Bullock names Ask acting GCD admin
Pub Date: 1/1/2009
Atty. Gen.-elect Steve Bullock, who will officialy assume his post January 6, paid a visit to the Gaming Advisory Council (GAC) meeting in Helena Dec. 17.
There, he announced he will name Rick Ask acting administrator of the Gambling Control Division (GCD), likely through the duration of the 2009 Montana legislative session, he said. Ask has served as the GCD Operations Bureau supervisor for most of the last decade and is a well known hand in gaming regulation.
Bullock also told the Council, "I hope we all share objectives" for gaming regulation, "and that is even-handed regulation. We all need to work at policing the industry and serving the industry. As you know, a bad apple can spoil the whole barrel.
"We won't be 'doing something the same way because that is the way It's always been done.' That's no way to run a railroad or a government agency. we'll see changes at the (Justice) Department, but I don't believe in reinventing the wheel, either. There will be new faces and new ideas and the changes will bring new opportunities.
"I look forward to working with the Council."
GAC Chairman John Tooke replied, "Even handed enforcement is good'; certain enforcement might be even better. The industry wants the law and rules enforced. We look forward to working with you and maintaining the businesslike relationship we have with the Department and the Division."
Seattle based Kevin Lintner, IGT's new sales rep for Montana, was introduced to the council as was Bob Burk and Ben Williams, electronics and computer technicians for the GCD testing Lab.
With that, the chairman called on Shauna Helfert, administrator of the Liquor Control Division. She said she had no prepared presentation but would simply be open to questions.
Council member Tim Carson asked if license applications were up or down, and how many were coming from out-of-state.
Helfert said the volume of applications was holding steady with perhaps 200 received since July 1, and most of these were for transfer of ownership. Some new applications for the 147 restaurant beer and wine licenses made available in 2007 "continue to trickle in," she said. Fewer than 20 of the applications have come from out-of-state, she said, and most of these were associated with hotels and motels.
She said recent new census-quota all-beverage licenses in Billings and Bozeman drew fewer applications than previously because a new law requires that a $100,000 letter-of-credit must accompany applications and this has weeded out the casual speculators and speeded the license into an actual use status.
Under old business, the Council reviewed a bill draft for revising the raffle law. The topic, after a year of discussion and work, still drew plenty of comment.
The bill draft will change the definition of non-profit organizations the only kind allowed to conduct raffles to include schools, and to delete the $5,000 cash prize limit in some circumstances. Finally, counties would no longer have the responsibility of issuing permits for raffles and the GCD would have oversight authority.
A couple of council members came back to the fear that for-profit entities may try operating large raffles and may attempt it using the internet to sell tickets, and that at some time a fraudulent raffle may require legal action. The bill revisions do grant the state the authority to regulate raffles but contains no provisions for enforcement or penalties.
Tooke said he saw the bill as an improvement but added that it would need more work in the future, especially regarding enforcement provisions.
Councilman Mark Kennedy agreed. "We can't look the other way. There's going to be a problem. Someday someone is going to ask, 'Where's the money?' We need to be vigilant and need to keep moving forward."
Councilman Nick Murnion said, "There have been no violations or abuses. Are we fixing something that isn't broken? I support what We're providing here. Let's take it a step at a time. If we see serious abuses, we can come back and work on the penalties."
Retiring GCD Administrator Gene Huntington said some education of the public regarding raffle laws would be required but that in the event of abuse a cease and desist order could be issued. He also said there is some evidence of "professional" raffles being run on the internet with the capability of accepting credit cards.
A motion was made and approved to accept the current draft language.
An issue that has dogged legal gaming since its inception has apparently fully and finally exasperated the regulators and licensees: the use of credit cards to obtain cash with which to gamble.
Lately some out-of-state companies have been pushing credit card "swipe" systems supposedly designed specifically to provide "legal" cash advances in the gaming environment. The issue "is becoming increasingly complex," Huntington said, despite industry's and regulators' attempts to clarify and simplify rules surrounding use of credit cards to obtain cash for gambling, which is a legal practice.
Huntington said GCD had even been approached to declare the systems "legal." The companies claim the systems satisfy the rules, Huntington said, "but may try to circumvent the intent" which is to prevent gamblers from running up large gambling debts.
Thus Huntington presented a proposal to prohibit the use of credit cards in any way for the purpose of gambling. Under the proposal, debit cards used in ATMs will be permitted, as that constitutes a user accessing actual funds on hand.
Carson said, "When we provide solutions to the problem, others just come up with new developments" to subvert the intent. "And we certainly don't need gaming businesses blatantly advertising that they accept credit cards. I think the proposal is appropriate."
The full council agreed as it moved and approved of Huntington's proposal to prohibit in any way use of credit cards for gambling.
Another issue the Council has grappled with for more than year involves the accounting for tax purposes when a machine loses money during a quarter. Those losses cannot be credited during the period or carried forward into the next period, thus creating was has been termed a "negative tax." A bill to rectify the problem had been drafted.
Carson said, "Considering the present financial culture, I would like to move to withdraw the bill from introduction." The motion was seconded and approved without additional comment.
Huntington asked the group to further consider the issue of recycling out-of-service and obsolete gaming machines.
He noted that there are literally thousands of machines in the state that haven't been issued permits for years, have no value and of which the whereabouts are uncertain.
As an example, he says a location or even route vendor licensee may go out of business and simply warehouse the equipment or even drop it in the landfill.
When machine owners are no longer licensed, regulators have very little leverage in tracking, locating, accounting for or properly disposing of machines, he said, noting the old machines with CRT monitors are considered hazardous waste.
"Down the road, we might have to try to start rounding them up to get them recycled," Huntington said. The Division's current database will allow for accurate tracking of machines now permitted, but lacked that ability in previous years.
Huntington furnished a proposal that called for the Division to budget $5,000 to help educate former licensees of their responsibility to dispose of the machines through their sale or destruction within 12 months of the license expiration. The Council approved.
After a break, Chairman Tooke recognized the Division having won two awards one last August from a national governance organization, and another just recently at state level for its excellent work in developing information technology applications for automating regulatory and tax collection functions.
"I hope efforts like this will continue in the future," Tooke said, to a round of applause.
Huntington then reported on draft rules changes ready for implementation that will clarify when and what components in a machine can be replaced or upgraded by entities other than the original manufacturer. Mostly the question involves monitors, bill acceptors and glass.
There are issues that may surface later surrounding what components are proprietary to the original manufacturer, Huntington said, but for now components supplied by non-original manufacturers will simply have to be submitted to GCD for testing and approval. Carson suggested original manufacturers receive notification if other substitute components have been approved.
The Council was then briefed on the progress of new rules relating to use of thermal printers and portable data storage devices in place of impact printers and printed audit rolls.
Huntington said the change could be a "great improvement for our auditors," and GCD testing lab chief Ben Kamerzel concurred.
"Technologically there are no barriers," Kamerzel said. "It will mean a big change in our business practices for audit purposes, but there is a lot of good in the concept. We have identified a couple of concerns" such as the potential to accidentally erase data.
Blaine Bowman, in the audience representing machine manufacturer Spielo, said there is no reason for the device to ever come out of the machine, except in the case of malfunction, thus diminishing the potential for a loss of data.
Huntington also noted the new rules will allow owners of machines with conventional impact printers and audit roll data collection, and who report on the state's new on-line system, to reduce the time requirement for keeping the rolls from two years to one year.
At that point, GCD's Ask reported that the internet accounting system for the state's video gaming machines has been thoroughly tested and proven to be reliable with a few minor exceptions that will be addressed mostly with better education of licensees.
"The system works," he said. "All meter readings that were transferred were accurately received and stored."
Huntington said currently more than 90 percent of the machines in the field are being reported electronically and that figure would continue to increase as the state moves through enforcement of the multi-game contracts. So far, no licensee has opted to forego multi-game machines in order to avoid electronic reporting, Huntington told the Council.
Several years back, when the electronic reporting system was being developed, the state used a "carrot" to encourage licensees to use the system. They were allowed to run dual-game platforms if they promised to report electronically when a system became available. Those provisions are now being enforced gradually and through an education process, Huntington said.
In the future, once notified, those who are running multi-games and agreed to report electronically will have to begin to do so or else will lose the multi-game equipment. Virtually all games that ran only poker or only keno have been replaced by the multi-game platforms.
It was announced Al Arvish, who was the electronic reporting project manager, would be retiring Dec. 19. Words of praise and appreciation for Arvish's performance followed.
With that, Tooke sought to bring the meeting to adjournment, but not before he commended Huntington and staff once more. Huntington is retiring Dec. 31 after eight years at the GCD helm.
"I want to thank Gene and his staff and (outgoing Atty. Gen.) Mike McGrath for changing the tone of the Division to a more businesslike partnership in finding solutions. And this body (Council) has been involved in that. The results show a lot has been achieved that has benefited the industry, the Division and the public. The last eight years have been a great run and I hope for more.
"Gene, you've been an able and progressive administrator and I hate to see you go."
Huntington responded, "The Gaming Advisory Council has been a very productive tool for guiding a government agency. And I also want to thank the Montana Tavern Times. They have been very cooperative and it is a beneficial tool in helping us fulfill our communications mission."
It was decided to determine the date for the next meeting of the Council after the adjournment of the 2009 Legislature.
Source: The Montana Tavern Times, January, 2009, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.