Legislature(1995 - 1996)
04/20/1995 01:40 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL 286
"An Act providing an exemption from gambling and
certain alcoholic beverage laws for gambling conducted
by cruise ships for their ticketed passengers in the
offshore water of the state; relating to promotions on
board cruise ships; defining 'cruise ship'; providing
for exemption procedures for certain cruise ships
before they can conduct gambling in the offshore water
of the state; providing an exemption from the
coin-operated device tax for cruise ships exempted from
the gambling laws; and providing for an effective
date."
REPRESENTATIVE WILLIAM WILLIAMS testified in support of HB
286. He stated that HB 286 would give the State
authorization to offer an exemption from gambling statutes
to cruise ships. The exemption would allow cruise ships to
operate their casinos in Alaskan waters.
He added that casino gambling aboard cruise ships is an
amenity needed to keep Alaska on par with other cruise
destinations. While gambling is not the main attraction of
cruises, it is an accepted and expected part of the
experience.
Representative Williams added that the communities of Alaska
would not be negatively affected by the legislation. Casino
operations would be prohibited within three miles of a
vessel's port of call. While in port the casino would
remain closed, therefore removing the opportunity for non-
ticketed people to participate in the activities.
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Representative Williams concluded that the legislation would
support the tourism industry and would raise State revenues.
He urged Committee members' support the legislation.
TOM DOW, VICE PRESIDENT, PRINCESS TOURS, testified in
support of HB 286. The legislation would allow gambling
aboard cruise ships within Alaskan waters for ticketed
cruise passengers. Cruise ships would be required to pay a
fee to the State for an exemption prior to conducting
gambling under the legislation.
Mr. Dow added that his company believes that there are no
public policy reasons to prohibit the activity. There is
public support to allow it to continue and with the
provision of an exemption fee, there would be a simple
method for the State to thus secure revenues from cruise
lines who wish to continue to offer the entertainment option
to their passengers. He added, there is little
administrative expense or burden placed on the State for the
collection of the revenues.
Representative Brown asked if the fees recommended in this
year's legislation were the same as those in the original
legislation last year. Mr. Dow replied that the fees
reflect what was passed last year from Committee and that
those fees should generate $600 thousand dollars this year
and more in the following year.
Representative Brown referenced Section #6 and asked why the
exception was necessary: This prohibition does not apply to
on-shore excursions that are sold on board a cruise ship.
Mr. Dow commented, last year an amendment was offered to the
legislation. The legislation was directed at prohibiting or
restricting promotions to gift shops. The language in the
bill specifically excluded the sale of shore excursion
products on board. Therefore, more narrowly defined the
disclosure requirement to the area of gift shop promotional
lectures.
He pointed out, that practice has been applied frequently in
the Caribbean areas although not a common practice in
Alaska. Operators have attempted to do this over the years,
although the Princess Line has never supported it. He
understood the practice was not legal as informed by the
Attorney General's office. Because the last year's
legislation that was vetoed contained the exemption for
shore excursion activities, that area was then readdressed.
He added that it is common practice for cruise ship lines to
offer shore excursion activities to passengers. The
practice is a convenience for the passengers and to the
vendors providing the service. Mr. Dow suggested that the
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information could be disclosed on the shore excursion
brochures.
Representative Brown referenced correspondence from a local
vendor who felt that the inclusion of the sentence in
Section #6 would be detrimental to small and local vendors.
Mr. Dow responded that the cruise lines has a responsible
role to guarantee that activities that involve equipment and
transportation are safe. He emphasized that the current
system works for the greater benefit of most of the
customers, passengers and vendors who are operating.
Representative Martin voiced concern with "opening the door"
to gambling in the State of Alaska. Mr. Dow responded that
gambling would be available only to the passengers on the
cruise ships. Representative Martin emphasized that the
State of Alaska prohibits gambling. He asked if the
legislation could proliferate gambling in the State.
Mr. Dow explained that this precedence has been established
in other states who share a gambling prohibition. The
unique quality of Alaska as opposed to other coastal states,
is that in Alaska, the cruise pattern tends to "hug" the
inside passage. By some definitions, the cruise ship would
be within the state territorial waters at all times.
Representative Martin reemphasized that the cruise lines
would be opening gambling for profit purposes as opposed to
charitable donations. He asked the type of gambling
available aboard the ships.
Mr. Dow explained the various forms available to the cruise
line passengers. Representative Martin voiced resistance to
video gambling and credit card gambling. He felt that once
the legislation moves through the Legislature, it would open
up gambling possibilities throughout the State.
Representative Brown referenced a memo from the Department
of Revenue addressing the legalization of slot machines in
the proposed legislation. Mr. Dow stated that current
information from the Department indicates that there may be
another section of State law that prohibits other coin
operated devices. He stated that it could require an
amendment.
Mr. Dow added that it would be possible to pass the
exemptive legislation and narrowly define what is involved
without opening the State of Alaska to gambling.
Representative Martin asked if Mr. Dow would object to an
amendment indicating that proceeds from the gambling would
not be allowed for political campaigning. Mr. Dow stated
that there was no intention that the cruise operators would
be using the proceeds to fund any outside activities.
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SUSAN BURKE, ATTORNEY, GROSS & BURKE, REPRESENTING PRINCESS
TOURS, JUNEAU, spoke to the need for a technical amendment.
The Department of Law indicated that a problem existed from
the drafting, which inadvertently excluded slot machines.
Ms. Burke believed that the bill as passed last year
adequately covers that concern. Although, having gone
through the past two years legislative work, she recommended
including the amendment.
Ms. Burke noted that Amendment #1 [Attachment #1] would
provide clear intent that slot machines would not be
included in the exemption for cruise ships.
Mr. Burke responded to Representative Martin's concern that
under the equal protection doctrine, by passing the bill
providing an exemption from casino gambling for cruise ships
would not allow anyone in the State the authority to go to
court and appeal for the same rights. She stated this was
not a concern. Under the equal protection analysis, to
treat one class of person different from another, would
require good reason for doing so. Ms. Burke added, when
speaking about commercial regulations to conduct the
gambling activity, there would be no chance that a court
would come to the conclusion that an equal protection
problem existed.
(Tape Change, HFC 95-88, Side 2).
Ms. Burke noted that Amendment #1 would clarify existing
law, adding new language AS 05.15.250. The effect would
establish the fact of cruise ship exemption, and that any
prohibitions resulting from lack of authorization listed
would not apply to the cruise ships.
Representative Martin voiced concern that the legislation
would bring gambling to the State in order to generate more
revenues. Ms. Burke noted that there would be a difference
between having a gambling operation located on land in which
everyone had access to gambling on board a cruise ship. The
activity of gambling on the cruise ship would be an activity
which in actuality would not take place in Alaska, although
it would in a technical sense.
Representative Therriault MOVED to adopt Amendment #1.
Representative Martin OBJECTED for purposes of discussion.
DENNIS POSHARD, DIRECTOR, DIVISION OF CHARITABLE GAMING,
DEPARTMENT OF REVENUE, noted that the position paper
distributed to Committee members resulted from a discussion
with the Department of Law. However, he felt that the
amendment was not needed because of Section 2(d) which would
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address the concern.
The area of a potential problem results from the regulations
which were adopted in accordance with Title 43, the taxing
provisions for coin operated devices. The basis for the
particular regulation which makes Class 2 and Class 3 coin
operated devices illegal, was the criminal and civil
statutes which prohibit slot machines and coin operated
devices. Mr. Poshard added, from discussions with
Legislative Legal Counsel, the Department of Revenue's
concern with the proposed legislation has been alleviated.
Mr. Poshard commented that the main intent of the position
paper was to address the relationship between the cruise
ship gambling bill and the negotiations which are taking
place with Klawock Native group involving a contract to
conduct Class 3 gaming activities.
Representative Martin asked for further information
regarding the Native American court cases and the gambling
concern. Mr. Poshard stated that there are several cases
existing although he could not speculate on the relationship
between those cases and the proposed legislation. Federal
law requires entering into negotiations in good faith with
any recognized Indian tribes as lands that could conduct
gaming.
Representative Martin asked if the State could prohibit a
group of people from gambling. Mr. Poshard explained that
the only basis for allowing the gaming to take place on
Indian lands is through the Indian Gaming Regulatory Act
which is federal law. No other states which have gambling
prohibitions, have also permitted other types of gambling
following the agreement with an Indian tribe on reservation
land.
A roll call was taken on the MOTION to adopt Amendment #1.
IN FAVOR: Grussendorf, Kelly, Kohring, Therriault,
Brown, Foster, Hanley
OPPOSED: Martin
Representatives Mulder, Navarre and Parnell were not present
for the vote.
The MOTION PASSED (7-1).
Representative Grussendorf why the number 300 passengers
qualified a boat as a "cruise" ship thus permitting
gambling. Ms. Burke stated that it was the intent of the
legislation to limit the gambling to the larger vessels
which offer a big range of entertainment services.
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Establishing that number would eliminate a small boat
claiming status in order to offer gambling. She remarked
that the language would close any possible loop holes.
JERRY LUCKHAUPT, ATTORNEY, LEGAL COUNSEL, DIVISION OF LEGAL
SERVICES, stated that the operator of the cruise ship would
have to apply for the exemption as specified in Section 2 of
the legislation. The definition would exclude anyone who is
not eligible to obtain an exemption. Each ship would have
to apply for an exemption separately and each ship could
loose their exemption separately.
Representative Therriault MOVED to report CS HB 286 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note. There being NO OBJECTION, it
was so ordered.
CS HB 286 (FIN) was reported out of Committee with "no
recommendations" and with a fiscal note by the Department of
Revenue dated 4/06/95.
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