There are several categories of shipboard casino gambling. Gambling on riverboats or other vessels within the waters of a specific jurisdiction is discussed under the entries covering the various jurisdictions (e.g., Illinois). The two categories discussed in this entry include ocean or high seas cruises and voyages and what have come to be known as “cruises to nowhere”.
Voyages on the High Seas
The shipboard cruises encompass destination vacation activities for passengers. Typically, the cruises last several days or even weeks. The ships are luxurious, the cruises are expensive, and the amenities aboard the ships are many—food, dancing, sports activities. Casino gambling has been an activity on more and more of the cruises. The leader among the cruise companies having casinos aboard their ships is Carnival Cruise Lines, with more than forty ships offering casino games. Carnival has a gambling staff exceeding 1,000 individuals for its ships. The ships offer linked slot machines among several vessels, permitting megajackpots. Other major cruise lines with casinos include Holland American Line, Norwegian Cruise Line, Princess Cruises, and Royal Caribbean International.
These ships must operate their games on the high seas, and their voyages are essentially international. They stop at several seaport cities on their venture – at least two of which are in different jurisdictions (countries). While in port, no casino gambling is allowed.
The ship lines listed above are not U.S. companies. Indeed, very few U.S. ships have casino gaming, and very few have luxury cruises either. In 1949, the U.S. Congress passed very strict prohibitions banning gambling on U.S. flag vessels no matter where they were operating, whether in territorial or international waters. The ban affected vessels registered as U.S. and also ones principally owned by U.S. citizens. Although the point of the law was clearly to regulate the type of gambling ship discussed as cruises to nowhere, the effect was general. Even though the law was to apply to ships that were used “principally” for gambling (a rather vague term); U.S. ships ceased to have casinos on their voyages.
The Johnson Act of 1951 made possession of gambling machines illegal except under certain circumstances (e.g., they were legal in the jurisdiction where they were located). This law gave an emphasis to the notion that U.S. ships could not have machine gambling and come into any U.S. port where state law prohibited the machines (which included every port city in the United States in 1951). Foreign vessels could stop the use of the machines in these ports and not be in violation of the 1951 law, as they were still under foreign or international jurisdiction to some degree while in port.
By 1990, the cruise ship industry was flourishing. Over eighty cruise ships utilized U.S. ports. All but two flew foreign flags. Moreover, the general state of U.S. shipbuilding and U.S. companies operating sailing vessels was one of deterioration. In 1991, the U.S. attorney general ruled that a ship was not a “gambling ship” if it provided for overnight accommodations and/or landed in a foreign port on its cruise. U.S. shipping companies renewed an interest in offering gambling on cruises. As a result, Congress passed the Cruise Ship Competitiveness Act on 9 March 1992 in order to establish “equal competition” for U.S. ships. Now the U.S. flagships can have gambling on their cruises while in international waters.
The international cruise ships are, for the most part, not subject to the regulation of any jurisdiction regarding their gambling activities. There are few limitations on licensing of casino managers or employees and few guidelines on surveillance and player disputes. Nonetheless, the major cruise ship companies have considerable internal regulations. Most have definite limits on the amounts of money that can be wagered, as they do not wish to take opportunities for spending money on other amenities away from the passengers, who may have to remain on the ship for several days after their gambling venture has ended. As Carnival Cruise Lines and other ship casino companies (Casinos Austria runs several of the casinos) have land-based operations in other jurisdictions (Carnival is in Louisiana and Ontario), they do not want to have their licenses there jeopardized by any unacceptable practices within their shipboard casinos.
There is one ship on the high seas that has been subjected to the direct regulation of a state. Nevada requires its casino license holders to secure permission of the Nevada Gaming Commission and the Gaming Control Board if they are operating gambling operations outside of the state. Prior to 1993, the permission had to come from the state authorities before out-of-state operations could begin. Accordingly, in 1989 Caesars Palace applied for approval to manage the casino on board the Crystal Harmony, an exclusive Japanese-owned ship flying the flag of the Bahamas. The approval was granted under the condition that Caesars establish a fund for the Nevada gaming authorities so that the state could conduct background investigations of the ship owners, operators, and crew. Internal auditing controls also had to meet state standards, with independent accountants conducting regular reviews of the books. Nevada agents were given full access to the casino’s records, as well as to the facilities. Caesars absorbed all costs of regulation. The Crystal Harmony was the first and only international ship to have a casino regulated by the jurisdiction of a state of the United States.
Cruises to Nowhere
The 1949 act banning gambling on U.S. flagships resulted from a controversy lasting several decades in California and other coastal states. Starting in the 1920s, floating barges appeared in the waters off of San Francisco and Los Angeles, as well as off the Florida coast. The ships anchored in international waters—three miles off the coasts. They had brightly lighted decks that could be seen from shore and beyond. Each day and evening they would provide boat taxi service for customers from nearby docks. The ships had entertainers, food, drinks (it was Prohibition time), and gambling. They operated through the 1930s without much opposition from law enforcement. When Earl Warren became attorney general of California, however, he decided to crack down. Raids were conducted, but the issue of what was definitely legal or illegal persisted until U. S. senator William Knowland of California persuaded his congressional colleagues to pass legislation in 1949. The law now had teeth and was enforced until there was pressure for change in the 1990s.
Even before the passage of the 1992 Cruise Ship Competitiveness Act, vessels began to test the resolve of states and the federal government regarding coastal gambling operations. The actions of one company seemed to be the catalyst for the legalization of riverboat and coastal casinos in Mississippi in 1990. After the 1992 legislation passed, the states were given the opportunity to opt out of the Johnson Act prohibition on machines in their waters. Hence, they could allow boats to have cruises out to international waters for gambling even if the boats did not stop at foreign ports. In 1996, the U.S. Congress acted again. This time Congress gave a blanket approval to the international waters’ “cruises to nowhere” unless the state (of debarkation and reentry) specifically prohibited the gambling ships. The state could only prohibit them if the ship did not make port in another jurisdiction. The ship’s gambling operations would not be subject to any jurisdiction unless, again, the state took specific action for regulation.
Since the 1996 law was passed, a large number of ships have begun operations off of Florida and also in the northeast. The state of California specifically passed a ban on the ships. Over twenty-two ships operate off of Florida, generating collective revenues of well over $200 million a year. Ships also have used South Carolina ports. Several ships attempted to gain docking rights in New York City, but local officials, including Mayor Rudolph Giuliani, fought the efforts and demanded that the boats go out to at least twelve miles off the coast before they could have gambling. After many months of negotiations, the city agreed to establish a gambling regulatory board for the ships through passage of an ordinance. One major vessel, the Liberty I, agreed to follow the local regulations.
Several states, including South Carolina and Florida, have found opponents of the boats seeking legislation against them, but so far their efforts have been to no avail. Even California has succumbed to the realization that regular gambling cruises for local residents have come to be. On 15 April 2000, the Enchanted Sun began voyages out of San Diego. The ship goes out three miles and hugs the coast until it reaches Rosarito Beach, south of Tijuana, Mexico. It hits the dock, briefly drops anchor, and then returns. The ship is at sea for a total of less than eight hours. In each trip, over 400 passengers enjoy a meal, entertainment, drinks, and gambling. Commercial success of such operations is not guaranteed. Passengers have to pay a cruise fee of $68, and as with other ships, there is always the problem of rough seas. An interesting twist to the Enchanted Sun casino is the fact that the California Viejas Band of Native Americans is an operating partner in the venture on the high seas.