Legislature(2005 - 2006)BUTROVICH 205
05/06/2005 08:30 AM JUDICIARY
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* first hearing in first committee of referral
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SB 165-CARD ROOMS & OPERATIONS 8:58:38 AM CHAIR RALPH SEEKINS announced SB 165 to be up for consideration. MR. CHIP WAGONER, executive director, Alaska Catholic Conference, testified in opposition. He said the Roman Catholic Church does not take the position that gambling is immoral. Games of chance become morally unacceptable when they deprive someone the ability to provide for themselves and others. The games are already legal as indicated in the Anchorage Daily News article dated May 4, 2005. People can gamble in their homes. 9:00:36 AM When money and commercial gaming interests are added to the equation it causes the gambling addition to become. SB 165 will not replace illegal operations, it will just add to the crime. The Alaska Catholic Conference opposes SB 165 because they feel it will only hurt people and the state will not provide the necessary resources to fund addiction reparation. Child neglect, embezzlement, and suicide rates will rise. Pathological gambling is a psychiatric disorder. A University of Chicago study found that the presence of a gambling facility within 50 miles doubles the prevalence of problem and pathological gambling. The National Research Council of the National Academy of Sciences found that some of the greatest increases in the number of problem and pathological gamblers came over periods of expanded gambling opportunities. 9:02:27 AM MR. WAGONER continued the effects of gambling are a mess as the State of Washington has found. He quoted from the Seattle Post Intelligencer: "As legalized gambling continues its swift rise in Washington, the quiet parallel growth of problem gambling has marched right along with it, often with disastrous consequences." Problem gambling is an emotional disorder that is under the radar screen because it is not as visible as needle marks and public intoxication. According to the Seattle Post Intelligencer, thousands of lives in Washington have been ruined due to gambling. There is increased indebtedness, bankruptcies, crime, divorce, and suicide. The troubles have cost the State of Washington millions of dollars a year. 9:04:18 AM Experts and gamblers themselves say gambling addictions are more difficult to spot than alcoholism or drug addiction, and can be more difficult to quit. The National Council on Problem Gambling is not for or against gambling; their purpose is to help people who have gambling addictions. However they recognize the societal costs are very high. Bankruptcy lawyers in Seattle are seeing more filings caused by gambling troubles. There has been a definite increase in the last 10 years. King County deputies regularly see the effects of gambling in the prosecution of domestic violence and child neglect cases. 9:06:10 AM One reason funding for gambling addiction is hard is because gambling is a hidden disease. The State of Oregon has funded 27 treatment clinics and hired more than 50 counselors. More than 10,000 people have entered their state treatment programs since 1995, which has cost the state 4.5 million dollars. The State of Alaska does not have a single gambling addiction certified counselor. The economic benefits of SB 165 will not even come close to taking care of the negative costs associated with SB 165. The National Gambling Impact Study Commission report, the largest most comprehensive study performed in the United States, determined problem gamblers cost society $715 dollars each on a yearly basis and pathological gamblers cost society $1,200 each. 9:08:02 AM For those reasons the Alaska Catholic Conference urges the committee to not pass SB 165. It only hurts people and Alaska cannot afford it. 9:08:52 AM SENATOR HOLLIS FRENCH commented his research found that electronic gaming machines contribute to problem gambling. He asked Mr. Wagoner whether he had specific research focusing on poker playing. MR. WAGONER agreed electronic gaming machines are called the crack cocaine of gambling. The faster the game the more likely it will cause addiction. Everything that has an immediate payoff has addiction potential. He urged the committee to have someone who deals with gambling disorders testify on SB 165. However, it is known that when gambling is increased, the disorders are also increased. 9:12:00 AM SENATOR FRENCH asked Mr. Wagoner whether he would close pull-tab shops, given the chance. MR. WAGONER asserted he would. People sit by themselves in pull- tab parlors hoping for the big break. Many are desperate to win. It has a sad effect on families and kids. Children are left in the parking lot for hours while their parents gamble. Gambling games are designed to separate people from their money. 9:14:31 AM SENATOR JOHN COWDERY asserted people are currently gambling in illegal establishments. 9:17:43 AM MR. WAGONER said the Roman Catholic Church does not look at gambling as sinful. It is the effects that are concerning. SB 165 will open the door with commercial gaming and there will be more pressure on the Legislature to expand it. 9:20:32 AM MS. SUSAN BURKE, attorney retained by Perry Green to look into the implications of SB 165 as it relates to Indian gaming, offered her comments. She looked at two questions primarily. The first was whether enactment of SB 165 would open the door to casino-type class 3 gaming. Her research shows it would not. The second question was whether the enactment of SB 165 would open the door to additional kinds of class 2 gaming beyond what is already authorized under Alaska law. Her research shows it would not. CHAIR SEEKINS interrupted to say from a strictly legal standpoint that would be a logical conclusion. MS. BURKE said her main point is Indian tribes today under the Indian Gaming Act, if they fulfill all of the other requirements, could engage in poker, cribbage, bridge, and pan card rooms today under existing law because Alaska law does not explicitly prohibit non-banking card games in any location in the state. Social card games in homes are not prohibited under Alaska law; therefore they would be the kind of card game that Indian tribes could engage in. There are a number of federal laws and regulations an Indian tribe would have to comply with in order to get a license. Equally important, they could do so only on Indian lands the particular tribe has jurisdiction over. 9:24:17 AM MS. BURKE added Native claims settlement lands would not qualify. The definition of "Indian lands" under the federal act is "lands within the limits of a reservation" and the only reservation in Alaska is Metlakatla. The other category is "any lands the title to which is either held in trust by the United States for the benefit of an Indian tribe or individual, or held by an Indian tribe or individual subject to restriction by the United States against alienation or sale." CHAIR SEEKINS asked whether someone could simply plead sovereign immunity and thereby protect the land from alienation. MS. BURKE responded alienation is a voluntary thing and unless the federal government has imposed restrictions on the voluntary act, it wouldn't qualify as Indian lands. 9:26:26 AM CHAIR SEEKINS mentioned a California case where one Indian tribe bought land and claimed it as official Indian land where they could start a casino. The State of California contested it on the grounds that the land was once under the jurisdiction of California. Unless the state acts affirmatively to remove the jurisdiction, it remains under the jurisdiction of the state. SENATOR FRENCH asked the relationship between Native corporation land and Native corporation shares, which are not alienable. MS. BURKE replied a person couldn't conduct a gaming operation on a share of stock. CHAIR SEEKINS answered Native corporation land is not Indian land. It is subject to alienation and can be sold or traded. Native corporations themselves do not have sovereign immunity. 9:29:08 AM SENATOR GENE THERRIAULT said there was a constant push to expand sovereign immunity on Native lands. The Rural Justice Commission is being steered toward a request to transfer all the Native corporate land into Indian land. MS. BURKE said regardless of where the Indian lands laws are, Alaska law is such that Indian tribes could implement anything in SB 165 today. The tribes would have to exercise governmental powers on the land itself and Metlakatla seems to be the only place where that happens. CHAIR SEEKINS said he would disagree if her conclusion were tribes in Alaska today could operate class 2 gaming without a permit from the state. MS. BURKE agreed they would have to go through the Indian Gaming Act, as well as get a permit and follow certain regulatory requirements. 9:32:26 AM SENATOR THERRIAULT speculated the Native organizations have determined there is either not a lot of money in the gaming operation or the lack of authorized land is why they haven't pursued it. CHAIR SEEKINS referred to two applications that were denied and a third in Klawock that was granted an Indian Gaming Regulatory Act (IGRA) permit. It is not outside the realm of possibility that IGRA will grant permits. MS. BURKE emphasized action on SB 165 will not avoid IGRA issuing permits and the results that occur forthwith. The only way the Legislature could stop Indian gaming is to repeal the exemption in Alaska law for social gaming in the home. 9:34:52 AM CHAIR SEEKINS said the more money that might be made from state authorized gambling; the more motivated the tribes may be to get permits. MS. BURKE said proponents of SB 165 must believe there is money in the operation of card rooms otherwise they wouldn't want to do it. She does not know why Indian tribes have not come to the same conclusion. CHAIR SEEKINS agreed the motivator is money and not recreation. MS. BURKE confirmed that is absolutely correct. SENATOR HUGGINS said it might be like moving the capitol, which was on the back burner until recently. MS. BURKE said virtually by introducing SB 165 the cat is out of the bag. 9:36:56 AM CHAIR SEEKINS said the more money that is involved, the more temptation for groups to persuade the gaming commission and the federal courts that they are Indian tribes for the purpose of IGRA and that there are parcels of land in Alaska that are Indian lands as defined by IGRA. MS. BURKE emphasized whether SB 165 passes or not, Indian tribes could still enter the gaming business under Alaska law. CHAIR SEEKINS agreed so long as they comply with state law, which means no one takes a rake. MS. BURKE disagreed. She said the only state law limits have to do with maximum wagers, maximum pots, and hours of operation. SENATOR THERRIAULT speculated there isn't enough money in the game rooms to gain the interest of Indian tribes. 9:39:14 AM MS. BURKE disagreed. She asserted somebody must see it as a viable economic advantage else they would not be pushing SB 165 legislation. SENATOR FRENCH commented location would be difficult. CHAIR SEEKINS wondered the motivation for the current push to transfer corporate lands into Indian lands. SENATOR COWDERY agreed location would be a deterrent for the tribes. He suggested a local option where communities could vote SB 165 out. 9:42:32 AM CHAIR SEEKINS stated for the record he is not in favor of gambling and has no intent to vote for SB 165 on the Senate Floor. 9:44:08 AM MR. RYAN MAKINSTER, staff to Senator John Cowdery, offered to answer questions. CHAIR SEEKINS suggested a limit to five-dollar wager. SENATOR COWDERY commented that informed players could make multiple raises in poker. MR. MAKINSTER said Washington State limits the raises to three. SENATOR FRENCH noted that would be $240 maximum out of pocket for any game. 9:48:09 AM SENATOR COWDERY said it is rare for everyone to stay in the game until the end. Generally a table of ten ends up with maximum of three at the end. CHAIR SEEKINS asserted he does not want high stakes gambling. SENATOR HUGGINS asked how low stakes would change the structure of SB 165. MR. MAKINSTER said the house has no stake in the game. CHAIR SEEKINS interrupted to assert they do; the higher the pot, the bigger the rake. MR. MAKINSTER said SB 165 could set the rake at two or four dollars. 9:50:14 AM CHAIR SEEKINS said SB 165 has been portrayed as recreational gambling and it should be more for fun and not big money. 9:52:18 AM CHAIR SEEKINS proposed a limit of a five-dollar wager and a 15- dollar per person pot. MR. MAKINSTER asserted that rule would ruin the game of poker. He said limiting wagers would take the zeal out of the game. CHAIR SEEKINS said each round doesn't always have to reach maximum. 9:54:18 AM CHAIR SEEKINS said recreational gambling should not allow unlimited pots. That would be raising the risk of making it a fast game. 9:56:18 AM CHAIR SEEKINS said illegal enterprises are not interested in a 5-dollar limit because there isn't enough profit. SENATOR GUESS wondered why five dollars is too low of a limit. MR. MAKINSTER said the 15-dollar pot is what is too low. It would be difficult to control the pot size without limiting the raises. 9:58:31 AM CHAIR SEEKINS referred to Page 2, lines 24-26, which allows a person to buy chips on credit. He expressed disagreement with running up a tab. He said he is trying to avoid gambling debts. SENATOR COWDERY said the establishment owner has nothing to do with credit. Credit happens between players. SENATOR FRENCH asked whether they were talking about using credit cards to buy chips. CHAIR SEEKINS clarified it was in-house credit. 10:01:48 AM MR. MAKINSTER pointed out some states disallow buying at the table. A person has to physically leave a table in order to buy more chips. CHAIR SEEKINS said he would like to address that in SB 165. 10:02:54 AM SENATOR HUGGINS commented he has noticed ornate items in Las Vegas pawnshops. 10:04:27 AM CHAIR SEEKINS expressed interest in a requirement that all employees would need a license and they could not be convicted felons. SENATOR FRENCH referenced the provision for an occupational licensing but stated it wasn't clear to whom that applied. CHAIR SEEKINS said he would require it to be every employee of the facility, including the janitor. 10:07:02 AM SENATOR HUGGINS asked Mr. Makinster to clarify the training involved. MR. MAKINSTER said if legislation required employees to be licensed, the provision allows a place to train certified dealers. SENATOR COWDERY asked Chair Seekins whether it was constitutional to require a janitor to be licensed. CHAIR SEEKINS answered yes. He said that pull-tabs are close to being strong-arm operations. He is not interested in having reconstituted felons be dealers. 10:11:09 AM SENATOR GUESS noted the language on Page 10, line 24; "character, reputation, experience" are subjective words. She expressed concern over equal opportunity. MR. MAKINSTER agreed it was a gray area. CHAIR SEEKINS said the Charitable Gaming Act is limited to non- profit corporations that are resident to the State of Alaska. He said he intends to ask legislative legal whether they can place the same restriction on SB 165. 10:13:44 AM SENATOR COWDERY countered residence is a sticky issue. SENATOR GUESS noted Page 14, lines 4-5; opens up opportunities for discrimination. She questioned who would judge the character of another and whether that could be done fairly. SENATOR HUGGINS asked whether employees and owners would be prohibited from gambling in the establishment where they work. MR. MAKINSTER answered it is not prohibited in SB 165. Other states do not allow employees to gamble in their own establishment and card room owners are typically not allowed to gamble in the state. 10:16:46 AM SENATOR FRENCH said the bulk of concern from his constituents is they are not opposed to card rooms but they are concerned with how the licenses would be issued. He asked Senator Cowdery whether he would be opposed to a public comment period. SENATOR COWDERY agreed that would be proper. CHAIR SEEKINS pointed to a KTUU survey, which showed more than 60 percent of the people polled are against card rooms. SENATOR GUESS said her primary concerns are when legislation uses words like "character and reputation" in regards to who gets licenses and jobs. It is unclear who decides who gets licensed and who decides the character of another. CHAIR SEEKINS asked Mr. Makinster whether SB 165 requires a local election prior to authorizing card room in a community. MR. MAKINSTER answered the only election is for municipalities under 30,000. The sponsor is willing to broaden that to all communities. SENATOR FRENCH clarified it would be a positive opt-in election. 10:20:28 AM SENATOR GUESS suggested there was additional language coming from the House. 10:22:19 AM SENATOR GUESS asked whether the class C felony of "cheats at a card game" is being defined on Page 19, lines 16-19. MR. MAKINSTER responded the verbiage has to be somewhat ambiguous because cheaters tend to stay ahead of the game. The definition points to several devices and instances where a person could be assumed to be cheating. 10:24:02 AM MR. MAKINSTER added the courts would be tasked with deciding the felony charge. SENATOR GUESS asked whether there is a lot of cheating in non- banking games, such as rummy, cribbage and bridge. MR. MAKINSTER responded the majority of cheating is someone trying to beat the house using by using card counters. SENATOR GUESS referred to Page 3, line 13; selecting "applicants that promote the most economic development" and expressed concern over the ambiguous definition. 10:27:08 AM CHAIR SEEKINS offered someone willing to build a new building rather than putting the business in a used building would fulfill that function. SENATOR GUESS said she wants to ensure an even playing field and that all Alaskans have a shot at the business. CHAIR SEEKINS held SB 165 in committee. SB 165-CARD ROOMS & OPERATIONS 5:21:42 PM CHAIR RALPH SEEKINS announced SB 165 to be up for consideration. He referred Page 5 lines 13-23 and noted the bill was excluding any applicant that has a pending registration filed with the United States Security and Exchange Commission (SEC). He asked Mr. Makinster whether there were any corporations in Alaska who meet that requirement. MR. RYAN MAKINSTER, staff to Senator John Cowdery, did not know. CHAIR SEEKINS speculated it would be a major sized corporation. MR. MAKINSTER countered not necessarily. A person could have other holdings. 5:23:58 PM SENATOR HOLLIS FRENCH asked what it means to have a pending registration filed with the SEC. MR. MAKINSTER advised the language was added to the bill by legislative legal. When a company files to be on the stock exchange there is a period where the company has to be silent about certain information because it may affect the stock price on opening day. SENATOR FRENCH asked the type of information the company is allowed to withhold. MR. MAKINSTER answered information regarding the specific company. He said it doesn't preclude them from giving out other information. CHAIR SEEKINS disagreed. 5:26:05 PM CHAIR SEEKINS said they would have to provide names of all persons holding 20 percent interest but would not be subject to the scrutiny any other applicant would be. He said it appears the wealthiest person would not be required to provide much information including the state they are registered in. 5:29:02 PM MR. MAKINSTER said a company that has a filing pending with the SEC is in an information black out period. CHAIR SEEKINS asserted at that point he would not be interested in them being an applicant. SENATOR FRENCH concurred. SENATOR JOHN COWDERY concurred. 5:31:44 PM CHAIR SEEKINS moved Amendment 1 Page 5, line 15, after the word registration delete the comma, insert semi-colon. Delete the rest of sub-subparagraph (i) and delete sub-subparagraph (ii). Hearing no objections, the motion carried. SENATOR FRENCH moved Amendment 2. Page 5, line 28, after the word "indicted", insert the word "charged." Hearing no objections, the motion carried. SENATOR FRENCH moved Amendment 3. Page 10, following line 20: Insert a new subsection to read: "(h) Before issuing a license, the department shall provide notice to the public of the identity of the applicant and the location of the proposed card room and allow at least 30 days for public comment." CHAIR SEEKINS objected for explanation. SENATOR FRENCH advised the amendment was like a liquor license or a zoning change. It gives the citizens an opportunity to weigh in. 5:35:47 PM CHAIR SEEKINS removed his objection. Hearing no others, Amendment 3 was unanimously adopted. CHAIR SEEKINS recessed the meeting to the call of the Chair at 5:35:59 PM. CHAIR SEEKINS reconvened the meeting at 7:36:10 PM. He referred to the State of Washington's administrative code regarding limits on wagers and read through the information. 7:37:54 PM MR. MAKINSTER commented SB 165 gives the DOR the ability to regulate wagers. CHAIR SEEKINS asked Mr. Makinster whether the information in the State of Washington administrative code is a standard. MR. MAKINSTER advised it was the same between Washington and Oregon. 7:41:30 PM CHAIR SEEKINS noted the ante could be $25 and any additional wager could only be $25 with a maximum of three additional rounds. MR. MAKINSTER said correct. SENATOR COWDERY commented it would be rare in a game for all people to be in until the end. 7:45:47 PM CHAIR SEEKINS advised the committee they would be tasked with setting a maximum wager. CHAIR SEEKINS held SB 165 in committee.