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. Tom Dow, Vice President of Hotels, Princess Cruises, testified in support of SB 370. SB 370 was HELD in committee. CS FOR SENATE BILL NO. 370(JUD): 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; requiring certain disclosures in connection with promotions on board cruise ships and making violation of that provision an unfair trade practice; defining `cruise ship'; and providing for exemption fees for certain cruise ships before they can conduct gambling in the offshore water of the state. Co-chair Pearce announced that SB 370 would be heard in committee strictly as an overview. She invited Tom Dow, Vice President of Hotels, Princess Cruises, to join the members at the table. She also said Donald Stolworthy, Director, Charitable Gaming Division, Department of Revenue, was in the audience and available for questions from the committee. Co-chair Pearce asked Senator Sharp if he would like to make a statement regarding the bill since it was introduced by the Transportation Committee. Senator Sharp said there was a short sponsor statement but he would give the floor to Mr. Dow in consideration of limited time in the meeting this morning. TOM DOW said that SB 370 would provide for an exemption for the state's gambling laws for cruise ships and in effect would allow cruise ships to operate casinos on board when sailing within Alaskan waters with the exception of three miles off any port of call. This bill would restore rights to cruise ship operators which have been common practice within the industry for about 20 years. He said a letter in support of SB 370 had been sent to Senator Taylor and would be presented to the committee if it was not on file. The bill would require a fee for the exemption. An estimate said that this bill would raise approximately $300,000 per year from cruise ship companies. He felt that revenues would grow in consideration of new ship construction plans. Mr. Dow went on to say that in the last 20 years Alaska had become one of the premier cruising destinations in the world, currently ranking number 2. During this period of growth and development, there was no evidence that the on- board entertainment activities had any impact on any Alaskan resident or community because of the way casinos operated. The casinos were open only when the ship was underway and closed when in port. Access was limited to passengers who had paid for a trip. He felt the public policy concerns related to gambling would not be compromised. He knew Alaskans appreciated the importance of tourism to the state, they recognized the significant role that cruise ship companies played, and Alaskans did not favor prohibiting casinos. He pointed out that all world class cruises offered gambling and passengers now expected it. He felt there was no public policy opposing gambling on cruise ships and the state could gain some revenues from those ships that wished to continue gambling on its cruises. He said that this bill effected a small portion of time when the ships were in Alaskan waters. In answer to Co-chair Pearce, Mr. Dow said that the time the casinos were open varied depending upon the ship. For Princess cruises, normal operating time would be from about 10 am to 2 am in the morning excepting when in port or during a special glacier viewing or other sightseeing opportunity when the casino would be closed. In answer to Senator Rieger, Mr. Dow said that passenger participation depended on the cruise company, space available and demographics. He estimated 50-60 percent of Princess cruise ship passengers participated at some point to some extent. In answer to Co-chair Pearce, Mr. Dow said that Princess ran its own gambling casino. In answer to Senator Kelly, Mr. Dow said that a preliminary plan for one of his ships said that casinos would operate the first two days, the evening the first day and the second day from 9am to 2am, the third would be closed after 2am. The next two days would be closed entirely, day five would be open from 9:30am to 2am, and day six, 2pm to 2am. He said there was some ability to adjust the time schedule depending on the situation but no one had ever measured the increment of activity that would be prohibited so it was hard to estimate use. In answer to Senator Sharp, Mr. Dow said that it took about two days to reach Alaska waters from Vancouver. In answer to Senator Kerttula, fees were not paid to other states since Alaska was unique in that the cruise ship hugged the coast for a substantial part of the cruise. Out of Los Angeles or Miami, by the time passengers were settled, the ship was out three miles and gambling was not an issue. He said that there was one similar situation in Chesapeake Bay in Maryland and exempted ships from gambling so they could call in Baltimore. (In a later meeting, Mr. Dow said that Maryland charged the cruise ships a $25 fee.) Senator Sharp noted that item 2 on lines 1 and 2, and Section 3 and 4 on page 2 which required that any promotion done on board a ship had to state clearly that it was a paid advertisement had been added to CSSB 370(JUD). This had been requested by vendors up and down the coast. In answer to Senator Kerttula regarding enforcement costs, Senator Sharp said that in Judiciary Committee the word exemption was changed from the word licensing thus reducing the fiscal notes. It was also noted that the new fiscal note for the Department of Revenue was for $43.6. Co-chair Pearce announced that SB 370 would be HELD in committee.