Mark Staples: lawyer, lobbyist, song writer, musician and singer, comic, emcee and panel moderator.
He was all those (with his musical talents excepted) as he deftly handled a panel of liquor and gaming industry regulators at the Sept. 19 afternoon session of the Montana Tavern Association convention.
He introduced the only elected official on the panel, Atty. Gen. Mike McGrath, with humorous and only mildly embarrassing anecdotes of their growing up together in Butte (McGrath and Staples caddied at the country club), then about attending the University of Montana and law school in Missoula.
When McGrath got up to speak, he denied completely even knowing Staples, to the delight of the room packed with tavern owners. Staples rejoined, "Yes, but only since you got elected," to another hearty laugh.
But when the hilarity died down, McGrath got down to business.
Atty. Gen. Mike McGrath "I told you when I ran for this job six years ago," he began, "I wanted to work on the relationship and culture between the industry and the gambling Control Division. We needed to fairly regulate gambling while promoting economic development. I think that has been achieved.
"I said I wanted to work on reducing the long delays in the licensing process," he continued. "A legislative audit had found processing an application took on average 190 days. We solved it by initiating a joint application (for liquor and gaming licenses). We worked out the turf issues. Gene Huntington (Gambling Control Division Administrator) and Neil Peterson (licensing chief at the Department of Revenue) worked on this. Today that has been reduced to 90 days and we're hoping for even more improvement."
McGrath said the 10-year struggle with settling on an appropriate way to automatically report gaming machine and tax data is over and a new web-based system is under development. Hopefully, that system can be designed to automate other functions such as machine permitting, he said.
"This should be a huge labor saver," he said. "Hopefully we'll have a system by this time next year."
When an out-of-state corporation challenged Montana's statute prohibiting non-resident ownership of liquor and gaming licenses, McGrath's justice department defended the statute under the authority granted states by the 21st Amendment to the U.S. Constitution which repealed Prohibition and granted states almost complete latitude in regulating beverage alcohol.
The district court ruled the statute discriminated against non-residents, which is illegal under the Constitution's commerce clause. Then the U.S. Supreme Court came to a similar conclusion in a case involving interstate direct shipping of alcohol between manufacturers and consumers--that states can regulate how they see fit, but cannot treat residents differently than non-residents.
Montana's non-resident ownership case was lost at that point, McGrath said, adding he hasn't seen any flurry of non-residents license applications.
He also said televised poker tournaments are regenerating keen interest in live card games in Montana which has licensed "92 percent more card tables and 250 percent more card dealers" this year than last. That burgeoning volume of regulatory work may require some changes in regulations, McGrath said, noting Gambling Control is working through these and other issues with help from the Gaming Advisory Council.
When the attorney general concluded his remarks, Staples took the floor and commended the McGrath Justice Department for its professional and vigorous defense of the ownership statute and a 2003 smoking law that exempted businesses licensed for gaming from a state-wide ban.
"We didn't lose those because the defense was weak," he said.
Staples then introduced Montana Department of Revenue Director Dan Bucks, noting the cooperation between the revenue and justice departments has been "exceptional."
The governor's selection of Bucks was "a great pick," Staples said. "It's remarkable to get someone of Dan's credentials to drop his life and come to Helena to take on this difficult position."
Revenue Director Dan Bucks Bucks took the podium then, telling MTA members that the governor has emphasized repeatedly "that we work for the citizens of Montana and to not forget it."
He then clicked off a number of recent successes including development of the joint liquor/gaming license application and process, and implementation of a functional department of revenue computer system which will soon begin processing state income taxes which could also serve as the mainframe for Gambling Control's new automated accounting and reporting computer requirements.
He noted the department is working out the new processes that will be required to handle non-resident license applications, and promised to expedite review of structural changes that may be required in licensed premises to comply with the new smoking law.
Bucks noted the Supreme Court decision on direct shipping of beverage alcohol from manufacturer to consumer may have a bearing on the state's connoisseur's license which allows wine to be shipped directly from vintner to consumer.
"It is a concern," Bucks said, noting an article that appeared in the September edition of the Montana Tavern Times which found that direct shipping of not only wine, but also beer and spirits, is possible via the internet with no age verification required for purchase or delivery or tax collections.
"That will be a challenge to deal with," he said. "We need to seriously consider that topic."
Bucks noted a new beer keg law has gone into effect and keg retailers will need to get special tags from the department to affix to containers before they are sold.
In the tax field, Bucks said the new computer system, called IRIS in its Montana adaptation, was coming on line gradually but successfully with 500,000 state income tax returns to be processed in the coming year. He noted most of the problematic income tax returns are being filed by non-residents.
He said the department will adopt monthly billing for late or deferred tax payments, much as the rest of the world operates. He said there are 19,000 delinquent taxpayers, some as far as five years behind. Bucks said the department is resolved to collect these but will work with taxpayers to devise workable payment plans, if necessary.
"The governor is committed to not raising taxes," Bucks said, "so the best way to proceed is to make sure everyone is paying their fair share and to make sure everyone who owes, pays.
"Folks who earn income in Montana need to pay taxes on that," he continued. "There are out-of-state companies who are illegally escaping their tax burden. Ninety-seven percent of Montanans pay the capital gains tax on land sales. The out-of-staters? Only 27 percent pay. We need a system of withholding (due taxes) at the time of the sale for out-of-staters.
"We're serious about compliance. We're doing cross checks to make sure everyone is paying. We started with state employees and we found a few who weren't ."
Staples next introduced Gene Huntington, a familiar face to licensees and the administrator of the Gambling Control Division of the Department of Justice. Staples said Atty. Gen. McGrath had made a "great" selection when he appointed Huntington to head the division.
"The culture between Gambling Control and businesses has changed," Staples said. "It's arms-length, as it should be, but respectful and professional and human." He characterized Huntington's leadership as open-minded, thoughtful and fair.
Staples also noted the division has built an exceptionally productive working relationship with the Gaming Advisory Council, which has been the catalyst in "taking on tough issues, formulating legislation and building consensus."
Gambling Control's Gene Huntington Huntington touched upon the poker issues outlined earlier by Atty. Gen. McGrath, but more thoroughly outlined new wrinkles that have crept into the use of credit card cash advances in casinos.
He told MTA members of a case where an operator had allowed a patron to obtain cash advances on a credit card that did not actually allow such transactions. The business owner had charged the cash advances as "merchandise," which was a violation of the conditions specified in the card company's merchant agreement.
When the card holder disputed the charges, the credit card company rejected them and the business owner then tried to collect them from the card holder.
A collection effort for mischaracterized charges could constitute a violation of the Montana statute that prohibits credit gambling. The attempt to collect, per se, assumes a debt, Huntington said.
The division had drafted an "issue paper" that outlined the problem and potential ways--statutory or by rule--the situation could be dealt with. The issue would be considered by the Gaming Advisory Council at it's Sept. 23 meeting (see complete report elsewhere in this edition).
Staples then introduced Neil Peterson, who heads what used to be the "liquor division" in the department of revenue. Staples said, "Ever since the last reorganization, I have no idea what anyone's title is, but Neil's the go-to guy."
He credited Peterson with being instrumental in crafting legislation that has largely alleviated problems with abuse of catering licenses, special events licenses, cabaret licenses and, recently, the connoisseur's license.
Revenue Department's Neil Peterson Peterson said the recent court rulings on out-of-state ownership and direct shipping could mean some adjustment in statute or rules.
He said determining a responsible party named to a license owned by a corporation, as well as conducting investigations of non-residents, may need to be addressed.
He also echoed Bucks regarding the connoisseur's license, stating it may also need some changes. "Some people who have applied for it complain about the paperwork," Peterson said. "Welcome to the world of liquor control."
"We may have to tinker with it to make sure it isn't discriminatory," Peterson said. "It's actually tougher on residents," he said, because it doesn't allow Montana producers to ship directly, but does allow it for those out-of-state.
He noted a tricky bill that was passed in the last legislative session that attempted to deal with license owners who park a license right next to city out-skirts in the singular hope that the city would annex the location, in effect converting a county non-quota license to the significantly more valuable city quota license.
That law now requires a license that gets annexed into city limits not be moved for a period of five years, making the speculative "camping" proposition far less attractive.
"It's not working perfectly, but it does seem to be having the desired effect," Peterson said.
Kent Frampton asked Peterson if he thought the court rulings on discrimination would affect Montana's prohibition against an individual owning more than one all-beverage license, and Peterson responded that he did not think so as that prohibition applies equally to residents and non-residents.
Jim Grubbs noted the department changed some criteria for eligibility for applying for new population-based city quota liquor licenses that are awarded by lottery, among them the requirement that an applicant had to have a physical address where the license would be parked.
That requirement was changed, Peterson acknolwedged, to allow people who had no real estate or lease--those not already in business--a better chance to get into the lottery. He noted, parenthetically, that at the same time the rules were changed to allow just one application per individual, as a number of applications were being submitted on behalf of the same party, using personal names, business names, corporation names and so on.
He said dropping the requirement that applications have a location was not problemtaic at first, but that "word has gotten out." Bozeman had 270 applications for new quota licenses and the same phenomenon was evident in recent Billings and Missoula lotteries, he said.
"We may see if we need to make further changes," Peterson said.
Pat Kelley suggested requiring lottery winners to keep a license five years before putting it on the market could dampen the rampant speculation. Peterson said there is currently a requirment that awarded licenses not be sold for three years.
Staples asked if the process for reviewing and approving structural changes to premises can be "streamlined" in light of the new smoking law which may spawn numerous such requests.
Huntington replied that his division is working with DPHHS and Revenue to develop a form for exemptions and that time extensions to complete rennovations could be granted.
Source: The Montana Tavern Times, Oct. 2005, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.