in the arcade. One is skill-based where strategy, timing, and dexterity is used to determine the outcome of the game. About 65 percent of the games are this type. The second type are simulation games. These include simulations of flying an aircraft or driving in the Indianapolis 500. The criteria for selecting games for the arcade is those that assess and evaluate a player's skill. Players earn tickets that can be redeemed onsite where there are a variety of prizes that range in value. Tickets can be redeemed immediately or the customer can save tickets and redeem them in the future. MR. TRICKEY stated that this amendment was requested to define amusement devices whose outcome is determined predominantly by the skill and ability of the player. He said the definition is needed because of an outdated 2001 attorney general opinion that concluded that a video golf game that was programed to include significant elements of chance did constitute gambling. Under that opinion, Dave and Buster's would face some uncertainty if they went forward with the proposed investment at Dimond Center Mall. He explained that the bill adds a new Section 3 that defined amusement devices in both a positive and negative sense. The bill positively defines what constitutes "amusement device" and then describes the games that are excluded. The excluded types of games are video forms of casino style games that would constitute a gambling activity. The bill adds a new paragraph to define amusement device. It clarifies that playing an amusement device is not gambling and earning tickets that can be redeemed for a prize is not gambling either. In no other way does the bill change the definition of what is a game of chance and what constitutes value. 2:39:05 PM SENATOR WIELECHOWSKI asked, "As I'm reading this, Chuck E. Cheese is illegal?" MR. TRICKEY replied the franchisee is probably taking a calculated business risk based on the 2001 attorney general opinion. SENATOR WIELECHOWSKI referenced page 2, line 6, and asked if he had a definition for "electronic novelty." MR. TRICKEY replied the term isn't defined but the intention is to allow electronic prizes that customers can redeem with tickets. He noted that one of the prizes is an IPad. SENATOR WIELECHOWSKI wondered whether there should be a limit on the toy, candy, or electronic novelty or the value of merchandise in a claw machine or similar device. MR. TRICKEY offered his belief that it should be a matter of personal family choice for the Dave and Buster's customers. "I don't see why the legislature would want to place a value on it in a way that would make it more difficult for the business model to be successful." SENATOR WIELECHOWSKI referenced page 2, line 27, and asked if he had a definition for "casino games." He said he's trying to build a record in the event that someone wants to come in with other types of games. MR. TRICKEY explained that, "By listing what's excluded, we developed a clear category of games that would not be permitted," he said. 2:44:44 PM SENATOR WIELECHOWSKI noted that one of the documents in the packet discusses site criteria, one of which is 500,000 to 1 million residences within 10 miles. He asked if Dave and Buster's is making an exception for that, because Anchorage does not meet that criterion. MR. TRICKEY suggested the question may be better for Mr. Ashlock or Mr. Tobin, but his understanding is that the Dimond Center Mall was selected because it is a statewide center. CHAIR MCGUIRE related that when she first enquired about getting a Dave and Buster's in Anchorage she was told the threshold was 1 million. She offered her belief that Dave and Buster's has found that Alaska is a good opportunity, despite the original entry requirements. "As a broader economic development point of view for us here in the legislature, I think this is a good trend." She asked Mr. Ashlock to address the question. 2:47:51 PM MR. ASHLOCK reported that Anchorage is number 2 in eating out in the U.S. at $6,900 per capita. New York is number 1 at $7,100 per capita and San Francisco is number 3 at $6,100 per capita. Much like Honolulu, Anchorage serves as a regional magnet and hub for medicine, entertainment, shopping, and international travelers. It's a perfect model for Dave and Buster's to select. 2:49:18 PM JAY TOBIN, General Counsel, Dave and Buster, Dallas, Texas, clarified that Dave and Buster's has more than 12,000 employees nationally. It has been a publicly traded company since October 2014 and the stock is listed on the NASDAQ. He explained that Dave and Buster's tagline is the opportunity to eat, drink, play, and watch. As mentioned previously, this development will be over 40,000 square feet and will have a full service restaurant with a full service bar. In addition there will be a full service sports bar, an area dedicated to private events, and a midway center for playing a variety of games. He clarified that these games are not allowed to dispense cash or cash equivalents. Addressing the site criteria question, he related that over time Dave and Buster's has learned to experiment, opening stores in locations that traditionally wouldn't fit the population requirement. He described the different reasons for openings in Panama City, Florida, Orlando, Florida and Virginia Beach, Virginia. The reasons for opening a location in Anchorage are multifold but primarily it's that the market is unique. Anchorage has a fulltime population, the municipality and Dimond Center are a significant draw from throughout the state, and national and international tourism is pulled in. Furthermore, the attention to detail and significant quality offered by Mr. Ashlock was very important in making the decision. 2:56:06 PM CHAIR MCGUIRE commented that this bodes well for the future of Anchorage. She mentioned the amazing military population in the state and asked him to relay a request to consider both college and military discounts, charitable giving, and partnerships with rural communities to enhance opportunities. SENATOR COGHILL observed that the definitions that are in the negative may be problematic. SENATOR COSTELLO summarized that this legislation clarifies and rectifies a situation for a specific business. She cautioned the committee to think about this broadly statewide to ensure that there are no unintended consequences. She questioned, for example, how pull tabs might be affected. CHAIR MCGUIRE said her staff has worked diligently to be clear that this is not about legalizing gambling. She committed her staff and the drafter to work with the members to ensure that any concerns are addressed. She said she likes the notion of limiting the value of the prizes to protect vulnerable populations. CHAIR MCGUIRE announced she would hold SB 157 in committee for further consideration.