GAC examines raffles, internet gaming, more
Pub Date: 12/1/2007
At a well-attended meeting of the Gaming Advisory Council at the Gambling Control Division (GCD) headquarters in Helena November 2, council members agreed to recommend Gambling Control change its rules to allow public and private universities and schools, along with other non-profit organizations, to continue the practice of offering spectators the opportunity to purchase a chance at winning a portion of the proceeds collected from a 50/50 raffle.
Ultimately, the council asked the Division to pursue these changes, and that members be kept informed of progress.
The meeting was called to order by Chairman John Tooke of Miles City. All members were present. Moving quickly into the agenda of what would become a whirlwind meeting, Tooke asked GCD Administrator Gene Huntington to reprise the raffle issue.
After discussion among the council, members agreed that groups offering the contests should, as usual, acquire authority from the county government where the raffle would take place.
Acknowledging that few Montana counties have formalized a procedure to license raffles, the council affirmed that nevertheless the responsibility remained with the counties.
Tooke then called for public comment on the issue, and recognized Kurt Kephart, of Billings, President of Cornerstone Conservation. Kephart indicated his group was seeking guidance, if not outright permission, regarding utilizing the internet for a raffle in which proceeds would be earmarked for purchase of easements for recreational access to public waters and land.
Under current Montana law, all internet gambling, including raffles, is prohibited.
Pam Kennedy, Mayor of Kalispell and Vice-chairman of GAC, voiced her concern that political parties might use rule changes to run internet raffles to fund campaigns, an issue that drew fire during the last election cycle.
It was agreed that GCD would include language distinguishing political parties and campaigns in their draft rules. The council reiterated their intent that changes to rules should address public and private schools and universities and prize limitations exclusively.
Moving down the agenda, Huntington introduced Shauna Helfert, administrator of the Liquor Division of the Montana Department of Revenue. Helfert briefed the board on the status of newly available restaurant beer and wine license so-called cabaret licenses.
Helfert reported her division was reviewing 56 applications from winners of last summer s lottery. They have so far disqualified 41 applicants for failure to meet the application deadline, and another 36 applications have been withdrawn by the applicant (see related story on page 3).
Helfert said there may be further disqualifications because applicants who had claimed a preference for operating a full-service restaurant for the previous 12 months may not meet that requirement, or may not meet the bona fide definition of a full-service restaurant, which includes serving an evening dinner.
Helfert also noted that no out-of-state small-volume wineries or breweries had applied to sell directly to retailers and direct-ship products in Montana, which is now legal under changes required by recent court decisions and subsequent changes in Montana statute.
Tim Carson, Billings, GAC representative from the coin machine operator sector, asked Helfert about the rate of on-premise license turn-over in Montana. She agreed with Carson when he suggested that around 25 per cent of Montana s licenses change hands each year. Helfert also reported the department had received fewer than 10 out-of-state license applications this year.
Board member Steve Morris, Helena, representing the Montana Tavern Association, asked Helfert if she thought there was a problem with bottle clubs restaurants that encourage their patrons to bring their own alcohol beverage to consume with their meal. Helfert said, Personally, I think there is a problem and added her division is looking into it.
Tooke than asked Pam Kennedy if she felt the new licenses were "taking the pressure off" in some Montana communities.
Kennedy said she did not think the new-issue restaurant beer and wine licenses completely satisfied the needs of some growing communities, since some restaurants want cheap licenses to sell spirits, too. Earlier, Helfert distributed a report indicating that of the 10 cabaret licenses available in Kalispell, at this time her division had received applications for just four, with one other applicant requesting an extension.
Kennedy said she didn t think this was the forum for a lengthy conversation on the issue, but added, I totally support the investment current owners have in liquor and gaming licenses.
Tooke then asked the board to consider the next agenda item, intra-state internet gambling, which a new federal law allows states to authorize.
Huntington, referring to the Unlawful internet Gambling Enforcement Act passed by Congress in 2006, which sought to outlaw internet gaming within the United States and eliminate credit gambling, suggested the act carved out some room for states to authorize and regulate intrastate internet gaming with the provision that age and location can be verified.
Huntington reminded the council that current state law specifically defines internet gambling as an illegal gambling enterprise. He suggested, however, that the state might want to consider changing current law to reflect changes in federal law, as well as recognize the technological advances continuing to affect the regulatory and enforcement capability for this type gaming.
Cornerstone Conservation s Kephart then stood to say that he felt authorizing internet gaming within the state's borders was something his group would favor, and he thought that perhaps some form of membership could be required that would provide the required age and location verification.
Vice-chairman Kennedy asked Kephart if he was seeking to offer on internet raffle to people in Montana or nation wide. Kephart replied that his idea originally involved both, but admitted he wasn t aware of all the laws regarding internet gaming. Kephart said he thought that if it was legal in Montana that would be a good start.
Rich Miller, executive director of the Gaming Industry Association, reported his group was opposed to changing current state law to permit internet gambling. Rhonda Wiggers from Montana Coin Machine Operators Association echoed Miller s opposition.
Bob McAnally, Poplar, representing Montana s Native Americans on the GAC, acknowledging that he needed to learn more about the issue, said he had a difficult time seeing how this would all work given the restrictions on credit gaming. It was offered that pre-paid gambling accounts could be established using debit cards or checks.
Huntington stated the Division s intent was to prepare for the issue, and be ready to confront the likelihood of piece-meal legislation seeking specific exceptions to the Montana's internet gaming prohibition.
Council member Carson replied that my vote is that (any proposed internet gambling legislation) goes nowhere. Carson said that to do otherwise would detract from the the diligence we are showing in addressing current (gambling) issues, and exceptions could especially exacerbate compulsive gambling.
Chairman Tooke, said, I just feel this is the camel s nose under the tent wall. We don t need any more excuses for people to never leave their living room.
Nick Murnion, Garfield Co. Atty., representing county government on the GAC, reminded the board that Huntington was asking them to think about legislation that possibly will come during the next session, and that everyone should prepare for it.
Huntington again stated that the division was seeking to establish a regulatory framework for intrastate wire gambling, and not implementing anything. He said he believed those advocating expanded gambling needed to understand the rigors and realities of enforcement and licensure before embarking. He allowed, however, there was no urgency on the issue.
Morris asked whether anyone felt that regulatory efforts on the part of the Gaming Division might lead to more internet gaming proposals. Carson asked, rhetorically, what kind of games were people discussing, and wondered aloud how you could address something that had no obvious boundaries.
Vice-chairman Kennedy said she supported addressing issues which had a good chance of being presented to the next legislature, but that the division certainly should not encourage such proposals.
Rep. Mark Blasdel, one of two state legislators on the GAC, was asked about the timing of legislative bills. He answered that there was plenty of time before the next session to prepare for bills that may come up, but cautioned that it was hard to predict what really might happen until after elections preceding the next session.
Through a working lunch provided by the division, Huntington delivered an update on Montana's new GenTax-based on-line reporting system for video gaming machines. The consensus from the GCD and from members of the GAC is that the system has so far proven to be roundly successful.
The council then took up a discussion on casino zoning. In the past, questions have arisen regarding the ability of municipalities to use zoning powers to supersede state statute regulating aspects of gaming such as the number of machines per establishment and what types of games may be conducted.
Huntington indicated there was reason for confusion regarding the law, but pointed to a 2001 Flathead County District Court ruling in which the court declared that the City of Whitefish, while zoning gaming establishments, chose to exert its power to a lesser extent than allowed by the law.
Questions were raised as to the context of the ruling which actually dealt with conditional use permits.
Tooke, acknowledging the contentious nature of the subject, suggested a sub-committee be formed and appointed Morris, Murnion, and Pam Kennedy to examine the issue and hopefully work out a position GAC could adopt.
The council then took up re-licensing procedures in the event of the death of a person with an ownership interest in a license. Huntington said the Division was reviewing the process because some licensees questioned why they needed to go through a drawn out re-application process when no new parties were being added to a license.
Huntington said he felt there was good potential to streamline the process and reduce the paperwork, and assured members of the council that he was unaware of instances where an undisputed estate had resulted in an establishment s closure prior to completion of probate.
The council supported finding a reasonable method for mitigating the problem.
The council then discussed reducing record retention requirements for machine owners and operators.
Carson said that many of the gambling machines licensed in the state would soon be obsolete due to changes in United States currency.
When redesigned currency is issued this spring in this case new five-dollar bills bill acceptors and the software that drives them and the software that allows them to interface with the parent device, must be upgraded. Many machines that would need updated bill acceptors will not be provided updated software by machine manufacturers, some of which are no longer licensed in the state.
He continued that the state s requirement that each machine be equipped with an impact printer could drive further obsolescence as, down the road, the one company now manufacturing the devices Ithica
could simply cease producing them as demand dwindles due to improved alternative technologies such as thermal printers. He added that as production declines, costs are seeing steady increases.
Carson said one reason for originally mandating impact printers was because printouts on thermal paper had a tendency to fade more quickly than the impact printouts, beside the ease of creating duplicate audit tapes.
Carson suggested that now that the on-line reporting system is in operation, there may be no reason to retain records for the length of time currently specified. He felt that, in light of new electronic reporting, allowing for thermal printers in the future could suffice in satisfying reduced record keeping requirements.
Huntington told the council that people were still being added to the automated reporting system, and that the Division did not yet have enough experience with it to confidently make changes in record keeping policy.
In other business before the GAC, Huntington offered a proposal to extend card dealer licenses from one to three years. New technology has reduced the time and complexity of the investigation process and the Division feels there is no reason for dealers to reapply each year, although Huntington stated that electronic reviews of criminal records for Montana s card dealers would continue annually.
Pam Kennedy objected to the proposed change, and after some further discussion, the council decided to table the issue for the time being.
Huntington than asked for direction in formalizing rules for licensing gambling associated businesses such as accounting software companies or machine recyclers. Huntington said on at least two occasions, the Division had trouble fitting such businesses into existing license categories. Council agreed this was a void in the law and recommend the Division develop policies and procedures to fill it.
The council did not offer much interest in a proposal to redefine antique illegal gaming devices, or did it show much enthusiasm for so-called ticket-in, ticket-out gaming technology.
The council asked Huntington to review the problem machine owners and operators were having with negative tax which occurs when a machine pays out more than it takes in, yet no credit or negative balance is allowed forward into the next reporting period.
Huntington said that the methods by which machines were reported was the result of an interpretation of the law that would need to be addressed in the statutes.
Seemingly surprised by the council s pace addressing the complex issues of the meeting, Chairman Tooke looked around and said, Well, I guess we just have to figure out where we re meeting next, and what kind of send off we give the esteemed character to my left, referring to Montana Sen. Joe Tropila who, due to term limits, is leaving his GAC post after the next meeting.
GAC s next meeting will be conducted in Great Falls, March 21, 2008. The exact location will be announced later.
Source: The Montana Tavern Times, December, 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.