BILL ANALYSIS AB 74 ASSEMBLY THIRD READING AB 74 (Alpert) - As Amended: June 9, 1993 ASSEMBLY ACTIONS: COMMITTEE G. O. VOTE 9-4 COMMITTEE VOTE Ayes: McDonald, Baca, Connolly, Cortese, Eastin, Hauser, Karnette, Moore, Napolitano Nays: Hoge, Knight, Quackenbush, Woodruff DIGEST Under current law: 1) It unlawful for any person to intentionally cause or knowingly permit š illegal gambling activity to occur on a ship sailing from a California port and disembarking at the same or another in-state port, whether within state or international waters, or for any person to own, operate, or control such a ship. 2) This prohibition does not apply to gambling activity occurring on a ship š traveling to or from a foreign nation or another state up to the point the ship first enters or last departs from California waters. 3) Illegal gambling activities include existing statutory prohibitions š against playing or conducting a lottery, roulette, any banking or percentage card or dice game, possessing or maintaining a slot machine, or bookmaking or illegal wagering on horseracing. 4) Further, the California Constitution provides that the Legislature shall š prohibit casinos of the type currently operating in Nevada and New Jersey (Section 19, Article IV). This bill: 1) Provides that the statutory prohibitions against gambling activities on š ships traveling between California ports shall not apply when either the gambling activity is conducted on a cruise ship traveling in international waters to or from a foreign nation or another state; or on a cruise ship traveling between California ports if the passengers are on board for at least 48 hours, meals and lodging are provided, a second port is visited for not less than six hours, any gambling is an incidental part of the cruise and the gambling does not occur in state waters. 2) Provides that its provisions would not become effective unless: a) A court of competent jurisdiction makes a final ruling, and after exhaustion of all possible appellate review, that cruise ship gambling would not permit Indian casino gambling in California, or - continued - AB 74 Page 1 AB 74 conversely, that horse racing and the Lottery in California permit Indian tribes to conduct casino gambling; or b) Federal law is either amended to provide that gambling on intrastate voyages shall not be construed to permit Indian casino gambling in a state, or is amended to provide that Indian tribes can only conduct the same gaming as a state permits within its territorial boundaries. FISCAL EFFECT None. COMMENTS 1) Legislation enacted last session (AB 3769, Conroy) prohibits gambling on š ships in international waters which are sailing between California ports without an intervening stop in another state or foreign nation. AB 3769 was enacted in response to federal legislation which amended federal law for the purpose of promoting competitiveness between U.S.-flagged and foreign-flagged cruise ships. The federal law permits U.S.-flag ships to conduct theretofore prohibited gambling when sailing beyond state waters, unless a state enacts a statute prohibiting the use of a gambling device on a voyage or a segment of a voyage begins and ends in the same state and does not make an intervening stop in a foreign nation or another state. 2) Cruise lines have responded to last year's law by reducing the number of outward bound port stops in order to permit gambling to begin as soon as the ship reaches international waters on a voyage to a Mexican or other foreign or out-of-state destination. Port cities, including San Diego, Avalon and San Francisco are experiencing loss of revenues from port fees and sales taxes, and employment losses which are estimated to be as much as $82 million annually to these local economies. 3) The Attorney General has opined that if California opts to permit intrastate cruise ship gambling as provided for by this legislation, the same gambling must, as a matter of law under the Indian Gaming Regulatory Act (IGRA), be available to Indian tribes in California. IGRA, enacted by Congress in 1988, permits Indian tribes to engage in three classes of gaming: Class I which is traditional Indian gaming; Class II includes bingo, pull-tabs, lotto, punch boards and certain non-banking card games; and Class III which is defined as all other forms of gaming but only if such activities are "...located in a state that permits such gaming for any purpose by any person, organization or entity..." Currently, the only Class III gaming permitted in California is parimutuel wagering on horseracing and the state operated lottery. The provisions of this bill, however, would only become effective after the federal courts have resolved the Indian gambling issue in - continued - AB 74 Page 2 AB 74 California, or if federal law is amended to insure that cruise ship gambling will not permit Indian tribes to conduct casino gambling. FN 002080 - continued - AB 74 Page 3