STAND. COM. REP. NO. 146-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2904
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Tourism, to which was referred H.B. No.
2904 entitled: 

     "A BILL FOR AN ACT RELATING TO GAMING,"

begs leave to report as follows:

     The purpose of this bill is to establish a regulatory
framework for the conduct of legal shipboard gaming in Hawaii.

     Pacific Cruises and Hawaii Gaming Advocates, Inc. testified
in support of the measure.  The Hawaii Government Employees
Association submitted testimony in support of the measure with
proposed amendments.  Outrigger Hotels & Resorts testified in
support of the intent of the measure.  The Department of the
Attorney General, Department of Prosecuting Attorney of the City
and County of Honolulu, Honolulu Police Department, Hawaii Green
Party, Maui Hotel Association, Hawaii Conference United Church of
Christ, Hawaii Pacific Baptist Convention, Hawaii Association of
International Buddhists, Life of the Land, Coalition of Hawaii
State/Counties, Advocates for Consumer Rights, League of Women
Voters of Honolulu, Hawaii Family Forum, Hawaii Coalition Against
Legalized Gambling, United Methodist Church, Wailuku Union
Church, Christian Voice of Hawaii, Pacific Gateway Center, Hawaii
Chapter of the National Rainbow Coalition, Inc., and several
individuals submitted testimony in opposition to the measure.
Comments were submitted by the Office of Information Practices,
Hawaii Catholic Conference, League of Women Voters of Honolulu,
and Paradise Cruise, Ltd.


 
 
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     Hawaii is one of only two states that does not have any form
of legalized gaming.  Your Committee notes that illegal gaming is
prevalent in the State despite efforts by law enforcement to
control such activity.  In addition, it is estimated that 40,000
Hawaii residents travel to Las Vegas each month to participate in
gaming and other attractions.  These and other factors have
compelled policymakers to take a greater look at the issue of
establishing legalized gaming in the State.

     Furthermore, in these difficult economic times, when
financial stresses have put a terrible strain on individuals and
their families due to a lack of jobs and other employment
opportunities, it is incumbent upon policymakers to take
immediate and effective action to address the day-to-day economic
needs of the community.

     Your Committee recognizes that in providing for economic
opportunities for the people, careful consideration must be given
to the type of economic activity and the impact that the activity
will have on the community as a whole.  Your Committee is
cognizant of the concerns raised about gaming.  However, your
Committee believes that this bill, by:

     (1)  Limiting gaming activities offshore on ships; and

     (2)  Restricting the number of licenses to operate these
          shipboard gaming activities to only four;

will enable the State to strictly and rigorously regulate gaming
activities to address these concerns.

     In addition, this bill provides other security and safety
net protections, including:

     (1)  Providing stringent licensing and eligibility
          requirements;

     (2)  Making licensees subject to bonding requirements with
          the Department of Business, Economic Development, and
          Tourism;

     (3)  Establishing civil and criminal penalties, including
          forfeiture, for gaming violations;

     (4)  Stipulating that the books and records of licensed
          owners are under the purview of the Uniform Information
          Practices Act; and


 
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     (5)  Making shipboard gaming operations subject to
          legislative oversight.

     Upon further consideration, your Committee has amended this
bill to provide additional safeguards and protections, including:

     (1)  Increasing the licensing fee from $15,000 to
          $10,000,000 for each year of operation to operate and
          maintain a gaming ship in the State to ensure that the
          licensees have the financial resources, security, and
          experience to operate gaming in a professional and
          responsible manner;

     (2)  Mandating the Hawaii Gaming Board to require licensees
          to charge a fee of $10 per person for admission to a
          ship to discourage those without financial resources
          from participating in the gaming activities;

     (3)  Specifying that all berthing permits issued for
          licensees are valid until December 31, 2008, unless
          earlier revoked or suspended, to ensure that licensees
          will engage in high quality and committed investment in
          the community; and

     (4)  Providing for the expiration of licenses on December
          31, 2008, to coincide with the repeal of the Shipboard
          Gaming Law.

     In providing for the broader economic needs of the State
through this bill, your Committee finds that the State must also
prepare for Hawaii's economic future.  A strong, viable economy,
characterized by diversity, growth, and stability, requires an
educated workforce.  Your Committee further finds that shipboard
gaming offers a well-timed opportunity to address the educational
needs of Hawaii's people.  While this bill will create new jobs
in the immediate future, your Committee believes that the moneys
generated by this new economic activity should be earmarked to
prepare our children for the future.

     With many of Hawaii's public schools in disrepair and the
dire need of funds for school equipment and classroom resources,
moneys from gaming provide an attractive and stable source of
funding for education.  Your Committee finds that shipboard
gaming would infuse additional moneys into the State and that
these additional funds should be earmarked for education, thereby
assuring that students are afforded a conducive learning
environment and expanding the range of quality programs, which
are key to academic success.


 
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     In addition, your Committee is cognizant of the social
problems that can be generated by gaming activities and believes
that funds should also be provided to those who may need
counseling and other assistance.

     After careful deliberation, your Committee has further
amended the bill by:

     (1)  Creating the Education Special Fund to be funded with
          moneys generated from gaming, to be used for
          educational purposes to:

          (A)  Support capital improvements and enhancements for
               educational purposes and programs;

          (B)  Provide free voluntary pre-kindergarten for four-
               year-olds;

          (C)  Provide Helping Outstanding Pupils Education
               (HOPE) scholarships to students who maintain a 3.0
               grade point so that they may obtain a free college
               education in the University of Hawaii System;

          (D)  Provide teacher HOPE scholarships to teachers to
               obtain advanced degrees in critical fields of
               study; and

          (E)  Provide increased access to computer and
               telecommunication technology so that students will
               have hands-on experience with computer learning
               programs;

     (2)  Creating the Gaming Addiction Interdiction and
          Education Special Fund to be funded with moneys
          generated from gaming, to provide counseling and other
          assistance to those with gaming problems;

     (3)  Providing that of the total amounts collected under the
          Shipboard Gaming Law, the moneys will be disbursed as
          follows:

          (A)  Two percent into the State Gaming Fund;

          (B)  Ninety-six percent into the newly created
               Education Special Fund; and

          (C)  Two percent into the newly created Gaming
               Addiction Interdiction and Education Special Fund

 
                                 STAND. COM. REP. NO. 146-00
                                 Page 5

 
               to provide assistance through a Gaming Addiction
               Interdiction and Education Program;

     (4)  Specifying that all admission fees be deposited into
          the State Gaming Fund;

     (5)  Excluding $83,333,333 in adjusted gross receipts per
          year from the 12 percent tax rate paid on the adjusted
          gross receipts from games authorized under the
          Shipboard Gaming Law;
     
     (6)  Clarifying that the Hawaii Gaming Board assess fees for
          the copying of government records in accordance with
          section 92-21, Hawaii Revised Statutes; and

     (7)  Making technical, nonsubstantive amendments for
          clarity, consistency, and style.

     Your Committee recognizes that gaming in and of itself is
not the panacea for Hawaii's economic problems; however, it is
your Committee's belief that shipboard gaming will provide
Hawaii's people with jobs, generate much-needed resources to
improve the educational quality of Hawaii's schools, and infuse
moneys into the state economy.

     To alleviate concerns that are associated with gaming, it is
the intent of your Committee to ensure that gaming in Hawaii is
conducted in a controlled environment, subject to stringent
safeguards.  It is your Committee's belief that shipboard gaming,
as provided in this bill, takes a prudent and proactive approach
to address what the public deems as their top concerns in the
State:  the economy and education.

     As affirmed by the record of votes of the members of your
Committee on Tourism that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
2904, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as H.B. No. 2904, H.D. 1, and
be referred to the Committee on Judiciary and Hawaiian Affairs.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Tourism,



                                   ______________________________
                                   JERRY L. CHANG, Chair