HB 272-CARD ROOMS & OPERATIONS  9:20:07 AM CHAIR SEEKINS announced CSHB 272(FIN) AM to be up for consideration. MICHAEL O' HARE, Staff to Representative Pete Kott, introduced the bill. The game of poker is seeing a growing popularity. The bill would provide a safe environment in which to play games and would remove the need for illegal backroom games. The types of games would include non-banking card games, such as poker, pan, rummy, bridge, and cribbage. Licenses would be limited to one license for municipalities for less than 30,000 people and the limit for municipalities with over 30,000 may not exceed the population divided by that number. 9:22:47 AM The licensee would be required to pay a non-refundable application fee of $25,000 with the Department of Revenue (DOR) and would post $500,000 cash bond at least sixty days in advance of commencement of card room operation as well as a $10,000 fee per card table. Licensee would be required to undergo a personal background check and pay for investigative costs incurred over the application fee. Licensee would be required to host quarterly tournament with proceeds to be distributed to a non- profit educational institution. The bill would allow the DOR to impose regulations. The bill would give back to the community in the form of jobs and support of non-profit charities. Included in the bill packet are the fiscal notes and a sectional analysis and legal opinion. The Supreme Courts of Montana and Oregon have identified that poker is a game of skill. 9:26:11 AM SENATOR FRENCH asked Mr. O'Hare whether alcohol would be served at the card rooms. MR. O'HARE inferred there was currently no intention to allow alcohol to be served in the cardrooms. SENATOR FRENCH inquired whether the bill prohibited alcohol sales. MR. O'HARE said no. 9:28:08 AM SENATOR GUESS commented that a business could have multiple owners. She asked Mr. O'Hare to comment on whether all owners would have to submit to the background checks. MR. O'HARE said he understood that everyone including the directors of the corporation would need to be fingerprinted and background checked. SENATOR GUESS asked whether a minority owner with a felony conviction could be part owner of the card room. MR. O'HARE offered to get back to the committee. SENATOR GUESS referred to page 3, lines 29-30, and asked for explanation of the language. MR. O'HARE responded that language was added in order to enhance any investigations that might occur. 9:30:26 AM SENATOR HUGGINS asked the reason for the bill. MR. O'HARE advised that currently backroom poker games happen all over the state, usually in the middle of the night, and without any level of control or consumer protection. HB 272 would establish a legal, monitored and friendly atmosphere in which to play poker. SENATOR THERRIAULT noted that bars are currently allowed to hold "poker nights" without the wagering of cash. CHAIR SEEKINS said it was his understanding that HB 272 would allow the house or owner of the establishment to take a cut of the winnings. SENATOR FRENCH referred to an article in the packet regarding a poker tournament that uses prizes for the winner in lieu of cash. 9:35:04 AM CHAIR SEEKINS asked for clarification whether the bill would bring professional poker playing into Alaska by allowing the card room owner to take a "rake." He asked whether there was anything in the bill that would control "shills." RYAN MAKINSTER, Staff to Senator John Cowdery, offered to answer questions. He said it is currently illegal to play for money in a public environment in Alaska unless you are in somebody's home. 9:38:43 AM MR. MAKINSTER advised the committee that, under the Indian Gaming Regulatory Act, Alaska would be required to work with any Alaska tribes within its class of gaming. SENATOR HUGGINS asked Mr. O'Hare whether there was a committee on gambling and if so, were any recommendations suggested from that committee. MR. O'HARE observed that a task force was identified on a gaming commission. The task force has not made any recommendations as of yet. SENATOR FRENCH asked whether the bill provided for any type of table restrictions. MR. O'HARE informed there were no stipulations to the limit of tables but each table would cost $10,000. CHAIR SEEKINS noted a discrepancy in the title of the bill. MR. O'HARE replied he did have the memo from legal services alerting the sponsor to that issue. 9:42:41 AM CHAIR SEEKINS questioned the reason for removing the municipal option. MR. O'HARE said he did not know. SENATOR GUESS asked how the number of 30,000 was chosen to determine the number of card rooms. MR. O'HARE replied initially it was a random number used to separate Anchorage and Fairbanks out as the larger municipalities. 9:45:53 AM SENATOR GUESS noted that Anchorage could have 10 card rooms with an unlimited number of tables. MR. O'HARE said correct. SENATOR GUESS referred to page 10 and asked how the DOR would determine who is awarded a license. She also noted that on line 18 the language seemed very subjective. MR. O'HARE said it was in order to give the utmost discretion to the Department. SENATOR GUESS referred to page 10, line 26 and asked whether that would be legal. CHAIR SEEKINS said he didn't think so. SENATOR FRENCH said it was a laudable idea but probably couldn't be codified in statute. 9:49:46 AM CHAIR SEEKINS asked for clarification the actual amount of money that a person would have to put up in order to open a card room with four tables. MR. O'HARE responded the initial application fee of $25,000, a $5,000 cash bond, and $10,000 per table as well as any additional costs associated with the background investigation. CHAIR SEEKINS speculated that card rooms must be a very profitable business. MR. O'HARE said it could be. CHAIR SEEKINS asked whether the license could be sold to another person. MR. O'HARE did not believe so. CHAIR SEEKINS asked whether the bill identified it as a non- transferable license. MR. O'HARE offered to find the section related to that topic. SENATOR FRENCH asked whether there were statutory restrictions on how the house earns the money, such as by the hand or by the half hour. MR. O'HARE said there are no restrictions. 9:52:25 AM SENATOR FRENCH asked what the financial integrity system would be for the purpose of transparency to the state overseer. MR. O'HARE admitted the bill contained no stipulation for that. SENATOR FRENCH expressed concern and said it would be difficult to keep exact track of how much the players earn and how much the house earns. MR. MAKINSTER informed the committee that other states do all of that in regulation rather than statute. SENATOR FRENCH commented the State of Washington requires closed circuit television recording of the tables and the cages. He asked whether HB 272 did the same. MR. O'HARE said no it does not but the sponsor would be willing to amend the bill to include that. SENATOR FRENCH asked about the effective dates and how they envision the process and first licensing. MR. O'HARE did not know. He deferred to the DOR. 9:56:37 AM SENATOR GUESS asked Mr. O'Hare to discuss the rakes and the sideboards around them. MR. O'HARE replied the bill does not discuss rakes or how much money the card room would be allowed to make. SENATOR GUESS asked how the business hours would be set. MR. O'HARE informed that would be addressed under the regulations. SENATOR HUGGINS asked whether people could play poker online. MR. O'HARE said yes and it was a popular method of playing. MR. MAKINSTER interrupted to inform the committee that online poker playing is not the same as plugging into Las Vegas since much of the online business is routed internationally. SENATOR GUESS referred to page 17, line 10 and noted that "cheats at a card game" is a broad and undefined charge. 10:01:19 AM SENATOR FRENCH asked whether there would be a prohibition on a bingo operation attached to a card room. MR. O'HARE said the bill would only allow an owner to have a card room operation. 10:06:52 AM GUY WARREN, Clerk for the Presbytery of Alaska, testified against the bill. He said implementing the bill would create social disorder and would not serve to the betterment of the people of the State of Alaska. 10:10:37 AM RUTH BLANCHARD, Houston, testified in support of the bill with some amendments, such as local control, super majority, and municipality change to cites. LINDA COY, Anchorage, testified in opposition to the bill. She took issue with the claim that creating card rooms would bring money into the state. She said that all pathological gamblers started when they were young and she encouraged the committee to abandon the bill. 10:13:36 AM DEBBIE JOSLIN, Eagle River, testified in opposition to the bill. She quoted Warren Buffet as saying that gambling begets crime, bankruptcy and suicide. MARIE TOOTHMAN, Houston, testified in support of the bill. She said the money would stay in Alaska and that people need winter entertainment. LINK FANNON, Houston, testified that the Houston city council supported the bill with a couple of amendments, such as local control and the super majority vote. 10:19:21 AM PAMELA SAMASH, Nenana, testified in opposition to the bill. She shared a personal experience of how gambling addictions have destroyed her family. 10:23:57 AM PERRY GREEN testified in support of HB 272. He claimed that the gaming commission was doomed to failure because all of the people on the commission were against gaming. He claimed that billions of dollars were leaving America due to online overseas games. He said the cost for licensing was excessive but agreed with the City of Houston's suggested amendments. 10:27:26 AM ROSEMARY BURNETT, Deputy Mayor of Houston, testified in support of the bill. She said there are already after hours card rooms in the MatSu Valley and it is getting out of hand. BOB CHAFFONE, Professional poker player in Michigan, testified that poker is an addiction but said it was not the function of the bill to micro-manage people and their addictions. He testified in support of the bill and said it would be a responsible form of government to regulate the gambling. ROBERT HALL, Houston, testified in support of the bill. He suggested allowing for customers to pre-set limits as to how much they could lose in a sitting. 10:35:29 AM SUSAN DUCK said she recently planned a poker tournament. Approximately 7,500 players participated and it was an enormous success. She did not hear one complaint regarding the tournament. She said the bottom line is that card playing is already happening and people are making money illegally. She encouraged the committee to organize and regulate the card rooms. 10:37:55 AM CHAIR SEEKINS apologized that he had to interrupt testimony. He held the bill in committee.