SB 370 An Act providing an exemption from gambling laws for gambling conducted by cruise ships for their ticketed passengers in the offshore water of the state outside of ports; defining `cruise ship'; and providing for the licensing of certain cruise ships before they can conduct gambling in the offshore water of the state. HCS CS SB 370 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Revenue dated 5/21/94. SENATE BILL 370 "An Act providing an exemption from gambling laws for gambling conducted by cruise ships for their ticketed passengers in the offshore water of the state outside of ports; defining `cruise ship'; and providing for the licensing of certain cruise ships before they can conduct gambling in the offshore water of the state." Representative Martin noted his concerns with the legislation. He asked if a three percent tax was charged to the cruise lines for gaming receipts or if they were exempt from paying that fee. DONALD STOLWORTHY, DIRECTOR, CHARITABLE GAMING DIVISION, DEPARTMENT OF REVENUE, replied that the State accesses a three percent tax on the gross income of charities that have pull tabs. The fee structure in the committee substitute is not based on a percentage of the adjustable income. It is a flat rate fee per ship based upon the size of the ship. Representative Martin pointed out the amount received would be less than anticipated. Representative Martin asked if cruise ships were subject to federal or state law when they sail into state waters. Mr. 9 Stolworthy indicated this was a matter of dispute between the state and the cruise lines. Cruise lines maintain that they are not subject to U.S. jurisdiction or state jurisdiction. The Division of Charitable Gaming maintains that the cruise boats are subject to state law when in state waters. Mr. Stolworthy elaborated that the State of Alaska and the Indian Gaming Law expounds that only activities can be conducted that are authorized under state law. The federal courts which regulate that act have taken a broader interpretation. The only time the courts have taken a restrictive interpretation was when gambling activity could adversely impact the tribe's income. The law was specifically established to benefit the tribes economically. Representative Brown clarified that the State has jurisdiction from three miles off shore and that there can be no gambling within three miles of a port of call. Representative Martin asked if the legislation would provide authority for the first time in which gambling versus gaming would be allowed. Mr. Stolworthy replied gaming is a euphemism for gambling. There are three classes of gaming/gambling: 1. Class #1 - For amusement. 2. Class #2 - Bingo & pull tabs. 3. Class #3 - Banking card games and slot machines. He said that the State of Alaska allows gambling. Representative Martin noted that one could be done in the name of "charity" and the other could be done in the name of "free enterprise". Mr. Stolworthy replied that in charitable gaming, the proceeds are dedicated to worthy causes which differs from commercial gaming. Cruise ship gambling would be strictly a commercial enterprise. JERRY RHEINWALD, REPRESENTING SELF, JUNEAU, requested the Committee consider an amendment. The issue addresses "on board promotions", and preferential mention, an advertising scheme that a lot of small merchants find objectionable. The proposed amendment would replace the current section (c) with a total ban of on board advertising promotions. The language makes it specific that the ban would be targeted to on board advertising of local merchants. THOMAS DOW, VICE PRESIDENT, PRINCESS TOURS, ANCHORAGE, referenced the letter included in the Committee members bill packet. [Copy on file]. He spoke in support of the legislation which would allow gambling aboard cruise ships 10 within Alaskan waters for ticketed cruise passengers. Cruise ships would be required to pay a fee to the State for an exemption prior to conducting gambling under the legislation. He added that this is an activity that has been included for passengers for the past twenty years and has not adversely impacted any community. The language specifically prohibits the operation of casinos within three miles of any port of call. Mr. Dow spoke in support of the amendment. Co-Chair MacLean MOVED that the version before the Committee be HCS CS SB 370 (JUD). There being NO OBJECTION, it was adopted. Representative Navarre MOVED to adopt Amendment #1 including Section (A). Representative Brown recommended deleting "in" of the title and inserting "of". There being NO OBJECTION to the title change, the amendment was adopted. Co-Chair MacLean MOVED to report HCS CS SB 370 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTIONS, it was so ordered. HCS CS SB 370 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Revenue dated 5/02/94.