Pilot Shipboard Gaming

Allows 3-year pilot shipboard gaming in Hawaii at 3 docks on Oahu
using 3 ships.  Subject to review by DBEDT.

HOUSE OF REPRESENTATIVES                H.B. NO.1684       
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 2 a new chapter to be appropriately designated and to read as
 3 follows:
 4                             "CHAPTER
 5                      PILOT SHIPBOARD GAMING
 6         -1  Legislative intent.  This chapter is intended to
 7 benefit the people of the State of Hawaii by creating a new
 8 revenue source, shipboard gaming, that will enhance investment,
 9 development, and tourism in Hawaii.  It will also provide an
10 alternative source of tax revenue for the State.  As shipboard
11 gaming can be successful only if public confidence and trust in
12 the credibility and integrity of shipboard gaming operations and
13 the regulatory process are maintained, this chapter outlines
14 regulatory practices related to shipboard gaming operations.
15          -2  Shipboard gaming authorized.(a)  Shipboard gaming
16 operations and the system of wagering incorporated therein, as
17 defined in this chapter, are authorized to the extent that they
18 are carried out in accordance with this chapter.
19      (b)  Shipboard gaming pursuant to this chapter may be

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 1 conducted upon any territorial and archipelagic waters within the
 2 State.
 3         -3  Definitions.  As used in this chapter, unless the
 4 context otherwise requires:
 5      "Adjusted gross receipts" means the gross receipts less
 6 winnings paid to wagerers.
 7      "Admission tax" means a tax imposed for admissions to
 8 shipboard gaming vessels.  This admission tax is imposed upon the
 9 licensed owner conducting shipboard gaming.
10      "Department" means the department of business, economic
11 development, and tourism.
12      "Dock" means the location where a gaming ship moors for the
13 purpose of embarking passengers and disembarking passengers for
14 shipboard gaming.
15      "Gaming position" means a location where one individual can
16 legally engage in shipboard gaming (e.g. video poker machine,
17 blackjack stool, etc.).
18      "Gaming ship" means a ship or boat on which gaming activity
19 is conducted within the territorial and archipelagic waters of
20 the State.
21      "Gross receipts" means the total amount of money exchanged
22 for the purchase of chips, tokens, or electronic cards by
23 shipboard gaming patrons.

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 1      "Operator's license" means a valid commercial harbor mooring
 2 permit held for the past five years and in effect on the
 3 effective date of this Act and with a cruise permittee
 4 endorsement issued to a person or entity to perform and engage in
 5 shipboard gaming in Hawaii.
 6      "Shipboard gaming" means the operation of games aboard a
 7 ship, including baccarat, twenty-one (blackjack), poker, craps,
 8 slot machines, video games of chance, roulette wheel, keno
 9 layout, pull tab, or other games of chance.
10         -4  Pilot program.(a)  A thirty-six month pilot
11 program shall be implemented with a comprehensive review
12 conducted by the department at the end of the pilot program.  If
13 the review finds unsatisfactory social and economic results and
14 the department makes a recommendation to the legislature to cease
15 shipboard gaming operations, there shall be a twenty-four month
16 transition period to bring existing operations to a close.
17      (b)  Shipboard gaming shall be limited to vessels with a
18 minimum of two hundred fifty gaming positions.
19      (c)  Three shipboard gaming vessels shall be included in the
20 pilot program and shall be limited to the following:
21      (1)  Pier 5, Honolulu Harbor, Oahu;
22      (2)  Pier 6, Honolulu Harbor, Oahu; and
23      (3)  Pier 7-A, Honolulu Harbor, Oahu.

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 1         -5  Operator's license.(a)  A qualified person or
 2 entity must have held for the past five years a valid commercial
 3 harbor mooring permit on the effective date of this Act.  Such
 4 qualified person or entity shall be granted a cruise permittee
 5 endorsement to conduct a shipboard gaming operation.  All other
 6 normal and customary licenses and permits shall be required
 7 including a liquor license, department of health certification,
 8 and a Hawaii general excise license.
 9      (b)  A qualified person or principal of the entity must have
10 been found suitable in obtaining a gaming license in a
11 jurisdiction located within the United States.
12         -6  Commencement date.  A qualified person or entity
13 qualifying to obtain an operator's license shall commence
14 shipboard gaming operation within one hundred eighty days after
15 the effective date of this Act.
16         -7  Admission tax.(a)  A tax shall be imposed upon
17 admissions to shipboard gaming vessels authorized under this
18 chapter at a rate of $5 per adult person admitted as recommended
19 by the department in its report entitled "The Economic Impacts of
20 Shipboard Gaming and Horse Racing in Hawaii", dated April 1997.
21 this admission tax shall be imposed upon the licensed owner
22 conducting shipboard gaming.
23      (1)  If free passes or complimentary admission tickets are

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 1           issued, the licensee shall pay the same tax upon these
 2           passes or complimentary tickets as if they were sold at
 3           the regular and usual admission rate;
 4      (2)  The licensee may issue tax-free passes to actual and
 5           necessary officials and employees of the licensee or
 6           other persons actually working on the gaming vessel;
 7           and
 8      (3)  A list of all persons to whom tax-free passes are
 9           issued shall be filed and submitted with the payment of
10           the admission tax.
11      (b)  The licensed owner shall pay the entire admission tax
12 no less frequently than monthly by the fifteenth of the following
13 month to the department of taxation.
14         -8  Wagering tax; rate; distribution.(a)  A wagering
15 tax shall be imposed on adjusted gross receipts received from
16 shipboard gaming at a rate of ten per cent.  The wagering tax
17 imposed in this section shall be in lieu of all other state taxes
18 on gross or adjusted gross receipts, except income taxes.
19      (b)  The tax imposed by this section shall be paid by the
20 licensed operator no less frequently than monthly by the
21 fifteenth of the following month to the department of taxation.
22         -9  Licenses; records; reports; supervision.  (a)  A
23 licensed shipboard gaming operator shall maintain books and

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 1 records related to gaming activity permitted under this chapter
 2 so as to clearly show:
 3      (1)  The daily number of admissions;
 4      (2)  The total amount of gross receipts; and
 5      (3)  The total amount of the adjusted gross receipts.
 6 The licensed shipboard gaming operator shall furnish to the
 7 department reports of the operator's activities on forms designed
 8 and supplied for the purpose by the department.
 9      (b)  The books and records kept by the licensed operator
10 shall be open to the department of taxation and the department of
11 business, economic development, and tourism and the examination,
12 publication, and dissemination of the books and records shall be
13 subject to chapter 92F.
14         -10  Audit of licensee operations.  Within ninety days
15 after the end of each quarter of each fiscal year, the licensed
16 operator shall transmit to the department an audit of the
17 financial transactions and condition of the licensee's total
18 operations.  All audits shall be conducted by certified public
19 accountants.  Each certified public accountant shall be
20 registered and licensed to practice in the State.  Compensation
21 for each certified public accountant shall be paid directly by
22 the licensed operator to the certified public accountant.
23         -11  Offenses; penalty.(a)  A person is guilty of a

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 1 misdemeanor for any of the following:
 2      (1)  Operating a shipboard gaming facility where wagering is
 3           used or to be used without a license;
 4      (2)  Operating a shipboard gaming facility where wagering is
 5           permitted other than in the manner authorized under
 6           this chapter; or
 7      (3)  Permitting a person under twenty-one years of age to
 8           make a wager.
 9      (b)  A person wagering or accepting a wager at any location
10 outside the shipboard gaming areas shall be subject to the
11 penalties in sections 712-1220 to 712-1230.
12      (c)  A person commits a class C felony and, in addition,
13 shall be barred for life from shipboard gaming facilities in the
14 State, if the person does any of the following:
15      (1)  Offers, promises, or gives anything of value or benefit
16           to a person who is connected with a shipboard gaming
17           facility owner including an officer or employee of a
18           licensed operator or holder an operator's license
19           pursuant to an agreement or arrangement or with the
20           intent that the promise or thing of value or benefit
21           will influence the actions of the person to whom the
22           offer, promise, or gift was made in order to affect or
23           attempt to affect the outcome of a shipboard gaming

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 1           activity or to influence official action of the
 2           department, or employees in the department of the
 3           attorney general or state or county public safety
 4           officers who have direct authority over the regulation
 5           or investigation of any licensee or applicant;
 6      (2)  Solicits or knowingly accepts or receives a promise of
 7           anything of value or benefit while the person is
 8           connected with the shipboard gaming facility including
 9           an officer or employee of a licensed operator or holder
10           of an operator's license pursuant to an understanding
11           or arrangement or with the intent that the offer,
12           promise, gift, or thing of value or benefit will
13           influence the actions of the person to affect or
14           attempt to affect the outcome of a shipboard gaming
15           activity or to influence official action of the
16           department, or employees in the department of the
17           attorney general or state or county public safety
18           officers who have direct authority over the regulation
19           or investigation of any licensee or applicant;
20      (3)  Uses or possesses with the intent to use a device to
21           assist:
22           (A)  In projecting the outcome of a shipboard game of
23                skill or chance;

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 1           (B)  In keeping track of the cards played in a
 2                shipboard game of skill or chance;
 3           (C)  In analyzing the probability of the occurrence of
 4                an event relating to the shipboard gaming
 5                activity; and
 6           (D)  In analyzing the strategy for playing or betting
 7                to be used in a shipboard game;
 8      (4)  Cheats at a shipboard gaming activity;
 9      (5)  Manufactures, sells, or distributes any cards, chips,
10           dice, game or device which is intended to be used to
11           violate this chapter;
12      (6)  Alters or misrepresents the outcome of a shipboard
13           gaming activity on which wagers have been made after
14           the outcome is made sure but before it is revealed to
15           the players;
16      (7)  Places a bet after acquiring knowledge, not available
17           to other players, of the outcome of the shipboard
18           gaming activity which is the subject of the bet or to
19           aid a person in acquiring that knowledge for the
20           purpose of placing a bet contingent on that outcome;
21      (8)  Claims, collects, or takes, or attempts to claim,
22           collect, or take, money or anything of value in or from
23           the games, with intent to defraud, without having made

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 1           a wager contingent on winning a gaming activity, or
 2           claims, collects, or takes an amount of money or thing
 3           of value greater than the amount won;
 4      (9)  Uses counterfeit chips or tokens in a shipboard gaming
 5           activity; or
 6     (10)  Possesses any key or device designed for the purpose of
 7           opening, entering, or affecting the operation of a
 8           gaming device, drop box, or mechanical device connected
 9           with the shipboard gaming activity, or for removing
10           coins, tokens, chips, or other contents of a gaming
11           device.  This paragraph shall not apply to a gaming
12           licensee or employee of a gaming licensee acting in
13           furtherance of the employee's employment.
14         -12  Prohibited activities; civil penalties.  Any person
15 who conducts a shipboard gaming operation without first obtaining
16 the proper permits and licenses to do so, or who continues to
17 conduct such games after a revocation of the person's or
18 company's license, or any licensee who conducts or allows to be
19 conducted any unauthorized gaming activities in a shipboard
20 gaming operation, in addition to other penalties provided, shall
21 be subject to a civil penalty equal to the amount of adjusted
22 gross receipts derived from wagering on the games, whether
23 authorized or unauthorized, conducted on that day, as well as

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 1 confiscation and forfeiture of all gaming equipment used in the
 2 conduct of unauthorized shipboard games.
 3         -13  Exemption from federal laws prohibiting gaming
 4 devices.  The transportation of gaming devices into a county in
 5 which gaming is permitted and through other counties of the State
 6 shall be exempt from the provisions of Title 15 United States
 7 Code section 1172.  This exemption shall only apply to gaming
 8 devices that have satisfied the registration, record keeping, and
 9 labeling requirements of Title 15 United States Code section
10 1173-74 before entry in the State.
11         -14  Review and oversight.  (a)  The department shall
12 conduct an annual financial and social assessment of shipboard
13 gaming operations.  In conducting the assessment, the department
14 shall identify the financial impacts of shipboard gaming on the
15 state economy and the social impacts, where possible, of gaming
16 upon the community.  The department shall submit a report of
17 findings and recommendations to the legislature prior to
18 convening of the next regular session after the annual assessment
19 is completed."
20      SECTION 2.  Chapter 712, Hawaii Revised Statutes, is amended
21 by adding a new section to part III to be appropriately
22 designated and to read as follows:
23      "712-     Shipboard gaming; exempted.  This part shall not

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 1 apply to shipboard gaming as authorized by chapter     ."
 2      SECTION 3.  Section 237-24, Hawaii Revised Statutes, is
 3 amended to read as follows:
 4      "237-24  Amounts not taxable.  This chapter shall not apply
 5 to the following amounts:
 6      (1)  Amounts received under life insurance policies and
 7           contracts paid by reason of the death of the insured;
 8      (2)  Amounts received (other than amounts paid by reason of
 9           death of the insured) under life insurance, endowment,
10           or annuity contracts, either during the term or at
11           maturity or upon surrender of the contract;
12      (3)  Amounts received under any accident insurance or health
13           insurance policy or contract or under workers'
14           compensation acts or employers' liability acts, as
15           compensation for personal injuries, death, or sickness,
16           including also the amount of any damages or other
17           compensation received, whether as a result of action or
18           by private agreement between the parties on account of
19           the personal injuries, death, or sickness;
20      (4)  The value of all property of every kind and sort
21           acquired by gift, bequest, or devise, and the value of
22           all property acquired by descent or inheritance;
23      (5)  Amounts received by any person as compensatory damages

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 1           for any tort injury to the person, or to the person's
 2           character reputation, or received as compensatory
 3           damages for any tort injury to or destruction of
 4           property, whether as the result of action or by private
 5           agreement between the parties (provided that amounts
 6           received as punitive damages for tort injury or breach
 7           of contract injury shall be included in gross income);
 8      (6)  Amounts received as salaries or wages for services
 9           rendered by an employee to an employer;
10      (7)  Amounts received as alimony and other similar payments
11           and settlements;
12      (8)  Amounts collected by distributors as fuel taxes on
13           "liquid fuel" imposed by chapter 243, and the amounts
14           collected by such distributors as a fuel tax imposed by
15           any Act of the Congress of the United States;
16      (9)  Taxes on liquor imposed by chapter 244D on dealers
17           holding permits under that chapter;
18     (10)  The amounts of taxes on cigarettes and tobacco products
19           imposed by chapter 245 on wholesalers or dealers
20           holding licenses under that chapter and selling the
21           products at wholesale;
22     (11)  Federal excise taxes imposed on articles sold at retail
23           and collected from the purchasers thereof and paid to

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 1           the federal government by the retailer;
 2     (12)  The amounts of federal taxes under chapter 37 of the
 3           Internal Revenue Code, or similar federal taxes,
 4           imposed on sugar manufactured in the State, paid by the
 5           manufacturer to the federal government;
 6     (13)  An amount up to, but not in excess of, $2,000 a year of
 7           gross income received by any blind, deaf, or totally
 8           disabled person engaging, or continuing, in any
 9           business, trade, activity, occupation, or calling
10           within the State;
11     (14)  Amounts received by a producer of sugarcane from the
12           manufacturer to whom the producer sells the sugarcane,
13           where:
14           (A)  The producer is an independent cane farmer, so
15                classed by the Secretary of Agriculture under the
16                Sugar Act of 1948 (61 Stat. 922, Chapter 519) as
17                the Act may be amended or supplemented;
18           (B)  The value or gross proceeds of sale of the sugar,
19                and other products manufactured from the
20                sugarcane, is included in the measure of the tax
21                levied on the manufacturer under section 237-13(1)
22                or 237-13(2);
23           (C)  The producer's gross proceeds of sales are

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 1                dependent upon the actual value of the products
 2                manufactured therefrom or the average value of all
 3                similar products manufactured by the manufacturer;
 4                and
 5           (D)  The producer's gross proceeds of sales are reduced
 6                by reason of the tax on the value or sale of the
 7                manufactured products;
 8     (15)  Money paid by the State or eleemosynary child-placing
 9           organizations to foster parents for their care of
10           children in foster homes; [and]
11     (16)  Amounts received by a cooperative housing corporation
12           from its shareholders in reimbursement of funds paid by
13           such corporation for lease rental, real property taxes,
14           and other expenses of operating and maintaining the
15           cooperative land and improvements; provided that such a
16           cooperative corporation is a corporation:
17           (A)  Having one and only one class of stock
18                outstanding;
19           (B)  Each of the stockholders of which is entitled
20                solely by reason of the stockholder's ownership of
21                stock in the corporation, to occupy for dwelling
22                purposes a house, or an apartment in a building
23                owned or leased by the corporation; and

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                                     H.B. NO.1684       

 1           (C)  No stockholder of which is entitled (either
 2                conditionally or unconditionally) to receive any
 3                distribution not out of earnings and profits of
 4                the corporation except in a complete or partial
 5                liquidation of the corporation[.]; and
 6     (17)  Amounts received as gross receipts from shipboard
 7           gaming under chapter     .  The term "gross receipts"
 8           shall have the meaning as defined in section     -3."
 9      SECTION 4.  Statutory material to be repealed is bracketed.
10 New statutory material is underscored.
11      SECTION 5.  This Act shall take effect upon its approval.
13                           INTRODUCED BY:  _______________________