Legislature(2005 - 2006)
04/21/2005 01:34 PM L&C
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* first hearing in first committee of referral
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SB 165-CARD ROOMS & OPERATIONS CHAIR CON BUNDE announced SB 165 to be up for consideration. 2:01:50 PM SENATOR RALPH SEEKINS moved to adopt CSSB 165(L&C), version L. CHAIR BUNDE objected to explain the changes in the CS. It adds the term "rake" and defines it as the house money that is retained from a card game. He reminded people that card games for money are currently legal in Alaska as long as the house doesn't get paid for putting the game on. It also gives the department the power to determine what the maximum rake for games played in the card room would be and removes a minimum wager so the department only decides what maximum wagers are. It also adds the provision that only players in a card game may place a wager on that game. Section AS 05.18.200 changes licensing for card rooms. If the population is lower than 30,000 people, a license may be issued only if an ordinance is adopted by the municipality and ratified by a vote of the people. It also changes the number of licensed facilities so that a population of 59,900 can have two facilities and a population of 60,000 or more can have a maximum of three card rooms. Section AS 05.18.210 removes submission of design from the title because it doesn't really relate to the design. Section AS 05.18.900 adds number 13 - a player means an individual actively participating in a card game and 14, a rake is defined as a set fee or percentage of the total amount wagered by all the players in the game in the course of that game. 2:04:29 PM ROGER GAY, Big Lake resident, didn't like some provisions in the bill. His community has a lot of fun with no buy-ins - playing Texas Hold 'Em and receiving prizes donated by the local businesses. The bigger part of the game is entertainment and he thought the bill targeted tourists. Further, Mr. Gay said that putting all the money into the State Gaming Fund is unconstitutional under the no dedication of funds provision in the Alaska Constitution. CHAIR BUNDE replied that the state has a number of dedicated funds, which are not permanent and can be changed by any future legislature. The monies are accounted separately and have legislative intent. He used the duck stamp tax as an example. MR. GAY said he opposed, "creating a department with its own slush fund to be used as it sees fit." He said that AS 18.110(2)(d) says the department can enter a game room to determine compliance or non-compliance and it doesn't need to have probable cause. He thought there should be a presumption that things are done right, not that things are being done wrong. 2:08:35 PM He also thought that the uncompensated Card Room Advisory Board would soon be subject to outside pressures and should, therefore, get compensated. AS 05.18.170, the suspension of license section, used "reasonable time" and he thought the number of days should be specified. He also thought the non- refundable $25,000 application fee was too much. What is the state doing that it deserves $25,000 to go into the State Gaming Fund! The applicant having to pay for the investigation and reinvestigation - if you want to investigate somebody, you do it on your own dime. Otherwise you can investigate and reinvestigate somebody day after day after day presuming that you always have a right to do so and that would just amount to harassment. Ten thousand dollars a table - right now we're playing for free. If you make somebody pay $10,000 for a table, who do you think is going to pay for that? It's the players. The people who are playing out here in the Valley at the moment are merely looking for entertainment. We're not bringing home any cash. If you make somebody pay $10,000 a table, the rake is going to be bigger and [indisc.] - $500,000 cash bond? To be at the disposal of this department? Without restriction? Once again, what's the state doing that it deserves to have a $500,000 cash bond at its disposal without restriction? MR. GAY asked if tournaments in AS 15.18.230 are only for education groups or any non-profit group. He also didn't see any reason someone couldn't give to the same group year after year. Restricting the Valley to just two operators was not a good idea either, because more operators would benefit more charities. 2:15:19 PM CHAIR BUNDE said he didn't think this bill would stop games for fun. He recalled that a few years ago some cribbage games were thought to be played for money and stopped because they were illegal and: What's happening in the Valley now may be beyond what is legal. So, you may want to look into that, but in any case I don't think this bill would affect those games for fun.... MR. GAY said that the bill does not include pinochle and other cards games and asked why the bill doesn't say that card games in general can be played. RYAN MCKINSTER, staff to Senator Cowdery, sponsor, said this bill is totally separate from those other games. Card rooms are specifically defined in the bill to be a structure in which card games are played under licensees and if one is not a licensee, this bill doesn't address them. 2:17:55 PM SENATOR SEEKINS asked if he had any legal opinions on the effects this would have on the Gaming Act. MR. MCKINSTER replied yes and it says this is a Class 2 type of game. It's non-banked, which all these games are and the state already allows Class 2 games. So, it doesn't affect it. If it goes to a bank version, that's when we would open up Class 3 gaming, which would be blackjack or games where the house has a stake in the game. SENATOR SEEKINS said one independent counsel that he talked to had concerns that there is no public comment or notification on an application, nor is there municipal or state comment. He thought this would precipitate a great number of applications for permits and several issues are already pending in court. 2:20:42 PM CHAIR BUNDE said the law allows three game rooms in communities with populations up to 60,000, but he wanted to know if Indian land could have as many as it wanted. MR. MCKINSTER replied this bill would not be restricting games on Indian land. They can currently do this according to the decision the Indian Gaming Commission made on New York's non- bank card games. CHAIR BUNDE clarified that they can have card rooms, but can't take a rake. MR. MCKINSTER replied, "True...." 2:21:47 PM SENATOR SEEKINS reiterated that there are pending issues in courts that would be wise for the committee to look at. Some legal opinions say if a tribe were to buy some land in downtown Anchorage, it could designate it as Indian land, which would subject it to the Indian Game Act. CHAIR BUNDE said that as he understands it, any expansion of Indian gaming would be limited to what state law allows. MR. MCKINSTER replied that Class 2 gaming laws apply to them, too. However: The issue does arise when you get to Class 3 games, which are casino style games. They don't have to designate anything. They can do everything if Class 3 is opened up, which this bill doesn't address. We're not getting to that level of gaming. 2:23:17 PM CHAIR BUNDE asked if language on waivers for rehabilitated felons is boilerplate from other issues like pulltabs. MR. MCKINSTER replied yes. 2:24:25 PM SENATOR DAVIS said the previous speaker had some valid concerns that she thought should be addressed. CHAIR BUNDE responded that his impression was that the previous speaker didn't want competition with their "fun games." SENATOR DAVIS replied that she understands that, but he mentioned some valid concerns. MR. MCKINSTER replied that the previous speaker's issues were not with this bill in general, but he said he would be glad to address specific issues if she could identify those. It's understandable, if they're doing games for no profit, a license fee of $10,000 is unreasonable. In this bill we're not addressing those games. We're addressing businesses that are actually going to make a profit off of this. So, we think it's reasonable for a $10,000 per table fee. 2:25:45 PM SENATOR DAVIS said she thought $10,000 was unreasonable. MR. MCKINSTER replied that the $10,000 is a number the sponsor came up with after looking at other fees. Washington has a $5,000 fee that is graduated depending on the number of tables. It is intended that this system be fully self-funded from program receipts. CHAIR BUNDE said his concern was that the state doesn't end up subsidizing the cost of regulating card rooms. 2:26:24 PM LARRY MEYERS, Department of Revenue, said Brett Fried, the department's economist, could best comment on that issue. 2:26:57 PM BRETT FRIED, Economist, Department of Revenue (DOR), reiterated the department's assumptions to come up with the fiscal note. He said they didn't know how many tables there would be in each card room. Assuming 13 card rooms and 15 tables in each, he anticipated $609,000 in total costs. SENATOR DAVIS asked if there would be any cost to the state if a card room fails. MR. FRIED replied that the department could only estimate and came up with $609,000 to the state that would cover investigations and administration of the program. SENATOR DAVIS asked who would bear the cost overruns. MR. FRIED replied the state would. 2:30:19 PM CHAIR BUNDE said that one of his concerns was on page 15 that says people could be investigated for any cause. MR. MCKINSTER replied that is boilerplate language and is the same used with alcohol licensing. Establishments are agreeing to be open for investigation. 2:31:44 PM SENATOR COWDERY, sponsor, said he introduced this bill because card games are getting to be more popular and he wanted to see them out in the open. 2:35:59 PM DAVID SANDEN, representing himself, said he has extensive experience in legal gambling in Alaska, but not in gaming. He understands the intent of this bill, but he cautioned there are lots of unknowns that will come with it. It's the next step in gambling in the State of Alaska and you, gentlemen and ma'am, have grave responsibility in making sure this is done, if it is done at all, very slowly and you'd better make sure you know what the consequences are. MR. SANDEN said the bill is trying to capitalize on gambling as a revenue source for the state and to promote tourism as opposed to a family playing games for fun. 2:37:31 PM If there were gaming permits, Juneau would have only one and only people with a lot of money would be eligible to apply. He didn't know how many people have that much money. He thought the $10,000 was a miniscule fee, but the $25,000 application fee first, with no guarantees, would be a stretch. 2:42:06 PM MR. SANDEN said that gambling is a vice and the fees and bond are expensive. Less than one percent of Juneau residents have that money. Because Juneau could only have one game room, it would be granted a monopoly. In lieu of charging such a large application fee and bond he thought lawmakers should consider making the regulations much more stringent. Once gambling is sanctioned by the state, the punishment for violations must be severe. 2:43:41 PM Another concern he had was with the Card Room Advisory Board, which will serve for five years, is appointed by the governor and will not be paid. He asked what kind of people would do that - two people from the clergy or the conservative right who are opposed to vice and two people who are pro-gambling interests? In short, he asked what the criteria are for being on the board. 2:45:04 PM SENATOR SEEKINS referenced page 2 of the legal opinion that was given to Representative Kott that had ominous overtones that should be addressed. It's not safe to assume that there are no other Indian lands in Alaska and also that there is a framework here that would require us upon application from a tribe to enter into a state/tribal compact, which we have not done on any basis in the past that I'm aware of. He said that he understands there has already been one Indian Gaming Commission license issued to one of the villages in Southeast Alaska, although it has never been activated. He didn't want to put the state in the position of trying to determine if lands purchased by a recognized tribe are tribal lands or not and of being able to deny entering into tribal/state compacts. He said he would request an additional assignment for this bill to go to the Judiciary Committee to give time for those answers. 2:47:34 PM SENATOR JOHNNY ELLIS asked what existing referrals the bill has. CHAIR BUNDE answered, "Finance." 2:47:59 PM SENATOR SEEKINS moved CSSB 165(L&C), version L, from committee with individual recommendations. Senators Ellis, Davis, Seekins, Ben Stevens and Chair Bunde voted yea; and CSSB 165(L&C) moved from committee.