Legislature(1995 - 1996)
04/05/1995 01:12 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 286 - CRUISE SHIP GAMBLING AND PROMOTIONS Number 275 TOM DOW, Vice President, Princess Cruise Lines, Seattle, presented the following sponsor statement on behalf of the sponsor, Representative Bill Williams: "House Bill 286 gives the state authorization to offer an exemption from gambling statutes to cruise ships. This exemption would allow cruise ships to operate their casinos in Alaska waters. "Casino gambling aboard cruise ships is an amenity needed to keep Alaska on a par with other cruise destinations. While gambling is not the main attraction of cruises to other parts of the world, it is an accepted and expected part of the experience. "In these times of strict budget discipline it is important to find new sources of income. Ships that take advantage of this exemption will pay the state of Alaska fees ranging from $10,000 to $40,000 per year. Initial projections suggest this could add an additional $500,000 per year to state coffers. "This bill supports the tourism industry and raises state revenues. I ask you to support House Bill 286." MR. DOW stated that this practice of operating on-board casinos has been in place for over 20 years prior to a question being raised in 1993. The result of that question being raised was an Attorney General's Opinion stating that since there is nothing to exempt these operations in Alaska law, they were not exempt. We took that as a clue that something should be done. Last year, this committee as well as the House Finance Committee, and the same committees on the Senate side reviewed the bill. There have been a couple of changes this year. One, is that under current law, there is a prohibition against an employee of a casino from serving alcohol in a casino. There are bars and lounges in and adjacent to casinos. Employees are commingled in those rooms, so the current bill reflects an exemption from that statute. Secondly, under the charitable gaming laws, there is a requirement for a license for video games, pinball machines, etc., which do not pay out cash, but might offer prizes. As the business evolves, we are finding more and more teens and young adults on our cruises, so many cruise lines are offering video arcade games. The license fee is $25 per year. We have asked to be exempt from that fee. We estimate that the cruise ships will bring an estimated $575,000 in revenues to the state this year. This video game licensing fee would require some auditing and calculation of the pro rata share of the time these video machines were actually in the state. It would be some fraction of four months a year, perhaps half of that time. So you would be talking about 1/6 of $25 per machine. The accounting for that would eat up the fee. This has nothing to do with the concern over gift shop promotions that came up last year. What we had agreed to do in the previous bill would require full disclosure of these on-board gift shop promotions. Number 420 REPRESENTATIVE CYNTHIA TOOHEY asked about the shore excursion trips. Are these trips solicited by you to sell? Do you pick and choose? MR. DOW said they do pick and choose. His company responds to solicitations, and they look at the product and sample it. We examine the reliability, dependability, cost and cleanliness of the operation. We probably have 150 of these on-shore adventures in a booklet for customers to pick from. REPRESENTATIVE FINKELSTEIN asked about the on-shore excursion part of the bill. What is the difference between on-shore excursions and gift shops? The previous discussion was not just about gift shops, it was about on-shore services. In that scenario you just described, you did not mention whether or not that on-shore company is paying you to be in that catalog. MR. DOW answered that the vendors absolutely do pay a commission for the sale. They are not paying a consideration cost to be listed in the book. The gift shop promotion business differs a little bit, in that these are usually verbal presentations and there are a lot of possibilities for abuse by the employee giving the lectures, perhaps giving a little extra body language to one gift shop over another, because somebody is paying them on the side to do it. It is a system that has been abused in the past, and we have never participated in it. The cruise line's defense of on- board promotions is that in some international venues, they believe people are concerned about where they might be ripped off. If there is a problem, these people can come back and say, "Wait a minute. You recommended this gift shop, and I got some shoddy merchandise, and they would not give me a refund." The passengers have some leverage in the deal. We do not think that is a problem in Alaska. Number 550 REPRESENTATIVE TOOHEY asked for clarification on what the ship's booklet included. She did not like the idea of them sending people to particular shops. MR. DOW said sending someone to a gift shop is different than putting them on a helicopter. If we suggest a helicopter tour or raft trip, we assume some liability there, just by offering it. We have on board, the equivalent of an in-flight magazine, such as Alaska Airlines has. People can buy advertising in those magazines. We do not have promotions, but we do have printed advertising like you would find if you opened up your drawer at the hotel room or in the front of your seat on the airplane. Everybody has an opportunity to advertise. REPRESENTATIVE BUNDE asked what the commission was for advertising. MR. DOW answered that it is somewhere from 15 to 20 percent. REPRESENTATIVE VEZEY asked what the distance from shore was for allowing gambling in international waters. MR. DOW said it is three miles. Number 690 CHAIRMAN PORTER noted the point is that the three mile restriction extends from the port to the cruise ship, rather than from the ship to the shore, because while coming up the passage, the ships are always within three miles of the shore. REPRESENTATIVE FINKELSTEIN offered an amendment to page 4, line 8. He wanted to insert "on a commission basis" after the word "sold." CHAIRMAN PORTER objected and a roll call vote was taken. Representatives Finkelstein and Davis voted yes. Representatives Bunde, Toohey, Vezey, Green and Porter voted no. The amendment failed five to two. Number 800 REPRESENTATIVE GREEN asked if someone could quickly explain what an unsworn falsification consists of, referring to page 3, line 7. ANNE CARPENETI, House Judiciary Committee Aide, said it is when you sign something certifying that it is true, but you do not take an oath. REPRESENTATIVE GREEN asked if there was any assurance for age restrictions for cruise ship gambling. MR. DOW did not know. CHAIRMAN PORTER assumed that since the casinos are in general proximity to a lounge, which precludes anyone under 21, that the gambling would also preclude anyone under 21. REPRESENTATIVE BUNDE made a motion to move HB 286 out of committee with individual recommendations and no fiscal notes. Seeing no objection, it was so ordered.