MTA considers poker, next legislative session
Pub Date: 12/1/2006
The Montana Tavern Association Legislative and Gambling Committee voted Nov. 16 to not support some provisions in a legislative bill that would have revised fees in the live poker game statute.
One week earlier, the Gaming Industry Association of Montana (GIA) reached the same decision, pending discussions with state Department of Justice and Administra-tion officials (see complete report on the GIA meeting page 16 in this edition).
And that led to the Gaming Advisory Council stripping out key provisions in the draft bill during its Nov. 17 meeting, particularly substantially increased fees that were to have been levied on card dealer and table licensing (see complete report on the GAC meeting page 14 in this edition).
For more than a decade live poker had seen a steady decline in the state, with only a couple of hundred dealers being licensed and with even fewer card tables operated. But televised Texas Hold 'Em tournaments coupled with booming internet poker games caught the imagination of Montanans and dealer and card table license applications quadrupled.
The Gambling Control Division was struggling to keep up with the flood so sought additional personnel and funding to handle the increase. It suggested a bill was needed to raise fees and its industry counterpart suggested, if the poker statute were to be revised, it was time to update other aspects of the law including tournaments regulations and pot limits.
The matter landed on the Gaming Advisory Council which created a subcommittee comprised of regulators, legislators, members of the public and industry representatives.
Last summer when it appeared consensus had been reached, some operators balked and subsequently administration officials indicated they believed certain parts of the bill could be construed to constitute an expansion, something the governor has vowed to oppose and could have complicated the administration's tribal gaming compact negotiations.
Gaming business representatives then contended the proposed more-than-doubling of dealer and card table permits fees needed to be offset with a potential increase in income for dealers and cardroom operators, and that was what the pot limit and other changes were designed to do.
Without the potential to offset the large fee increases, the bill lost steam. As Harlowton's Stockman Bar owner Rep. Harry Klock said, his tiny live poker operation, which "was barely making it now," would be closed down by the fee increases.
The GAC subcommittee proposal had called for increasing card table permit fees from $250 for the first table and $500 for additional tables, to $500 for the first table and $750 for additional tables. It proposed raising dealer license fees from $109 to $250 with a $200 renewal fee, and would have raised cardroom contractor license fees from $150 to $500, plus $500 for each location the contractor operated, whereas there is currently no fee for additional locations.
The MTA committee, while not opposing the entire bill, voted unanimously to oppose the fee increases, and the GAC, on split votes, decided accordingly the next day, with this exception: it adopted the provision to increase cardroom contractor fees to $500 without fees for additional locations.
MTA Government Affairs Counsel Mark Staples noted during the discussion it had been difficult to obtain business consensus on a number of provisions in the proposal, and that lack of unanimity made a solution elusive.
A bill to allow the governor to grant tribes total control over gaming on reservations, including jurisdiction over non-tribal operators, no limits on games played or wager or prize limits, complete taxing authority and more, had passed a joint interim legislative committee and would be introduced in the coming legislative session, Staples told the group.
He said he didn't believe the Legislature, controlled by either party, would be inclined to give that much authority to any sitting governor, nor did he believe any governor would actually want that responsibility. While non-tribal operators across the state certainly have a stake in the evolution of gaming in Montana, Staples said, they have no standing in negotiations between the tribes and the state.
Touching on the closely watched situation at the Blackfeet Tribe's Glacier Peaks casino, where Las Vegas-type unlimited gaming had been advertised, Staples said he believed the tribe was operating only legal Class II games (see complete report on Blackfeet gaming page 13¡ in this edition).
Further, he said, the current gaming compact on the Flathead reservation was set to expire Nov. 30 and that negotiations seemed to be at a standstill (see complete report on the Flathead negotiations page 13 in this edition).
The Confederated Salish and Kootenai Tribes had started negotiations seeking total regulatory and taxing authority over all gaming on the Flathead Reservation, including over non-tribal operators.
The governor's office, through negotiator Deanne Sandholm, had countered with an offer for more machines and higher payouts, which the tribe rejected. Since then, the tribe was offered an option to extend the current compact indefinitely, which was not responded to, and another proposal to extend the compact through May 1, allowing all parties to observe legislative outcomes before making further moves, or making none.
Staples said he had been told by non-tribal operators on the reservation that they would rather give up gaming than be subject to the jurisdiction of a government in which they had no say, and seemed steadfast, though he said he had been told one or two operators had contacted the governor's office to the contrary.
Donita Snyder, the Lake County representative to the MTA board (part of Lake County is situated within the reservation), told the committee operators there fully expect the compact to expire and gaming machines be pulled from locations.
Staples also said pending Congressional action and proposed new rules from the Indian Gaming Regulatory Commission were stirring the pot and that all Indian gaming issues were wrapped in complicated, related legal knots.
Staples told the group the Liquor Division of the Montana Department of Revenue was working on bills to revise laws that cover alcohol distribution to make Montana's statutes conform to a 2005 U.S. Supreme Court decision (Granholm v. Heald) that forbids states to discriminate between in-state and out-of-state producers of wine.
The proposal would allow any wine producer to ship a total of 4,500 cases to Montana retailers annually if they use their own transport, up to 9,000 cases if they use common carrier. Staples said the Montana Beer and Wine Wholesalers had signed off on the proposal, so the committee agreed to not oppose it.
Staples cited the work of an MTA licensing committee which was considering options, and noted it was time to get a bill draft request in, if MTA planned to act.
He said pressure to issue new licenses at prices well below what current licensees have paid was coming primarily from a few large national corporate chains who simply wanted into the market without making the investments current licensees have.
One board member noted there have been some abuses of the "cabaret" liquor license law, and Staples concurred. He suggested the MTA not make any move to change quotas unless and until the loopholes had been closed. The Legislative and Gambling Committee concurred, and meanwhile the MTA licensing subcommittee is to continue working on the issue.
The committee also considered the problem of population-based new issue licenses coming into markets at prices well below market, and the resultant participation of pure speculators.
When cities that are at quota gain population, new licenses are issued and awarded through lotteries. Formerly, an applicant had to demonstrate intent to go into business through possession of a premise suitable to operate a licensed business, but the Department of Revenue, by rule, eliminated that provision, resulting in the rampant speculation in the lotteries as predicted by MTA. One new issue license reportedly recently drew 600 applications, one of which was won "by a person without a penny to his name, who is now trying to sell his position," Staples said.
One board member observed that under the current lottery rules, the licenses aren't winding up in the hands of the people who would truly put them to use in a hospitality business. The licenses are merely parked at some dubious location until three years has elapsed and the licenses can be put up for sale. If the licenses were available at a realistic value, he said, those with the resources and intent to go into business, such as chain restaurants, could actually acquire them.
MTA is considering a bill draft to address the problem.
Staples said he thought some traditional anti-gambling bills such as tax increases would receive a lower priority at the coming legislative session, partly because the current system and business environment seems stable, but also because the government is projecting a surplus approaching $1 billion and because, since both houses of the Legislature are split, neither party may be able to muster the votes to pass punitive legislation.
Some members of the committee expressed grave concerns over the impact of the voter-passed minimum wage increase. One small operator noted the higher minimum wage will cost him over $10,000 annually just in wait-staff wages, but it will also hurt him when he has to raise wages "in the back of the house" to achieve some sort of wage parity and fairness.
Another committee member with restaurants in Bozeman said the law would cost him $3,500 a month.
It was noted Congress is likely to raise the minimum wage to $7.15 when Democrats assume control. The committee agreed individual members should work with other organizations that may seek some legislative adjustments that could mitigate the financial impacts on the bottom lines of small businesses.
With that, the committee adjourned.
Source: The Montana Tavern Times, Dec., 2006, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.