Those are the acoustical tiles from the old Seattle Center Coliseum (the actual All Star Game was in the Kingdome). They were taken down and replaced when the arena was renovated and renamed the KeyArena in the mid 90s.
Good picture of the dunk, but for the arena it looks like the lighting kinda sucked too. I guess it was just Slam Dunk comp. but still. Weird looking, especially with said acoustical tiles.
That's not how the lighting in the arena would appear to spectators. I believe it's a combination of very fast shutter speed and flash. Neat effect.