Legislature(2005 - 2006)HOUSE FINANCE 519
04/29/2005 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB272 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 217 | TELECONFERENCED | |
| + | HB 272 | TELECONFERENCED | |
| + | HCR 6 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 272
An Act relating to card rooms and card operations.
8:50:24 AM
Co-Chair Chenault MOVED to ADOPT work draft #24-LS0916\F,
Kurtz, 4/28/05, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
MICHAEL O'HARE, STAFF, REPRESENTATIVE PETE KOTT, commented
on the growing popularity of poker. Many networks are
regularly televising tournaments and enjoying sky rocketing
popularity and revenues. Poker playing is one of the
world's fastest growing forms of entertainment.
Men and woman, old and young, from all walks of life, are
joining the poker trend, which shows no signs of slowing.
Due to that growth in interest, the intent of the
legislation is to allow social card games to be played in a
tightly controlled public environment.
Mr. O'Hare suggested that Alaska could address the trend and
bring the popular pastime into compliance with safety and
revenue laws of the State. The types of games allowed are
non-banking card games, games where players play against
each other as opposed to banked games that the house pays
the winners and takes money from the loser. The games would
be played for tokens or chips and not negotiable currency.
Mr. O'Hare listed the games included:
· Poker
· Pan Rummy
· Bridge
· Cribbage
· Pinochle
A limited number of licenses for card room operations would
be available for municipalities over 30,000. The licensee
would be required to:
· Pay a non-refundable application fee of $25,000 to
the Department of Revenue;
· Post a $500K Cash Bond at least 60 days in advance
of commencement of a card room operation;
· Pay an annual fee of $10 thousand dollars for each
card table;
· Be fingerprinted with background checks;
· Pay for all investigative costs incurred over the
initial $25000 application fee;
· Host quarterly tournaments with the gross proceeds
to be distributed to a nonprofit educational
institution or group designated by the owner; and
· The license would be good for 5 years.
Mr. O'Hare added that an individual would not be able to
apply for a license if they were:
· Convicted of a felony;
· Knowingly falsifying the application;
· Currently, a manager, owner, director, or
managerial employee of an existing operation;
· Employer of any of owner, director, or managerial
employee of an existing operation.
HB 272 provides for the Department of Revenue to strictly
enforce regulations imposed on card room operations while
allowing card players to enjoy safe, regulated playing
environment of their favorite pastime. Additionally, it
gives back to the community by creating decent paying jobs,
while supporting nonprofit educational charities, and
removing at least 75% of the so-called "after hour" card
rooms.
Mr. O'Hare offered to answer questions of the Committee
8:54:51 AM
Representative Holm asked why pinochle had not been
included. Mr. O'Hare said it was.
REPRESENTATIVE PETE KOTT, SPONSOR, indicated that he
supports the addition of pinochle, adding that all non-
banking areas were intended to be included.
8:56:35 AM
Representative Hawker pointed out that the fiscal note
indicated the census basis had not been addressed.
Representative Kott replied that had been taken care of.
8:57:03 AM
ETHAN BILLINGS, OWNER/OPERATOR BUSINESS, JUNEAU, spoke in
support of HB 272. He commented that the bill is past due
and necessary to regulate the "card playing fever" happening
statewide. Card games are entertainment and more
entertainment is needed not only for local citizens but also
for the tourist that visit the State. He recommended that
if the bill does pass, that current local card games
continue to be allowed. Mr. Billings urged passage of the
bill.
8:58:43 AM
CHIP WAGONER, EXECUTIVE DIRECTOR, ALASKA CATHOLIC
CONFERENCE, JUNEAU, testified against the legislation, which
he believed would be legalized gambling.
He stated that the legislation would take the State from
charitable gaming into a commercial gaming enterprise called
"card rooms", operated by the professional gambling
industry.
Mr. Wagoner discussed that HB 272 would add to, but not
replace, illegal gambling already happening. There has been
no evidence presented that passage of the bill would lead to
less crime or less illegal gambling in Alaska. After
looking into the effects that the expansion of gambling
would do, the Voice of the Church strongly opposes the bill.
Mr. Wagoner outlined the reasons for that opposition:
· Some Alaskans will be hurt and hurt badly by the
bill.
· The State does not have money willing to spend to
fund the necessary programs to deal with all of
the problems that will flow out of the expansion
of legalized gambling.
He maintained that gambling for some Alaskans would become
an addiction. The National Research Council of the National
Academy of Sciences has reviewed over 4,000 references on
the literature on pathological and problem gambling. That
study concluded that within 12 months, 1% of the gamblers
would be pathological and another 2% would become problem
gamblers.
Mr. Wagoner emphasized that the bill will increase gambling
addictions and that gambling addictions are difficult to
overcome. He observed that problem gamblers cost society
$715 dollars annually and pathological gamblers cost $1,200
annually. Oregon has funded 27 treatment-clinics for
gambling problems.
Mr. Wagoner maintained that the economic benefit to State
government would not come close to funding the treatment of
addicted gamblers. Even if the industry paid for itself,
the Legislature should not look at economic growth if our
citizens will be hurt.
9:10:43 AM
Co-Chair Chenault inquired about the studies referenced by
Mr. Wagoner and if they specifically addressed gambling or
addictions including slot machines and poker. Mr. Wagoner
responded that the National Commission study dealt with all
forms of gambling. Some types of gambling are more
addictive than others. The speed of the game provides a
good indicator regarding the addictiveness. He warned that
research has shown that speed is important to addicting
temptation to the young. Co-Chair Chenault thought that
card room gambling was slow moving compared to machine
gambling.
9:12:53 AM
ROBERT HALL, (TESTIFIED VIA TELECONFERENCE), HOUSTON,
ALASKA, voiced concern with the proposed legislation for
other reasons. He addressed the impact the legislation will
have on other business from the player's perspective. It
would limit card rooms to two. He recommended adjusting the
bill for bars so they are able to have one table as well as
fraternal organizations.
Mr. Hall pointed out that the legislation does not provide
the advisory board with any per diem or travel costs. He
did not want to see participation limited on the board. He
noted that he supports the idea but believed that
adjustments need to be made. He noted areas outside of
Anchorage, which would not meet the 30,000 residential
limit.
9:16:28 AM
WILLIAM PHARR, (TESTIFIED VIA TELECONFERENCE), HOUSTON,
ALASKA, voiced support for legalized gambling throughout the
State.
9:16:58 AM
Representative Weyhrauch inquired if implementation should
be subject to a municipality vote of the people.
Representative Kott responded that could be a policy call.
He thought that the card rooms should first gain momentum
and then by a vote of the people, determine whether it stays
or not.
9:18:30 AM
Representative Weyhrauch referenced language on Page 2, the
wagering subject to sales tax. Representative Kott
requested that the Department respond to that. He did not
believe they could place a sales tax on a chip.
9:19:23 AM
Representative Weyhrauch expressed concern with purchasing
chips with credit. Representative Kott acknowledged that
the bill language was broad and would be controlled by the
Board. The Board will determine the rules and regulations
regarding operations and extension of credit.
9:20:58 AM
Representative Weyhrauch asked the intent of the language
regarding investigating and reinvestigating. Representative
Kott wanted to make sure that the operations were legal and
that the Department had the authorization to investigate as
long as needed.
9:21:43 AM
Representative Weyhrauch referenced language on Page 4,
providing the Department the authority to enter into the
card room to obtain evidence. He asked if that would allow
the Department to go in without a warrant. Representative
Kott clarified that the legislation has provided the
Department the sole authority to enter a card room under any
suspicion.
9:22:28 AM
Representative Hawker asked about the 30,000-population
regulation. He thought that it would restrict the card room
to only a couple of population centers in the State. He
asked why not give every 15,000 residents in the State one
card room. Representative Kott replied that the 30,000-
number was arbitrary. It was attempted to determine what
population base could support a card room and that number
was developed for operations to be successful. He
continued, the licensee must show that it will continue for
five years. He noted that 80% of the tables would need to
be fully occupied for success. The 30,000-number would be
established on a trial base.
9:25:13 AM
Representative Hawker understood that the concept underlying
the legislation is that the card room would be
professionally managed and highly regulated. Representative
Kott agreed that was the intent and thought that the
legislation would provide about a 75% reduction of on-going,
illegal activity in Anchorage alone.
9:26:41 AM
Representative Holm referenced language on Page 9, Line 14,
the non-refundable $25,000 dollar fee needed to obtain a
license. He asked about provisions in the bill that would
provide the loser applicants, their fee returned.
Representative Kott explained that if only a certain number
of licenses were available, he assumed the Board would make
regulations regarding repayment of that fee. The funds
would absolutely be returned.
9:28:52 AM
Representative Holm asked who chooses which request becomes
the successful bidder. Representative Kott anticipated that
the board would draft policy procedures regarding the
application process and licenses. There is not a deadline
included yet; he guessed that those who take the initiative
would be given the first look. He agreed that a timeline
would need to be established, which would be the work of the
board.
9:31:37 AM
Representative Holm warned about a first come, first serve
base and the value of the license with a limitation. He
thought that there should be some sort of mechanism that
makes it more of a lottery system. He reiterated his
concern with the process, given the potential amount of
interest. Representative Kott acknowledged that was a valid
concern. He said that given the requirements of the license
fee and bond, there might not be too many able to apply.
9:35:22 AM
Representative Weyhrauch MOVED to ADOPT Amendment #1. Co-
Chair Meyer OBJECTED.
Representative Weyhrauch explained that the amendment would
add language on Page 6, Line 13, "after attorney" inserting,
", if any".
Co-Chair Meyer WITHDREW his OBJECTION. There being NO
further OBJECTIONS, Amendment #1 was adopted.
9:36:17 AM
Representative Weyhrauch MOVED to ADOPT Amendment #2. Co-
Chair Meyer OBJECTED.
Representative Weyhrauch explained that the amendment would
delete language on Page 7, Lines 3-4, "on the business day"
and replaces it with "three business days".
Co-Chair Meyer WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment #2 was adopted.
9:37:19 AM
Representative Weyhrauch questioned the sales tax issue,
listed on Page 2. He asked where a taxable event would be
listed and how it would help the municipality to obtain any
revenue.
9:38:16 AM
BRETT FRIED, ECONOMIST, TAX DIVISION, DEPARTMENT OF REVENUE,
was not familiar with municipal ordinance tax but imagined
that the fee paid by each player would be taxed based on the
fee the house charged the player.
9:39:19 AM
LARRY MEYERS, (TESTIFIED VIA TELECONFERENCE), DEPUTY
DIRECTOR, TAX DIVISION, ALASKA DEPARTMENT OF REVENUE,
ANCHORAGE, stated that it would be up to the local
municipality to determine whether or not they wanted to tax
the activity.
Representative Weyhrauch asked if the card room took money
in exchange for tokens and chips, could the municipality
rule that was a taxable event. Mr. Meyers explained that
the municipality has already addressed that in the pull-tab
arena.
9:40:15 AM
Representative Holm said that each action would not indicate
a transfer of money. There would be no earnings made by
individuals making it a taxable event. He understood it
could be the same difficultly as using pull-tabs.
9:41:13 AM
Representative Weyhrauch inquired if pull-tabs were taxed.
Representative Holm replied that they were taxed on the
entire roll and taxed one time only. Representative
Weyhrauch agreed that made sense.
9:41:31 AM
Representative Hawker understood that sales taxation of
gaming activities was a specialized area within the whole
body of sales tax policy procedures and that municipality
would choose a specific exclusion. If a premium were
charged on that service and the municipality choose to tax
services, then the service would be subject to taxation. He
concluded it would all fall back into the local sales tax
realm.
Representative Weyhrauch pointed out that there is nothing
in the bill, which governs what a municipality, may or may
not do with respect to taxation.
9:43:22 AM
Co-Chair Meyer suggested that it would be best left open.
Representative Weyhrauch agreed that was his preference.
9:43:37 AM
Representative Holm asked if the bond would be a cash bond.
Representative Kott replied it would be a $500,000 cash
bond. The bond would be held by the State and the State
would earn the interest off of it.
9:44:27 AM
Representative Kelly believed his position would offend the
former speaker. He questioned if a municipality could opt
out. Representative Kott acknowledged they could.
Representative Kelly asked if the legislation would be of
value to the State. Representative Kott responded that
there are provisions in the bill requiring the State to look
at the best proposal. The applicant must meet a number of
the qualifications and criteria.
9:47:03 AM
Representative Foster MOVED to REPORT CS HB 272 (FIN) out of
Committee with individual recommendations and with the
accompanying indeterminate note. Representative Kelly
OBJECTED.
CS HB 272 (FIN) was reported out of Committee with a "no
recommendation" and with a new indeterminate note by the
Department of Revenue.
| Document Name | Date/Time | Subjects |
|---|