Legislature(2005 - 2006)BELTZ 211

04/19/2005 01:30 PM LABOR & COMMERCE

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01:37:46 PM Start
01:38:54 PM Confirmation Hearing(s)
01:41:46 PM Richard Heieren, Fairbanks
01:46:30 PM Gary Atwood, Fairbanks
01:47:51 PM Colleen Scanlon, Ketchikan
01:51:00 PM HB81
01:55:11 PM SB169
01:57:18 PM SB168
02:07:12 PM SB165
02:34:13 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 168 Out of Committee
Moved CSSB 169(L&C) Out of Committee
Heard & Held
Confirmation Hearings:
Board of Veterinary Examiners
Timothy L. Bowser, D.V.M. - Soldotna
Cynthia Ann Trout, D.V.M. - Anchorage
Alfred Agree - Trapper Creek
Alaska State Board of Public Accountancy
Carla J. Bassler - Anchorage
Kenneth L. Mayer - Kenai
Christy Morse - Anchorage
State Board of Registration for
Architects, Engineers & Land Surveyors
Richard C. Heieren - Fairbanks
Harley H. Hightower - Anchorage
Mark G. Morris - Juneau
Board of Barbers and Hairdressers
Alice B. Massie - Wasilla
Labor Relations Agency
Gary A. Atwood - Fairbanks
Aaron T. Isaacs, Jr. - Klawock
Colleen E. Scanlon - Ketchikan
Bills Previously Heard/Scheduled
Including But Not Limited to:
Moved SCS CSHB 81(L&C) Out of Committee
                 SB 165-CARD ROOMS & OPERATIONS                                                                             
CHAIR BUNDE announced SB 165 to be up for consideration.                                                                        
BRIAN MCKINSTER,  staff to Senator Cowdery,  explained that SB  165                                                             
allows  card rooms to  exist in  a controlled  public environment,                                                              
but only non-bank games can be played such as poker and rummy.                                                                  
He  said there  is a  growing popularity  for  these games  in  the                                                             
country  and the  state  and crime  goes  with  hand in  hand  with                                                             
underground  games; but  in a public  legal environment  the games                                                              
will be  regulated and  followed closely  by state  officials.  The                                                             
state would charge  a $10,000 yearly fee  per table with a $25,000                                                              
application fee. The yearly fee would not be prorated.                                                                          
This bill  addresses  who can  and who  cannot hold  a license  and                                                             
limits  the number  of  licenses to  1 per  30,000  in population.                                                              
These games  are allowed  at home so  this is  not necessarily  and                                                             
expansion  of  gaming,  but "We're  just  saying  in  a controlled                                                              
limited  environment,  you can  play  in  a public  venue  that  is                                                             
limited by the state for revenue and for criminal activity."                                                                    
2:07:12 PM                                                                                                                    
CHAIR BUNDE  said it  is legal to  gamble with cards  for money  in                                                             
Alaska as  long as the  house doesn't  take a rake  or some of  the                                                             
money for operating costs.                                                                                                      
MR. MCKINSTER  agreed, but  added that the  clarification needs  to                                                             
be made  that there is a  difference between a  rake and the house                                                              
actually having a stake in the game.                                                                                            
     You're  not  playing  odds against  the  house  like you                                                                   
     would at  blackjack. The  odds are even  for every other                                                                   
     table  and  they're   physically  playing  against  each                                                                   
     other  instead  of the  house.  Basically,  it's  just a                                                                   
     rental fee for the table or otherwise known as rake.                                                                       
2:08:08 PM                                                                                                                    
CHAIR BUNDE  said the significant  change this  bill would make  is                                                             
it would  allow someone who  has organized the  game to charge  for                                                             
table rental.  He expressed a conflict in  that he plays poker and                                                              
asked if this bill would allow tournaments.                                                                                     
MR.  MCKINSTER replied  that it  doesn't  address that  except  for                                                             
charity.  Senator Cowdery  thought it  best to  leave  that to  the                                                             
department to develop in regulations.                                                                                           
2:10:54 PM                                                                                                                    
SENATOR COWDERY  noticed that  the committee  had an advertisement                                                              
for a  world poker tour  with players paying  $15,000 for a chance                                                              
to win $1.7 million.                                                                                                            
MR. MCKINSTER  explained that the maximum  dollar amounts would  be                                                             
left up to the Department of Revenue.                                                                                           
2:11:59 PM                                                                                                                    
CHAIR  BUNDE said  the bill  focuses on  poker and  asked if  other                                                             
games, like cribbage, are covered.                                                                                              
MR. MCKINSTER  said originally  the sponsor didn't  intend to name                                                              
the  games  in  the   bill,  but  wanted  to  leave  that  to   the                                                             
department.  However, some  people wanted reassurances  about what                                                              
games  would  be  allowed under  this  statute  and  they  are  now                                                             
listed as poker, pan, rummy and cribbage.                                                                                       
2:13:37 PM                                                                                                                    
CHAIR BUNDE asked how wagers are addressed.                                                                                     
MR.  MCKINSTER  replied  the  department  could  decide  how  much                                                              
wagers would be, but he envisioned $1 - $4.                                                                                     
2:14:14 PM                                                                                                                    
SENATOR  DAVIS was concerned  about money  made by  people who  own                                                             
the gaming rooms.                                                                                                               
MR. MCKINSTER  said this bill doesn't  address that, but a sponsor                                                              
substitute could. The department would decide.                                                                                  
SENATOR DAVIS asked how many new jobs would this provide.                                                                       
MR. MCKINSTER  replied that  it takes  7.5 people to  run a table,                                                              
not considering food and beverage services.                                                                                     
CHAIR BUNDE asked what rates are in other areas.                                                                                
MR.  MCKINSTER replied  that  other  areas charge  a  fairly small                                                              
percentage based on the size of the game that is played.                                                                        
2:16:38 PM                                                                                                                    
CHAIR  BUNDE  asked  if  he  thought  serving  alcohol  should   be                                                             
allowed in card rooms.                                                                                                          
MR. MCKINSTER  replied  that serving  alcohol is  not addressed  in                                                             
the  bill. However,  a couple  of  people he  talked to  said they                                                              
wouldn't  need  alcohol  to  sell  this  as  an establishment   and                                                             
that's obviously the case now.                                                                                                  
He  noted that  state policy  does  not allow  free alcohol  to  be                                                             
served  as  an incentive  like  in  a Las  Vegas  casino,  but  the                                                             
Department of Revenue could decide that, also.                                                                                  
CHAIR BUNDE asked what the fiscal impact to the state is.                                                                       
BRETT  FRIED,  Economist,  Department  of  Revenue  (DOR), replied                                                              
that it  is difficult  to generate a  number. He  doesn't know  how                                                             
many  card rooms  or tables  would end  up in  the card  rooms.  He                                                             
used the  2000 census for  a maximum allowable  number and divided                                                              
that by  30,000 and came  up with  13. He used  the maximum number                                                              
of card tables  per room allowed in Washington  state, which is  15                                                             
and 6.7  as the average  number of  gaming employees  per table  to                                                             
derive  an estimate  of $2.5  million in  the first  year and  $2.1                                                             
million in the second year.                                                                                                     
2:20:33 PM                                                                                                                    
PERRY GREEN,  Alaskan card player,  said the bill  is well written                                                              
and is  very stringent for a  card room. "It's  a wonderful way  of                                                             
doing it."                                                                                                                      
He expressed  that  there is  a lot of  interest in  this activity                                                              
and  compared  it to  golf  that  has about  2,000  pros  that  are                                                             
playing for $100 million in prize money per year. He said:                                                                      
     Poker has  blossomed so much that  today the prize money                                                                   
     in  tournaments  is around  $700  million.  With Senator                                                                   
     Cowdery's  bill  we're not  talking about  this  kind of                                                                   
     money.  But   I'm  just  saying   that  that  is  what's                                                                   
He said  that gambling  happens in  Alaskan waters  on tour ships.                                                              
"So, if  you think you're  stopping gambling, you're  not - by  not                                                             
voting for this."                                                                                                               
CHAIR  BUNDE  pointed  out  that  cruise  ships  can  gamble  only                                                              
outside of  state waters and  asked what rake  is standard for  the                                                             
industry per game.                                                                                                              
MR. GREEN replied  that California charges  for poker rooms get  $3                                                             
or $4 to  host one game and  it takes three  or four people to  run                                                             
one table.   They each need a dealer,  security, janitors, relief,                                                              
floor  supervisors,  cashiers, maintenance,  rush  people  and  on-                                                             
call people.                                                                                                                    
CHAIR  BUNDE asked  how many  games  are played  per hour  and  how                                                             
long a day is.                                                                                                                  
MR.  GREEN answered  that  card rooms  generally  take in  $90  per                                                             
hour per table  - gross - and the games  can run for any number  of                                                             
hours. "It depends. Games start and break up and start again."                                                                  
2:28:02 PM                                                                                                                    
SENATOR DAVIS  noted that  Senator Cowdery had  pointed out flyers                                                              
describing all  the money that can be  made playing poker and said                                                              
those big games are happening here now.                                                                                         
SENATOR COWDERY  added that he could find  15 underground games  in                                                             
Anchorage  per  night  if  he  wanted  to. "It's  unregulated   and                                                             
that's  a fact. I  think it's  a recreational  game.  Even my  wife                                                             
has caught on to it."                                                                                                           
2:30:22 PM                                                                                                                    
CHAIR BUNDE  said TV  gambling is  a growing phenomenon.  He asked                                                              
if  on-line gambling  is  legal  in Alaska  if  it's headquartered                                                              
somewhere else.                                                                                                                 
SENATOR  COWDERY  responded  that  he  thought  on-line  games  are                                                             
MR. GREEN  said about  90 percent of  on-line poker  goes to Costa                                                              
Rica, Dominican  Republic, London, and  other tax haven places.  He                                                             
knew of a $7,200,000 tournament that was out of Aruba.                                                                          
2:31:24 PM                                                                                                                    
CHAIR  BUNDE asked  if convicted  felons would  be allowed  to  run                                                             
SENATOR COWDERY responded:                                                                                                      
     Before  anybody  could  get a  license,  you  might hope                                                                   
     that  they would  have to  be cleared  of any  felony or                                                                   
     any  crimes  in their  past  just  to try  to  keep this                                                                   
     above board  to be run by individuals  or people who are                                                                   
     aboveboard  and  citizens....  I  think  anyone  who  is                                                                   
     going  to open  one  of these  establishments  should be                                                                   
     pretty up and coming people, not convicted felons.                                                                         
MR. GREEN added that on-line sites charge $3 per game and that:                                                                 
     I  know in games  where you're  playing for  money, they                                                                   
     have  no brick  and mortar.  By  brick and  mortar, they                                                                   
     don't  have a  plant  or facility.  All  they have  is a                                                                   
     computer line.  And I noticed when   "Poker Stars" dealt                                                                   
     their  one-billionth  hand -  one-billionth hand  - they                                                                   
     gave  away $100,000  whether you  were playing  for five                                                                   
     and  ten  cents  or  you  were  playing  for  $1,000  or                                                                   
     %10,000....  They are just  coining money  and good luck                                                                   
     to them.                                                                                                                   
CHAIR BUNDE said that there were no further questions and closed                                                                
the hearing. The committee would wait for the CS. He then                                                                       
adjourned the meeting at 2:34:13 PM.                                                                                          

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