04/05/1995 01:12 PM House JUD

 HB 286 - CRUISE SHIP GAMBLING AND PROMOTIONS                                
                                                                               
 Number 275                                                                    
                                                                               
 TOM DOW, Vice President, Princess Cruise Lines, Seattle, presented            
 the following sponsor statement on behalf of the sponsor,                     
 Representative Bill Williams:                                                 
                                                                               
 "House Bill 286 gives the state authorization to offer an exemption           
 from gambling statutes to cruise ships.  This exemption would allow           
 cruise ships to operate their casinos in Alaska waters.                       
                                                                               
 "Casino gambling aboard cruise ships is an amenity needed to keep             
 Alaska on a par with other cruise destinations.  While gambling is            
 not the main attraction of cruises to other parts of the world, it            
 is an accepted and expected part of the experience.                           
                                                                               
 "In these times of strict budget discipline it is important to find           
 new sources of income.  Ships that take advantage of this exemption           
 will pay the state of Alaska fees ranging from $10,000 to $40,000             
 per year.  Initial projections suggest this could add an additional           
 $500,000 per year to state coffers.                                           
                                                                               
 "This bill supports the tourism industry and raises state revenues.           
 I ask you to support House Bill 286."                                         
                                                                               
 MR. DOW stated that this practice of operating on-board casinos has           
 been in place for over 20 years prior to a question being raised in           
 1993.  The result of that question being raised was an Attorney               
 General's Opinion stating that since there is nothing to exempt               
 these operations in Alaska law, they were not exempt.  We took that           
 as a clue that something should be done.  Last year, this committee           
 as well as the House Finance Committee, and the same committees on            
 the Senate side reviewed the bill.  There have been a couple of               
 changes this year.  One, is that under current law, there is a                
 prohibition against an employee of a casino from serving alcohol in           
 a casino.  There are bars and lounges in and adjacent to casinos.             
 Employees are commingled in those rooms, so the current bill                  
 reflects an exemption from that statute.  Secondly, under the                 
 charitable gaming laws, there is a requirement for a license for              
 video games, pinball machines, etc., which do not pay out cash, but           
 might offer prizes.  As the business evolves, we are finding more             
 and more teens and young adults on our cruises, so many cruise                
 lines are offering video arcade games.  The license fee is $25 per            
 year.  We have asked to be exempt from that fee.  We estimate that            
 the cruise ships will bring an estimated $575,000 in revenues to              
 the state this year.  This video game licensing fee would require             
 some auditing and calculation of the pro rata share of the time               
 these video machines were actually in the state.  It would be some            
 fraction of four months a year, perhaps half of that time.  So you            
 would be talking about 1/6 of $25 per machine.  The accounting for            
 that would eat up the fee.  This has nothing to do with the concern           
 over gift shop promotions that came up last year.  What we had                
 agreed to do in the previous bill would require full disclosure of            
 these on-board gift shop promotions.                                          
                                                                               
 Number 420                                                                    
                                                                               
 REPRESENTATIVE CYNTHIA TOOHEY asked about the shore excursion                 
 trips.  Are these trips solicited by you to sell?  Do you pick and            
 choose?                                                                       
                                                                               
 MR. DOW said they do pick and choose.  His company responds to                
 solicitations, and they look at the product and sample it.  We                
 examine the reliability, dependability, cost and cleanliness of the           
 operation.  We probably have 150 of these on-shore adventures in a            
 booklet for customers to pick from.                                           
                                                                               
 REPRESENTATIVE FINKELSTEIN asked about the on-shore excursion part            
 of the bill.  What is the difference between on-shore excursions              
 and gift shops?  The previous discussion was not just about gift              
 shops, it was about on-shore services.  In that scenario you just             
 described, you did not mention whether or not that on-shore company           
 is paying you to be in that catalog.                                          
                                                                               
 MR. DOW answered that the vendors absolutely do pay a commission              
 for the sale.  They are not paying a consideration cost to be                 
 listed in the book.  The gift shop promotion business differs a               
 little bit, in that these are usually verbal presentations and                
 there are a lot of possibilities for abuse by the employee giving             
 the lectures, perhaps giving a little extra body language to one              
 gift shop over another, because somebody is paying them on the side           
 to do it.  It is a system that has been abused in the past, and we            
 have never participated in it.  The cruise line's defense of on-              
 board promotions is that in some international venues, they believe           
 people are concerned about where they might be ripped off.  If                
 there is a problem, these people can come back and say, "Wait a               
 minute.  You recommended this gift shop, and I got some shoddy                
 merchandise, and they would not give me a refund."  The passengers            
 have some leverage in the deal.  We do not think that is a problem            
 in Alaska.                                                                    
                                                                               
 Number 550                                                                    
                                                                               
 REPRESENTATIVE TOOHEY asked for clarification on what the ship's              
 booklet included.  She did not like the idea of them sending people           
 to particular shops.                                                          
                                                                               
 MR. DOW said sending someone to a gift shop is different than                 
 putting them on a helicopter.  If we suggest a helicopter tour or             
 raft trip, we assume some liability there, just by offering it.  We           
 have on board, the equivalent of an in-flight magazine, such as               
 Alaska Airlines has.  People can buy advertising in those                     
 magazines.  We do not have promotions, but we do have printed                 
 advertising like you would find if you opened up your drawer at the           
 hotel room or in the front of your seat on the airplane.  Everybody           
 has an opportunity to advertise.                                              
                                                                               
 REPRESENTATIVE BUNDE asked what the commission was for advertising.           
                                                                               
 MR. DOW answered that it is somewhere from 15 to 20 percent.                  
                                                                               
 REPRESENTATIVE VEZEY asked what the distance from shore was for               
 allowing gambling in international waters.                                    
                                                                               
 MR. DOW said it is three miles.                                               
                                                                               
 Number 690                                                                    
                                                                               
 CHAIRMAN PORTER noted the point is that the three mile restriction            
 extends from the port to the cruise ship, rather than from the ship           
 to the shore, because while coming up the passage, the ships are              
 always within three miles of the shore.                                       
                                                                               
 REPRESENTATIVE FINKELSTEIN offered an amendment to page 4, line 8.            
 He wanted to insert "on a commission basis" after the word "sold."            
                                                                               
 CHAIRMAN PORTER objected and a roll call vote was taken.                      
 Representatives Finkelstein and Davis voted yes.  Representatives             
 Bunde, Toohey, Vezey, Green and Porter voted no.  The amendment               
 failed five to two.                                                           
                                                                               
 Number 800                                                                    
                                                                               
 REPRESENTATIVE GREEN asked if someone could quickly explain what an           
 unsworn falsification consists of, referring to page 3, line 7.               
                                                                               
 ANNE CARPENETI, House Judiciary Committee Aide, said it is when you           
 sign something certifying that it is true, but you do not take an             
 oath.                                                                         
                                                                               
 REPRESENTATIVE GREEN asked if there was any assurance for age                 
 restrictions for cruise ship gambling.                                        
                                                                               
 MR. DOW did not know.                                                         
                                                                               
 CHAIRMAN PORTER assumed that since the casinos are in general                 
 proximity to a lounge, which precludes anyone under 21, that the              
 gambling would also preclude anyone under 21.                                 
                                                                               
 REPRESENTATIVE BUNDE made a motion to move HB 286 out of committee            
 with individual recommendations and no fiscal notes.  Seeing no               
 objection, it was so ordered.