Legislature(1993 - 1994)

02/08/1994 08:00 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 240 - GAMBLING DEVICES ON STATE FERRIES                                   
  CHAIR VEZEY reconvened the meeting at 9:20 a.m. and opened                   
  discussion on HB 240.                                                        
  Number 448                                                                   
  REPRESENTATIVE MOSES, sponsor of HB 240, presented a brief                   
  overview of HB 240 supplied by his sponsor statement. (See                   
  attached.)  HB 240 is intentionally crafted to allow the                     
  state ferry system to set up and operate or contract out the                 
  Number 465                                                                   
  CHAIR VEZEY commented HB 240 has been created in a                           
  convoluted manner and asked if Commerce and Economic                         
  Development has been changed to Revenue.                                     
  Number 478                                                                   
  REPRESENTATIVE MOSES replied if HB 240 passes "(we) can do                   
  whatever we want to it."                                                     
  Number 481                                                                   
  CHAIR VEZEY understood the Commissioner of Revenue would                     
  have control over the gambling.  CHAIR VEZEY questioned the                  
  wording which states "...a gambling device does not include                  
  a gambling device as authorized by statutes." "...a gambling                 
  enterprise is not a vessel of the Alaska Marine Highway                      
  System."  He felt the approach of HB 240 seemed backwards                    
  and asked if it was necessary because Alaska's gambling was                  
  so complicated.                                                              
  Number 492                                                                   
  REPRESENTATIVE MOSES was not very familiar with the                          
  technical details of HB 240, but felt the problems could be                  
  worked out.                                                                  
  Number 495                                                                   
  CHAIR VEZEY began to examine where the gambling machines                     
  would be located.                                                            
  Number 503                                                                   
  REPRESENTATIVE MOSES answered the ferries would find room.                   
  CHAIR VEZEY noted the different sizes of the ferries and the                 
  limited space on the smaller ones.  He questioned if HB 240                  
  was practical.                                                               
  Number 514                                                                   
  REPRESENTATIVE MOSES assumed the ferry system would have                     
  discretion to put the gambling devices only on ferries where                 
  it would be practical.                                                       
  CHAIR VEZEY warned of constituents who are against legalized                 
  gambling and wondered how it could be explained to those                     
  Number 527                                                                   
  REPRESENTATIVE MOSES explained a revenue stream would be                     
  developed and the winter traffic on ferries would probably                   
  increase by 20 percent.                                                      
  CHAIR VEZEY asked if the increase in traffic would be                        
  primarily residents of Alaska.                                               
  REPRESENTATIVE MOSES believed the gambling would be an                       
  attraction for the tourist industry.  The increased flow of                  
  traffic would be very beneficial.                                            
  Number 539                                                                   
  REPRESENTATIVE KOTT commented some cruise lines have closed                  
  down their gaming operations because they were not very                      
  profitable.  He warned the public may not feel the incentive                 
  to take the ferry solely to gamble.  He also inquired about                  
  the associated costs involved in managing the gaming                         
  Number 554                                                                   
  REPRESENTATIVE MOSES had not seen a projected revenue report                 
  and responded to REPRESENTATIVE KOTT gambling would be added                 
  attraction to the ferries, not the sole incentive.                           
  Number 561                                                                   
  REPRESENTATIVE OLBERG commented the gaming machines must be                  
  located in the bar area to limit those under 21 years of age                 
  from playing.                                                                
  REPRESENTATIVE KOTT agreed a regulated area must be                          
  Number 572                                                                   
  CHAIR VEZEY added minors are allowed in places which serve                   
  alcoholic beverages as long as they are accompanied by a                     
  parent or legal guardian.  He did not, however, know if the                  
  law also applied to gambling facilities.                                     
  Number 575                                                                   
  REPRESENTATIVE MOSES reaffirmed CHAIR VEZEY and stated                       
  minors are allowed inside, however, gambling is not                          
  REPRESENTATIVE KOTT agreed with CHAIR VEZEY and noted HB 240                 
  has a provision which prohibits minors from entering a                       
  gambling area.  A ferry's bar area would no longer work as a                 
  location for the gambling machines.  The alcohol                             
  establishment statute would either have to be changed or HB
  240 would override it.                                                       
  Number 598                                                                   
  REPRESENTATIVE MOSES thought the liquor laws would have to                   
  be incorporated whereby HB 240 would be changed to specify                   
  "unless accompanied by a parent or legal guardian."                          
  Number 607                                                                   
  REPRESENTATIVE KOTT agreed and mentioned policies of other                   
  Number 610                                                                   
  CHAIR VEZEY thought other states did not allow minors in                     
  alcohol facilities at all.                                                   
  REPRESENTATIVE OLBERG suggested a space be dedicated to the                  
  gambling devices and have the access controlled.  An                         
  overhead would have to be incurred.                                          
  Number 617                                                                   
  REPRESENTATIVE KOTT commented alcohol and gambling are                       
  closely related in other facilities.                                         
  Number 621                                                                   
  REPRESENTATIVE OLBERG noted the object is to raise revenue.                  
  Number 622                                                                   
  REPRESENTATIVE KOTT suggested alcohol and gambling not be                    
  Number 625                                                                   
  REPRESENTATIVE SANDERS wanted HB 240 to be worded like the                   
  liquor laws where minors may be present if accompanied by a                  
  parent or guardian.                                                          
  REPRESENTATIVE OLBERG stated if the gambling devices are not                 
  in the bar the overhead becomes self-defeating.  An extra                    
  employee would be required.                                                  
  Number 634                                                                   
  REPRESENTATIVE SANDERS added the social atmosphere would not                 
  be the same in a separate area from the bar.  The purpose of                 
  HB 240 would be defeated.                                                    
  Number 637                                                                   
  REPRESENTATIVE KOTT did not want minors in the gambling                      
  area.  He believed  it did not facilitate the proper social                  
  CHAIR VEZEY clarified slot machines were not the topic of                    
  conversation.  The machines used would not distribute coins                  
  or cash.                                                                     
  Number 660                                                                   
  REPRESENTATIVE OLBERG suggested the use of machines which                    
  dispense pull tabs.                                                          
  Number 661                                                                   
  CHAIR VEZEY agreed.                                                          
  Number 663                                                                   
  REPRESENTATIVE B. DAVIS expressed concern for the amount of                  
  machines required and the anticipated revenue stream.  She                   
  then asked if there was not any money coming to the state,                   
  would HB 240 be for entertainment purposes only.                             
  REPRESENTATIVE MOSES replied entertainment on coin operated                  
  machines is common now with two people playing a machine,                    
  not exposing their money, but still making debts.                            
  TAPE 94-9, SIDE A                                                            
  Number 007                                                                   
  REPRESENTATIVE B. DAVIS asked if these games are already                     
  being played on the boats.                                                   
  Number 011                                                                   
  REPRESENTATIVE MOSES said no, but the machines are available                 
  and found in bars.                                                           
  Number 022                                                                   
  REPRESENTATIVE KOTT illustrated the fiscal note does state                   
  six machines will be put on mainline vessels.                                
  CHAIR VEZEY recalled reading the provision of six machines                   
  written in the fiscal note.                                                  
  REPRESENTATIVE MOSES stated the amount of machines may                       
  increase due to demand for their use.                                        
  CHAIR VEZEY introduced DONALD STOLWORTHY as the next                         
  Number 052                                                                   
  DEPARTMENT OF REVENUE, answered questions on HB 240.  On                     
  July 1, 1993, Charitable Gaming transferred from the                         
  Department of Commerce to the Department of Revenue by                       
  Executive Order 82.  HB 240 states this change is for "house                 
  cleaning purposes."                                                          
  Number 072                                                                   
  CHAIR VEZEY recognized this reason.                                          
  REPRESENTATIVE KOTT asked what kind of machines might be                     
  installed on the ferries.                                                    
  MR. STOLWORTHY explained the three classes of gaming:  Class                 
  1 - video games, pinball machines; Class 2 - pull tabs,                      
  bingo (nonelectronic & nonmechanical sanctioned games);                      
  Class 3 - slot machines, electronic pull tab games (District                 
  Court 4, District of Columbia, Washington, recently ruled                    
  electronic pull tab games as Class 3.), video poker.  Class                  
  3 games return either money or tokens from the machine to                    
  the player.  MR. STOLWORTHY predicted HB 240 would allow                     
  electronic pull tab games, video poker, and slot machines                    
  which return tokens.                                                         
  CHAIR VEZEY asked for a clarification of the three classes                   
  of gaming devices.                                                           
  Number 150                                                                   
  MR. STOLWORTHY offered the three criteria as proposed by the                 
  courts which constitute gambling.  These three include                       
  chance, consideration (i.e. paying money), and prize (i.e.                   
  receiving cash).  Once past Class 1 the games are considered                 
  gambling devices.                                                            
  CHAIR VEZEY questioned if Class 1 games are not gambling                     
  devices, why are they classified as a Class 1 gambling                       
  Number 174                                                                   
  MR. STOLWORTHY replied the Class 1 games are for                             
  entertainment purposes only and he could not answer why they                 
  are labeled as gambling devices.                                             
  Number 180                                                                   
  REPRESENTATIVE KOTT noted the difference between Class 1 and                 
  Class 2 and 3 combined is no external pay out.  He then                      
  asked if HB 240 could require the provided slot machines to                  
  only emit tokens which could be redeemed on the ferry.                       
  Number 201                                                                   
  MR. STOLWORTHY felt REPRESENTATIVE KOTT's request could be                   
  included in HB 240, however, he believed the ferries would                   
  be more likely to use video poker and video pull tab                         
  machines which dispense tokens.                                              
  Number 213                                                                   
  REPRESENTATIVE SANDERS asked about the use of "set back                      
  buttons" on machines he has seen used in bars.                               
  Number 222                                                                   
  MR. STOLWORTHY answered "set back buttons" are currently                     
  illegal to use in the state of Alaska because the amount of                  
  payout by the facility is harder to keep track of.                           
  Fraternal clubs, veterans organizations, and bars tend to                    
  have machines with these devices installed in them.                          
  CHAIR VEZEY inquired if "set back buttons" were used to                      
  reduce the chances of winning.                                               
  MR. STOLWORTHY responded "set back buttons" are merely used                  
  to circumvent the law.  The game tallies the total amount of                 
  games played and can be reset at any time.  Computers are                    
  available to be hooked up to machines without "set back"                     
  devices which give tallies of the amount of free games left                  
  on the machines that have been paid back in cash.                            
  REPRESENTATIVE SANDERS thought some states had their                         
  gambling machines directly wired into the State Department                   
  of Revenue and inquired if it would be possible on ferries.                  
  Number 282                                                                   
  MR. STOLWORTHY clarified REPRESENTATIVE SANDERS was                          
  referring to "on-line technology".  States, such as Nevada,                  
  have computers which calculate the odds on many machines and                 
  print out any discrepancies found.  These computers are                      
  extremely accountable.  He noted paper pull tabs have a wide                 
  margin for pay out discrepancies with forged cards and                       
  insider trading.  Reports are filed quarterly that are                       
  matched up with the computer printouts.  This process                        
  creates a solid accounting system.                                           
  Number 338                                                                   
  CHAIR VEZEY did not understand the incentive behind only                     
  allowing gaming devices that do not dispense coins or cash.                  
  MR. STOLWORTHY did not know the reason.                                      
  CHAIR VEZEY clarified Department of Revenue did not have a                   
  preference because the accountability of both types of                       
  machines would be close to the same.                                         
  Number 346                                                                   
  MR. STOLWORTHY replied the money and token dispensing                        
  machines are identical devices which merely vary where the                   
  money is picked up.                                                          
  Number 348                                                                   
  CHAIR VEZEY asked for a committee member to volunteer to                     
  work with REPRESENTATIVE MOSES, sponsor, on HB 240.                          
  REPRESENTATIVE B. DAVIS volunteered.  Hearing no more                        
  testimony, HB 240 was held in committee to be rescheduled.                   
  CHAIR VEZEY announced a meeting for the Alaska Railroad                      
  Review Committee would be scheduled, possibly Saturday,                      
  February 12, and asked for members to relay convenient                       
  Seeing no more business before the committee, CHAIR VEZEY                    
  adjourned the meeting at 10:00 a.m.                                          

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