GAC hears tax collections down 5.7 percent
The Oct. 23 meeting of the Gaming Advisory Council (GAC) took on a somber tone when Gambling Control Division Administrator Rick Ask reported on gaming machine tax collections for the first quarter of Fiscal Year 2010 (July 1-Sept. 30, 2009).
While no one believed collections had rebounded or even remained level, the 5.7 percent decline from the same quarter one year ago – almost $900,000 – was not good news. It follows on the heals of a FY 2009 fourth quarter decline of 4.34 percent and a FY 2009 full-year decline of 2.16 percent. The unprecedented contractions follow a decade of growth in the 6 percent annual range.
The GAC met at Gambling Control headquarters in Helena.
GAC chairman John Tooke then called upon operators to summarize what they've been seeing under the first three weeks of the smoking ban, which was fully implemented Oct. 1.
Steve Arntzen, of Century Gaming, said his routes were down 5.5 percent, 13 percent and over 15 percent during the first three full business weeks of the month. He said more urban 20-machine locations were hardest hit but declines were evident across the state, adding, "Three weeks' data does not make a year, but it's still trending down, which is our biggest concern.
"The 80 percent of the non-smoking population we were told were going to come in after a smoke ban are not coming."
Council member Tim Carson operates Amusement services. He said his locations were down about 20 percent for the three weeks, but did concede harsh weather during the first week had an effect. He also said diversified traditional taverns are faring better, with beverage, food and entertainment departments holding up.
"At this point, it's just impossible to predict," he said.
Council member Steve Morris, owner of Jorgenson's in Helena which offers food, beverage and gaming, said, "We've seen a little downturn, but not to the point where I'm real concerned yet. It will take time to shake out.
"I am concerned that some local jurisdictions are not giving us a chance to let it settle down" before trying to impose further restrictions. "We need more time to adjust."
Instead of smoke-free advertising money being used negatively, why not use it constructively, urging folks to go to their smoke-free establishments? he asked.
Tooke agreed, saying, "We don't need police harassing our customers out on our deck" if they have a beer in hand. "That's part of our defined premise." The industry is complying, Tooke said. "We're all rowing in the same direction. But I'm not sure we'll ever be back to 'normal.’
"It's important for industry to look at the potential for enhancing our products, how we can offer even more entertainment. I'm hopeful the industry's collective imagination can help us get through this."
On the upside, councilman Mark Kennedy, who is also president of the Montana Council on Problem Gambling, said that organization continues to meet with success on its limited and tight budget.
He noted the organization has opted to rely on private funding rather than seek public funds after examining that option a few years ago. He said the Montana model, which is mostly funded by gaming businesses and their associations, has attracted positive attention and even imitation from other jurisdictions.
Kennedy noted when the program was launched in 2000, there were nine problem gambling treatment providers conducting 110 therapy groups serving 210 participants. Last year, he said, there were 32 providers conducting 938 groups serving 3,525 participants.
Further, he said 85 percent of the Council's funding goes directly to pay treatment providers. "We're in the black but don't have much room to sneeze," he said.
Administrator Ask then addressed the work of a subcommittee that has been charged with streamlining the process for amending a combined liquor/gaming license when a party to the license departs and there is no new party to the license. The scenarios cited are in the case of death, divorce or gifted interests.
The process used to trigger in essence a brand new application by all parties to the license, and required the re-investigation of everyone involved. Regulators and licensees alike recognized the opportunity to save business and government substantial work and money.
Now, Ask said, a very simple one-page form and list of required documents should greatly expedite the process for everyone.
The Council voted to keep the subcommittee intact to see if the streamlining concepts can be expanded to include other contingencies such as bankruptcy.
Carson thanked everyone who worked on the task and characterized the results as "a great outcome. It was a good process."
Neil Peterson, executive director of the Gaming industry Association, concurred, thanking the subcommittee, Gambling Control and the Department of Revenue "for your willingness to look at it. Your work represents significantly reduced compliance costs. It was good work by this council."
Tooke asked audience member Mark Ehli, owner of Big B Bingo in Billings, to address work that is being done to enhance live bingo, which has been suffering a steady decline.
Ehlie said an informal group of bingo operators, including commercial, fraternal and charitable, have met and agreed changes are needed to keep the game vital, including a look at game and session prize limits, and perhaps the introduction of limited 'special nights.'"
Ehli acknowledged session limits would need to be defined as would any proposed new maximum payout. He said he would try to convene the group again in early November to further their work, and to have something ready for the next GAC meeting, now set for Feb. 3, 2010.
Another agenda item, incorporating "stale-dates" on VGM win tickets, resulted in the Council deciding to study the matter further. It was pointed out other jurisdictions use an expiration date on win tickets, and that doing so would make it much more difficult to produce and cash counterfeit tickets.
In addition, as the industry converts to thermally printed tickets, shelf life of tickets has decreased so verification becomes problematic. Win tickets that aren't redeemed in a reasonable time frame also make machine accounting reconciliations more difficult.
Jeff Bryson of the GCD said stale ticket validation is "an ongoing problem" and GCD agents are regularly called upon to make determinations in disputes. "A time limit would sure help us," he said.
Arntzen pointed out that in most jurisdictions electronic validation is used, and that is not available in Montana. "The more manual the system is, the shorter the redemption period should be."
A GCD "white paper" determined a statutory change would be required, but that a redemption period could be set out in statute or statute could simply give GCD the authority to set the time frame in rule.
It was suggested the group look at a variety of "stale-dates" including 24 hours, seven days, 30, 60 or 90 days. The Council will again take the matter up at the next meeting, now set for Feb. 3, 2010.