Legislature(2005 - 2006)

04/21/2005 01:34 PM L&C

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                 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                                                               
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                                                               
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                                                               
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                                                                    
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.                                                                                                                 

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