'Montana Sports Action' aims to clear hurdle
Pub Date: 9/1/2008
By Paul F. Vang
Barring unexpected developments after Montana Tavern Times press deadline, fantasy football pari-mutuel ticket sales began on schedule on Thursday, Aug. 28, though some unresolved objections to the process a memorandum of understanding between the Board of Horse Racing and Montana Lottery still casts a cloud over the future of fantasy sports gaming.
That cloud is primarily in the form of a letter dated July 23, 2008 from Bart Campbell, staff attorney for the Economic Affairs interim Committee of the 60th Montana Legislature.
In this letter, Campbell points out aspects in the administrative rules promulgated by the Montana Department of Agriculture, the parent agency of the Montana Board of Horse Racing, which, from his standpoint as an attorney for the Legislature, seems improper.
The rules were meant to implement House Bill 616 passed by the 2007 Legislature which authorized fantasy sports based pari-mutuel wagering.
The proposed rules are undertaking actions that are beyond the grant of rule-making authority and also do not conform with the sponsor, Rep. McChesney (D-Miles City), or the 2007 Legislature s intent in passing HB 616, Campbell wrote the Montana Board of Horse Racing.
While some aspects of the letter appear to be based on technical legal points, part of the letter focuses on a potentially serious problem. The regulations as adopted calls for the Montana Lottery to act as the vendor, or the hub, of the fantasy gaming process. Section 23-7-102(3)(b), MCA, provides that the State Lottery may not carry on any form of gambling permitted by this state except a lottery game... Campbell concludes, The state lottery may not carry on fantasy sports pari-mutuel wagering because that form of gambling is not a lottery game ¦
The letter suggests that if the Board of Horse Racing adopts the rules as proposed, I will suggest to the EAI (Committee) that it poll the Legislature. If a majority of each house agrees that the rules are contrary to the intent of the Legislature ¦the proposed or adopted rules must be conclusively presumed to be contrary to the legislative intent in any court proceeding involving the validity of the rules.
On August 5, Ryan Sherman, executive director of the Board of Horse Racing, said The Board is addressing the concerns [of the legislative committee] He said the Board would be meeting on August 14 while attending the horse racing season in Billings. He went on to say, The Board of Horse Racing, Lottery, and the Governor s office would be working together to address the issues.
As far as polling the legislature, Sherman said, We have no objection to that happening'; though we hope to have an agreement that fantasy gaming can proceed while that happens.
On August 18, C. A. (Al) Carruthers, chairman of the Board of Horse Racing, told this reporter that his understanding was that the objection had been withdrawn. The only objection we had came from John Tooke (Miles City). He didn t have (any) basis to object. Fantasy gaming to benefit horse racing will proceed on schedule, he said. It s all done and ready to go.
Montana Lottery Communica-tions Manager Jo Berg said, As far as we know, everything is on schedule. We re installing communications equipment at 150 retailers, bars and taverns across Montana licensed for gaming.
The communications equipment is similar to that used by retailers for vending lottery tickets (distinct from scratch tickets). It s a secured satellite system with each facility having a terminal, with a small built-in monitor telling players about potential payouts, number of players, rules and deadlines for participation, and other such information.
The terminal will also have the capability to issue lottery tickets, as well. One machine does it all, Berg concluded.
As far as any legislative concerns about the process, Berg said, I think that was all just a misunderstanding. As far as Montana Lottery is concerned, all the pieces are in place for fantasy gaming to start on schedule.
In a phone interview on August 19, Bart Campbell, the attorney for the legislative committee and author of the letter denied that the objections to the fantasy gaming process that he raised have either been withdrawn or addressed in any kind of response from other agencies.
On the other hand, he pointed out that executive branch agencies aren t specifically required to make a response.
He explained the process. We (legislative legal staff) are required by law to review all rules under our domain to determine whether the rules conform to MAPA the Montana Administrative Procedures Act. It is my opinion that the administrative rules adopted by the Board of Horse Racing do not conform.
While he issued a letter raising the issues previously discussed, he said the executive branch agency may determine that its actions were correct, or make changes. In either case, the agency isn t required to make a formal response.
My committee (Economic Affairs interim Committee) still has options. In some cases, they could insist that rules be altered, or the committee could determine that no further changers are needed. Either way, I ve performed my statutory duty to review the administrative rules and raise any legal questions. It s not my job to make policy.
Campbell said it s somewhat similar to the legislative process. Part of my job is to draft legislation as requested by the legislators. If, as an extreme example, a legislator asked me to draft a bill making the Nazi Party the official state political party, it d be my job to write up the bill. It s up to the legislature to actually act on it.
The interim Committee s next scheduled meeting will be September 12, some two weeks after Montana Lottery plans to start selling fantasy games.
Campbell didn t want to speculate as to what if any action the committee might take, though he notes that the committee membership is evenly divided between Democrats and Republicans and the members might not want to politicize the issue.
ote: Rep. Roy Brown (R-Billings) is a member of the committee as well as the Republican gubernatorial candidate challenging incumbent Governor Brian Schweitzer. Outstanding concerns about fantasy gaming could simply be deferred to the 2009 Legislature.
In a phone interview from his home in Miles City, Rep. Bill McChesney, who carried the bill in the legislature enabling the creation of fantasy sports pari-mutuel betting for the benefit of horse racing commented, I sent a letter to the Board of Horse Racing to be read into the record. I subsequently received a letter from the Chief of Administration that everything was copasetic and legal.
I m concerned that what s happening, as far as the current set-up, doesn t match the intent of the bill and may not be totally legal. Still, I m hoping there aren t any legal challenges and that this program starts on schedule. I m hoping that the program to develop the system of pari-mutuel fantasy games is successful and that it does benefit horse racing in Montana. I don t care just who has fish to fry in this whole set-up. My only concern is that it s successful.
To sum up: The 2007 Legislature passed a bill allowing the creation of fantasy sports pari-mutuel wagering with the bulk of the proceeds for the benefit of horse racing. The Board of Horse Racing entered into an interagency Agreement with Montana Lottery to develop and administer the games. Montana Lottery s vendor, intralotUSA, designed the pari-mutuel fantasy games. On August 28, fantasy sports players may begin creating dream teams from the beginning-of-season rosters of NFL football teams in anticipation of the opening of the pro football season the weekend of September 4-8.
There may as yet be unaddressed legal concerns as to whether the process conforms to the intent of the legislature. For now, however, the operative question is, Are you ready for some football?
Source: The Montana Tavern Times, September, 2008, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.