When the Gaming Industry Association (GIA) board of directors convened at the Best Bet Casino in Helena Aug. 31, they were greeted by positive news from Executive Director Rich Miller.
He reported video gaming receipts were up a healthy 6.6 percent in Fiscal Year (FY) 2005 over FY 2004, though the rate was down from the strong 8.5 percent showing of the previous year.
Tax collections grew by $3.3 million compared to $3.93 million in FY '04. Last year the machines generated $50.1 million in taxes and $53.4 this year. The revenue flows to the state general fund and approximately two-thirds is returned to local governments.
Miller said locations continue to heavily promote and market their offerings after a heavy investment cycle in machine replacements and upgrades, accounting for the strong showings which have remained above 5 percent annual growth since the stagnant period of the late 1990's and 2000-2001.
With the resolution of the years-long automated accounting and reporting wrangle in 2002-2003, game designers who had put development on hold were allowed to combine poker and keno into a single software package and run both on one machine.
With that development came a cornucopia of new game concepts, fun bonus play, enhanced graphics and audio, more powerful processors with expanded memory and high resolution flat-screen displays, adding substantially to player entertainment value.
And, Miller reported, the Gambling Control Division (GCD) is indeed making headway in designing an internet-based system for automation of accounting and reporting procedures.
He told directors he had met with Al Arvish, a computer consultant hired by Gambling Control who will head up the division's program to develop a new database that fulfills requirements of the division and business owners, while integrating with the state's other computer systems.
Miller noted Arvish was responsible for the design of the division's current database back in 1986, a noteworthy achievement in that very little software of that vintage has survived and is still in use, testament to its practical, functional engineering.
He said Arvish will be utilizing an off-the-shelf database called Gen Tax which was adopted by the state revenue department several years ago in the wake of the failed $50 million P.O.I.N.T.S. system. The Gen Tax database is a proven platform, Miller said, whose vendor has developed an impeccable reputation for doing what they say they will do, at the bid price and on time.
Hiring Arvish and selecting Gen Tax are encouraging developments, Miller told the board, but some remaining concerns still call for resolution. Operators have long anticipated automated machine permitting as part of the automation package, but that component is not yet certain, nor is automated machine service reporting.
Miller said Arvish appeared to be impressed by--and readily understood--the state of business practices in use at many locations and, Miller added, he was in turn impressed by Arvish. He said GIA members are indicating they remain 100 percent behind the division's effort to implement web-based reporting and are optimistic conversion can be relatively painless.
Board member Tim Carson, president of Billings-based Summit Gaming, said everyone has a different wish list when it comes to automated reporting and accounting, and that Arvish seems willing to meet as many expectations as possible.
Carson cautioned board members to be focused on the longer term three to five years down the road. "This process involves more than just reporting," he said, noting that two-way "intelligent communication" between in-house accounting computers and gaming machines is a possibility.
Miller said to access the envisioned system should only require an internet connection, that everything else will be provided as part of the system, though in-house accounting packages are certainly possible and remain an option.
Carson then noted the Gambling Control Division is advocating an increase in its lab testing fees from $75 to $105. He said that would be reasonable but some benefits, such as faster approval, should be expected.
Montana Tavern Association attorney and lobbyist Mark Staples took the floor to explain some of the implications of draft indoor smoking prohibition rules released the day before at the request of the Montana Tavern Times, which he said had negated the possibility of getting additional negotiated changes made to the draft.
Staples said the state had thus far held to its word to work for a "reasonable, not Draconian" set of rules as well as implementation and enforcement process, and they were supported by health representatives "who actually negotiated the deal, as opposed to those who tried to shoot it down."
He said some establishments may have to install a barrier between smoking areas and non-smoking areas to address the smoke infiltration prohibition, and to protect minors as called for in the statute.
He said since the rules hearing was scheduled for Sept. 30 and the law was supposed to take effect Oct. 1, an extension was obviously required for compliance and would likely be set for Jan. 1.
Staples said the draft rules provided for a procedure to obtain a certification of exception, should a business desire one. The requirements are fairly basic, he said: minors must not be allowed in smoking areas and a business must derive at least 60 percent of its revenues from gaming or adult beverage sales or a combination of both.
In summary, he said he believed the draft rules to be reasonable. Moderate representatives of both sides of the issue have voiced strong commitments to making this work, he added.
After a break for a buffet sandwich lunch, directors dissected a Gambling Control issue paper on potential grey areas in credit gambling prohibitions regarding use of credit cards for cash advances in a licensed premise.
Miller briefly recounted the history of the difficult negotiations a decade ago that produced the current statute and rules. "It was a miserable fight," he said.
According to Gambling Control, a card user was obtaining cash advances on a credit card, then used the funds to gamble, which would have been legal except that the operator was charging the cash advances as merchandise purchases, in violation of the credit card agreements.
When the card user complained to the card company that the charges were in fact cash advances and had been used for gambling, the card company refused to pay the operator the charges. The operator then attempted to collect the money from the card holder, which, in the opinion of Gambling Control, in itself constitutes a violation of the credit gambling statute.
In this case, Miller said, the licensee "wound up holding the debt and that's credit gambling." He said directors needed to proceed with caution as such a finding may "open up as many problems as it solves. No one here wants credit gambling but that's not the issue here," he said.
Rather, the issue in this case is an operator violating his merchant agreement with the card company by inaccurately characterizing cash advances as merchandise purchases, he said.
Miller said he was also concerned that a liberal interpretation of the statute envisioned by Gambling Control could also then involve non-sufficient fund check returns. Is a bounced check an instrument of debt, therefore credit? Miller asked.
Other directors expressed concern that any card user might dispute legitimate credit card charges, dishonestly characterizing charges as gambling expenditures, then the licensee might find himself in a fight with the card company or, worse yet, slapped by Gambling Control with a credit gambling violation.
However, it was pointed out that disputed charges are rarely rejected and that breaking the merchant agreement is the real problem. "There is no problem trying to collect a legal charge," it was said.
Directors agreed to offer their views at the Sept. 23 Gaming Advisory Council meeting where the matter would be thoroughly aired (see complete report of Gaming Advisory Council meeting elsewhere in this edition).
Directors then touched upon some revisions the Gambling Control Division may seek to existing poker statutes as the wildly popular Texas Hold 'Em games grow statewide.
As part of those revisions, Gambling Control has opened the door to reconsider the $300 pot limit, which many contend prevents players from protecting their hand even when they clearly have a superior or top hand. Others contend the limit prevents players from losing their stake too quickly and allows players to stay in the game longer.
GIA director John Tooke suggested "table stakes" be considered, "where you can play what you brought to the game."
The pot limit has perennially generated discussion but has never been enough of a priority to generate actual action, observed GIA President Marc Wass.
The discussion then moved to the problem encountered by Gambling Control in adequately policing the burgeoning numbers of live card game dealers and dealer applicants.
Carson said GIA needs to step up to help the division get a handle on the problem. One year ago, the division was dealing with 350 licensed dealers and applicants; today that number exceeds 800.
Frampton said the temporary license provision is important to potential dealers who have an opportunity to go to work immediately.
Directors agreed to create a subcommittee to study the many issues that have cropped up due to the resurgence of live poker, particularly tournament formats. The committee would then present their ideas at the Gaming Advisory Council.
Subsequent to the GIA's formation of a poker study committee, its counterpart Montana Tavern Association did likewise at its meeting Sept. 18. And when the Gaming advisory Council met Sept. 23, it, too, created a poker study committee tasked to seek public and industry input, then revise the GCD issue paper for presentation at the January council meeting.
Miller reported there were no current negotiations between state government and tribes regarding reservation gambling, though discussions with the Assiniboine-Sioux were due to commence shortly.
Miller also noted there are several U.S. Senators planning to introduce federal legislation to prohibit tribal gambling operations off-reservation.
IGT's Terry Geurin reported that some tribes are operating the Class II video gaming machines that have been classified as "bingo" but which operate much like slots and have potentially unlimited jackpots. He said some tribes are looking at the Class II machines as their primary, if not solitary, form of machine gaming.
Director Tom Kenneally said the play of the devices is "very good" and that keno may be introduced as a Class II game. He said tribal Class II gaming appears to be growing.
Miller said he is hearing nothing about initiatives to raise gaming taxes but is expecting the usual cast to bring legislation to do so in the next session.
Miller suggested the dormant Gaming Research and Education Fund be revived to head up the campaign for a smooth implementation of the smoking ban, due to affect licensed businesses in 2009.
He said, "We will have to restructure our businesses and we should be doing the research in order to help make the transition."
Miller was instructed by the board to hire some part-time clerical help, while his travel and expense budget was increased.
The next GIA meeting was set for Nov. 8 at 10 a.m. at the Best Bet Casino in Helena.
Source: Montana Tavern Times, Oct. 2005, published monthly by Continental Communications, 800-406-5698, 125 W. Granite St., Suite 102, Butte, MT 59701.