Stop Gambling Growth — Stop Taxing It

By Dave Donaldson

The state last year received $6.8-million  from gamblers on cruise ships running casinos in Alaska waters.    Anchorage Democrat Harry Crawford doesn’t want that money.     He says although the state could use the money,  collecting it has a downside.

What I don’t want to do is open the door to for-profit gambling into this state.  What we’re afraid of is this initiative that started taxing the cruise ship industry on their gambling in state waters opens the door.

The initiative he’s referring to was approved by the public in 2006 as part of the ballot measure that imposed a head tax on cruise ship passengers.  While state law does NOT make cruise ship gambling Legal,  federal law forbids making it ILLEGAL.  The cruise ships are not allowed to break out the dice when they are in port,  but gambling is not specifically forbidden in state waters.  And,  although not permitted,  the cruise ships must give the state a third of their take.

Crawford says repealing the tax would take away an arguing point that could possibly be raised in litigation to open the state to full onshore casinos licensed under the federal Indian Gaming Regulatory Act.  He says the tax is an implicit acceptance of gambling.

The United States only allows tribal gaming to come into states where they have made that same kind of gaming for others like Harrods or Horseshoe Casinos, that sort of thing.  In this state we haven’t done that,  except that we’ve passed the cruise ship initiative that actually taxed the Class Three gambling that they have on those ships — and it could open the door to casino-type gambling here.

The Parnell administration doesn’t agree with Crawford’s concerns.   Johanna Bales,  deputy director of the Tax Division, says the Revenue and Law Department officials do not believe that taxing is synonymous with legalization.

The only reason these cruise ships are allowed to conduct gaming activity is because federal law prohibits the state of Alaska from making that illegal in Alaska waters.   But gambling in Alaska is illegal, gambling in state waters is also illegal, except for this one prohibition under federal law.

The sponsors of the cruise ship initiative don’t see any immediate need to repeal the tax, either.  Joe Geldhof helped write the law that voters approved.   He said because of the federal law taking away the state’s right to control the cruise industry,  the sponsors decided to tax it at a high enough rate to keep it from being a profitable on-board activity.

I don’t think it raises significant questions about Indian gaming. And the point where you need to take that up is if somebody comes and says I want the cruise ship deal, and I want to sign a compact.   That’s where you should take this up probably.  And decide whether you want to pull the plug on the ostensible state sanction.

The bill was held for further hearing as Crawford promised to provide documentation to members on the Indian Gaming Act and gambling compacts in other states.


Comments Off on Stop Gambling Growth — Stop Taxing It

Filed under News Scripts

Comments are closed.