Gaming Industry board hears of Miller resignation
Pub Date: 3/1/2008
The highlight of the Jan. 31 Gaming Industry Association board of directors quarterly meeting came at the end, and it was a bombshell: Eight-year Executive Director Rich Miller announced his resignation effective March 31.
Miller has spent virtually his entire career involved in the licensed business. He was the owner of the Best Bet Casino in Missoula, served a term as GIA president, then became GIA Executive Director when Dennis Casey retired from the position nearly a decade ago.
Miller said he plans to spend more time on his sailboat in the Caribbean, and more time with his grandchildren and helping his sister, Bonnie, run the family business, Miller's Crossing, in Helena.
"It has been an honor and a privilege to work for you folks," he told his board of directors. "You don't know how special that makes me feel. In this organization, members respond and that makes this organization unique. It's not the executive director'; It's the membership that makes us successful."
GIA President Marc Wass said, "It is impossible to say how much Rich has done for this organization, and me personally. He leaves mighty big shoes to fill."
Board member John Tooke said, "Under Rich's guidance, we've had a damned good run. Rich helped us be in the right place at the right time. we've achieved a lot under Rich's understated, low-ego leadership."
Other members offered similarly glowing accolades. (See Rich Miller tribute article beginning on page one and Montana Tavern Times Publisher Cole Boehler's personal column on Miller on page six.)
Wass immediately named Kent Frampton, Mike Kenneally, Tim Carson, Tooke, Steve Arntzen and himself to a committee to recruit Miller's successor. The imperative nature of that assignment was clear with the GIA convention now looming May 20-21, a primary election pending in June, a general election coming in November and Montana's Legislature convening next January, all of which will require the utmost attention from a new executive.
But the directors were also dealing with other matters of import such as the increasingly sophisticated fraudulent video gaming machine win tickets, issues pending before the Gaming Advisory Council, legislation, politics and more.
The meeting opened with a multimedia presentation by the Gambling Control Division's Investigations Supervisor Tom Oberweiser, who helped crack a case in Billings last December where a group of young college students with state-of-the-art computers, scanners, printers and software had fabricated convincing counterfeit win tickets.
Essentially, the scam amounted to printing a ticket for $5, scanning it, importing the scanned image into Photoshop or other similar graphics programs, then altering the digital image to produce a $500 win ticket with an exact time and date matching the moment when the conspirators expected to pass it off as valid and walk away with their ill gotten gains (see more detailed account beginning on page one).
Gambling Control Division Administrator Gene Huntington then briefly took the floor to inform the directors regarding the division's evaluation of its statistics gathering and reporting processes. Huntington said the GCD had retained on contract a specialist, Jim Pellegrini, to assess which reports were useful and in demand, and which could be dispensed with.
With the implementation of Gambling Control's new electronic accounting and reporting system for the state's video gaming machines and the associated new computer database, tthe division has ceased updating and publishing some traditional reports, drawing questions from some quarters.
"We're trying to zero in on what's needed and what's useful," Huntington said. "And We're also checking our calculation methods."
GIA board member Tom Kenneally, Jr., noted that "gaming machine revenue" as reported by the division is often confused by members of the press and public with "gaming machine income." Apparently, the term "income" is imbedded in statute and rules when it refers to the difference between cash-in and cash-out, which is in fact "gross machine revenue," Kenneally contended.
As a result, when gaming machine revenues are reported through Gambling Control and referred to as "income," some members of the public and press mistakenly believe it is the amount left the net profit after all expenses have been deducted, while in reality it is the amount left before any
operating and administrative expenses or taxes have been deducted.
Tooke was then called upon by Wass to report on the issues to be considered by the Gaming Advisory Council at its scheduled March 28 meeting. Tooke also sits on the Advisory Council
He said internet gambling, now expressly forbidden under Montana law with only a couple of traditional statutory exceptions (state lottery and pari-mutuel simulcast), continues to receive attention as "a lot of folks are conjuring schemes for the internet," Tooke said. He noted the Advisory Council heard one proposal at its last meeting from a group that wanted to run internet raffles to raise money to buy conservation easements to public lands for hunting.
"Once you open that door, you won't be able to close it again," Tooke said, and "our response on the Council has been 'hell no.' We thought we closed that gate and put a lock around it" after passing a law during the 2007 legislative session that specifically outlawed internet gambling.
Carson, who also serves on the Advisory Council, said municipal zoning practices aimed at licensed businesses continue to receive Council attention, and that a subcommittee is reviewing the situation and will report March 28.
Tooke said the GAC is also examining ways to streamline the process involved when a party to a license departs, most commonly through death or divorce. Currently, the entire relicensing process is triggered in that event, including re-investigations with their exhaustive financial disclosure statements and records audits.
Tooke said the thorough investigations are warranted when there is someone new to the license, but that in the case of a departure, it is nonsensical. He said a draft revision to address the problem is being readied by Gambling Control.
The Council will also take up the matter of tax credits or losses carried forward for video gaming machines that produce net losses during a tax reporting period.
Currently, operators pay taxes on any revenue the machines produce, Tooke said. However, when the machines lose money or "get upside down" operators are not allowed to take an offsetting credit against revenue during the reporting period, nor can they carry the loss forward into the next period as an offset against future revenues.
For some licensees, the quarterly tax costs can be substantial, even into five figures. One licensee present said his effective tax rate came to 15.63 percent as opposed to the state mandated rate of 15 percent. As machine payouts have crept higher, the issue is exacerbating, it was said.
"It's a question of fairness," Tooke said.
Wass then moved the group to a discussion of liquor licensing issues, noting the recent round of restaurant beer and wine "cabaret" licensure allowed well over 100 restaurants to gain restricted beer and wine service.
Miller said, though, it appeared some would protest the state's population based license allocation system no matter how many adult beverage licenses were issued, and often did so in the name of economic development and stating some big chain restaurants claim they are reluctant to locate in some towns because of the price of licenses.
Arntzen said it was ironic in the recent round of new cabaret license issuance that no chain restaurants even applied.
He said, too, that the lottery process was initially flooded with speculators, most of whom quickly backed out when they realized what adult beverage service licensure has traditionally entailed, not to mention the cost of liquor liability insurance.
Miller added that some cabaret applicants were shocked and complaining about the rigors of licensure, especially the rigorous investigations and financial disclosure requirements.
Frampton said applicants who have received a cabaret license in the Flathead area where he resides seemed quite "happy" with them.
Another board member, Ron Morris, said despite the availability of relatively inexpensive cabarets licenses, some restaurateurs continued to encourage patrons to bring their own alcohol to the unlicensed premise without regard for the law, proper beverage service practices or associated liquor liability.
Miller said some detractors believe strong liquor should be available everywhere. "Do you really want to be able to order a scotch and water with your Big Mac?" he asked rhetorically.
The group then shifted gears to consider tribal gaming issues.
Miller said some tribal members had once again met with an interim legislative committee to press their demands to take total jurisdiction of gambling on their reservations. That could imply substantially expanded gaming offerings including unlimited Las Vegas-type games such as blackjack, roulette and craps, and could imply tribal jurisdiction over non-tribal licensees, he said.
Miller said much "misinformation" on the subject has been circulating and advised his group that it could expect a reprise of the 2006-2007 tribal attempts to expand gambling via the legislative process rather than through negotiating compacts with the state, as allowed under the National Indian Gaming Regulatory Act.
Miller said it appeared the National Indian Gaming Commission was becoming more aggressive in its enforcement of Indian Gaming practices conducted outside state compacts, and that perhaps a new investigative office in Rapid City, S.D. was the reason.
After lunch, discussion moved to the political arena and particularly the race for attorney general. The level of activities, especially fund raising, for the respective five campaigns was covered and compared. It was noted all candidates were working hard and that so far none had expressed hostility or bad intent toward the state's small licensed businesses.
Miller said the industry had been treated fairly under the current Attorney General, Mike McGrath, who followed through on his pledge to "change the culture" from adversarial to one of fair, though rigorous, business regulation.
And Miller reminded the group that the administrator of the Gambling Control Division serves at the pleasure of the Attorney General, who also appoints most of the members of the Gaming Advisory Council which, under McGrath, has filled an important and constructive role in bridging the space between the legislature, the regulators and the business community.
A citizens initiative that is being reviewed to provide health care coverage for all the state's children was discussed, and it was noted GIA may be approached by coalitions from either side to provide support.
Other possible initiative scenarios that could affect licensed businesses were covered with the notable caveat that for anyone seriously considering qualifying an initiative this election cycle, time was running out. It was also said that those with sufficient determination could, and perhaps would, take aim at small businesses year after year.
Miller said some races are predictable, others not so. He said the balance in the State Senate would be close but could shift, and said the House is seen by many as a virtual toss-up with just a handful of races to determine the ultimate outcome.
Also on the GIA agenda was a discussion of the industry research and education fund, a non-profit 501(C)(3) corporation comprised of industry groups and companies to conduct and disseminate research and other information regarding gaming and liquor issues, primarily problem gambling.
Miller said the group needs an infusion of funding to continue its mission to provide and advertise a 24-hour problem gambler help hotline, but that it was also considering asking the University of Montana's Bureau of Business and Economic Research to update the 2002 gaming business economic impact study.
The GIA board voted to support both efforts (see report on the Gaming Research and Education Fund board meeting on page nine in this edition).
Miller also noted the industry's support for the Montana Council on Problem Gambling, which provides a group therapy treatment program for problem gamblers and training for credentialed treatment providers, is on track after a near 35 percent increase in funding contributions last year.
Tooke then reported on the status of HB616 passed in the 2007 legislative session authorizing fantasy league pari-mutuel wagering. He said that while he was no longer personally involved, it appeared the rules writing process was proceeding, albeit slowly (see complete report on a rules committee meeting on page three in this edition).
Tooke had on hand a demonstration self-serve "tote" terminal that could be used to run a fantasy sports pari-mutuel system.
Tooke also said the Board of Horse Racing, the body responsible for governing pari-mutuel wagering, is running out of money, leaving the future of fantasy league pari-mutuel somewhat uncertain.
Nearing adjournment, the board was reminded the GIA convention is slated for Chico Hot Springs just south of Livingston May 20-21.
Source: The Montana Tavern Times, March, 2008, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.