Bill Tries to Sink Floating Casinos : Legislation: A new federal law allows American-flag vessels to offer gambling between U.S. ports. But a state measure would outlaw gaming off California.

By PAUL JACOBS

June 8, 1992 12 AM PT

TIMES STAFF WRITER

SACRAMENTO — Venture Cruise Lines was preparing to operate the first of three gambling ships this weekend--sailing out of Marina del Rey to Catalina and other Southern California ports.

Champagne Cruises ordered 16 slot machines for a small ship offering dinner cruises out of Newport Beach.

Continental Coast Line hoped to begin construction of two large gaming ships for daily passenger service between Los Angeles and San Francisco.

The operators of these would-be gambling cruises all hoped to take advantage of a change in federal law, effective this month, that for the first time in 40 years allows American-flag vessels to offer gambling between U.S. ports, once they reach three miles offshore.

But all three shipping lines have put their plans on hold because of a state bill, backed by Atty. Gen. Dan Lungren, which steamed quickly through the Assembly and is cruising through the Senate. The measure, by Assemblyman Mickey Conroy (R-Santa Ana), prohibits gambling between California ports.

Lungren and his top aides are fearful of a return of floating casinos and a proliferation of gambling off California’s coast. Although the bill could be subject to a legal challenge, it has had its desired effect--even before becoming law.

“As long as this bill is alive, I can’t take delivery (of the first of three, specially outfitted ships),” said Vincent Ceccola, president of Venture Cruise Lines. “I’m dead.”

Similarly, Champagne Cruises has delayed delivery of those slot machines and Continental Coast Line has delayed taking bids for construction of two ships.

Earlier this year, Lungren tried to persuade President Bush to veto the federal legislation, arguing that ending the longstanding gambling ban would bring unregulated gambling operations to California--and, along with them, more organized crime, loan sharking, money-laundering and prostitution.

But the Republican President ignored the plea from California’s GOP attorney general. Instead, Bush accepted the argument that allowing U.S. vessels to offer gambling while outside of state waters was needed to help revive the country’s moribund maritime industry.

Before the federal law was enacted, foreign-flag vessels were able to offer gambling as they cruised between states or on their way to foreign ports, but those sailing under the U.S. flag could not. The new law permits all vessels, whether U.S. or foreign, to offer gambling.

However, as a concession to anti-gambling sentiment around the country, the new federal statute allowed an individual state to prohibit gambling between ports within that state.

Without such explicit legislation, the California cruise companies believed that they could start ordering equipment and specially outfitted ships so they could get into the gambling business.

But the Conroy bill has scuttled those plans, at least for now.

The measure won quick Assembly passage on a 56-4 vote in April, and is scheduled for its first Senate hearing Tuesday.

Now, Lungren and his top aides are saying that even without the bill, existing California law should be able to stop the cruise companies from installing slot machines, which are prohibited by California statute, and from offering gambling outside the three-mile limit.

But the anti-gambling ship bill is necessary to remove any doubt that “you can’t do this in California,” said Gary W. Schons, senior assistant attorney general. “Rather than have the cruise lines hot and bothered, running out and buying slot machines, we wanted there to be a bright light.

“Our concern is that once you open the door, the possibility is here for organized crime,” Schons said. “And nothing would prevent a guy running a half-day boat out of a landing for fishing in the morning, (then going out later with) . . . 40 gamblers.”

The cruise lines disagree with Lungren and Schons about current state law. They contend that unless Conroy’s bill is enacted, they are entitled to offer gambling once they get three miles out to sea.

And the companies assert that their vessels will not become “gambling ships”--that gambling is just one more feature along with meals and entertainment to attract customers. They point out that foreign vessels operating between California and other states and countries are offering gambling to their passengers. One company legally operates a daily gambling cruise between San Diego and Ensenada.

“The sad thing is you can’t survive without it (gambling),” Ceccola said. “A dinner cruise line is just a loser.”

Robert A. Wells, vice president of marketing for Champagne Cruises, said Americans have come to expect gambling on cruise ships. “(Slot machines) add some allure to the boats. . . . People book cruises because there’s great food and the bartenders are friendly. This may add that little oomph.”

Continental Coast Line of Fremont has the most ambitious plans of all--running two deluxe, 2,500-passenger casino ships with crews of 900 between San Francisco and Los Angeles. The ships could also hold 500 cars and 11 tour buses.

If gambling is prohibited, the company will cancel its plans to operate off the California coast, said Continental’s chairman of the board, Ronald Svendsgaard.

Svendsgaard and the company’s president, Edward Pater, emphasize the jobs that their line could bring to California--directly employing 4,000 workers. And they say they hope to do some of the construction in a shipyard that could be reopened at Hunter’s Point in San Francisco.

“We’re looking forward to putting people back to work in the maritime industry,” said Champagne Cruises’ Wells. “It’s the only ray of sunlight.”

If the Conroy bill passes, the cruise lines are likely to challenge the law, Ceccola said, contending that the federal government, not the states, can regulate gambling on the high seas.

“It would be like telling people, you can’t get in your car and drive to Las Vegas if you want to gamble,” Ceccola said.

However, Schons made it clear that whatever the outcome of the Conroy bill, his office regards gambling on ships operating between California ports--or on vessels that travel out to sea and then return to the same port--as illegal.

“You can’t come and go from a California port into international waters and gamble,” Schons said. “Nothing that happened in Washington changes that.”