Before the Montana Tavern Association membership commenced business at their afternoon session Sept. 13, lost members of the association were appropriately recognized by a minute of contemplative silence. Remembered were Gene Herndon, Roger Frampton and Lynda Stefani who all died during the last year.
After gavelling the 51st annual convention to order, MTA President Jupe Compton introduced Butte-Silver Bow Chief Executive Paul Babb who welcomed members and their annual gathering to the community.
He noted Butte's rich history, in which taverns played a major role. "Butte's taverns always have been social places where friends gathered, not just drinking establishments." He then praised the state's adult beverage business for "speaking with one voice. That gives you a lot of power," Babb said.
"Thank you for a job well done; keep up the good work. Now, enjoy Butte and come back soon."
Recorded messages from U.S. Senator Conrad Burns and Senate challenger Jon Tester were played for the audience, and a letter from U.S. Senator Max Baucus was read.
MTA Government Affairs Counsel Mark Staples then introduced key convention guests who would constitute the convention's regulatory panel. They were: Montana Attorney General Mike McGrath, Gambling Control Division Administrator Gene Huntington, Department of Revenue Director Dan Bucks and Liquor Division Administrator Shauna Helfert.
McGrath took the podium first, thanking MTA and other business groups "for working with us. We told you we wanted to change the (regulatory) culture" from adversarial to cooperative "and we've had great success at that.
"The Gaming Advisory Council has worked very well for us," he said, singling out council members Sen. Joe Tropila (D-Great Falls), Rep. John Witt (R-Carter) and licensees John Tooke and Steve Morris for their work with the council and its issues. The council has fostered a "cooperative relationship between the private and public sector," McGrath said.
He said the last few years have also yielded "great success in building government-to-government relationships, especially between the Department of Justice and Department of Revenue," where combined investigative functions have streamlined the complex licensing process to take just one-third the time it used to.
McGrath also noted the departments are using a shared computer database that is allowing for more efficient, user-friendly tax collections, especially as it pertains to gaming machine permitting and tax reporting. "We're under budget and ahead of schedule," he said to rousing applause, thanking Huntington personally for the system's success.
McGrath noted the Gaming Advisory Council has been working hard to "modernize" the live poker statute, since dealer licenses have increased four fold and card table licenses are up 262 percent.
DOR Director Bucks next took the microphone, acknowledging that private and public relationships are really "relationships between people. There are open and direct communications between our department and MTA."
He then thanked the Governor, McGrath, Huntington and his own staff for helping forge effective partnerships between government departments, agencies and private business.
"You approach us as good Montana citizens and business owners with a problem-solving attitude. And you deserve thanks for your contributions to the state, our economy and the people of Montana," Bucks said.
Bucks, too, touched on the new computer database and cooperative efforts that are yielding streamlined licensing and tax collection processes. "We want to make information flow better so you can get on with business," he said.
In terms of potential legislation, he said he was in favor of the status quo when it came to Montana's liquor license quota system, drawing a favorable response from the audience.
"Some believe the population based formula (for allocating liquor licenses) doesn't allow for enough licenses," he said. "There are folks interested in making changes," he said, though mostly to the restaurant beer and wine ("Cabaret") license structure.
Bucks predicted that in light of a May, 2005 U.S. Supreme Court decision forbidding states to discriminate in their policies regulating in-state versus out-of-state producers of wine shipping directly to consumers or retailers, "there will be some legislation introduced."
In earlier statements in the September edition of the Montana Tavern Times, Bucks indicated Montana's laws were not discriminatory so no legislative adjustments would be required.
At the convention, however, he indicated while he believed state law is in line when dealing with direct shipping to consumers, it's laws dealing with direct shipping to retailers may require adjustment.
Montana provides for a connoisseur's license which allows consumers to buy limited volumes of wine direct from wineries, and Bucks said this component did not require change. Nor, he said, was government interested in promoting anything less than face-to-face sales from licensed establishments. Further, he said he was opposed to internet and telephone ordering of adult beverages.
Bucks also indicated he thought some legislation might be required to address another court decision that declared unconstitutional Montana's prohibition on out-of-state ownership of retail alcohol licenses.
He said alcohol consumption by volume was up 8-9 percent in 2005 and dollar volumes were up 11 percent with increased spirits sales leading the way.
Staples then introduced Gambling Control's Huntington, noting MTA members are observant of gaming compact negotiations between the state and tribes, as a number of non-tribal operators will be affected by the outcomes.
"We're careful not to interfere," Staples said, "but we are concerned" about negotiations pertaining to the Flathead Reservation and the Blackfeet Tribe's advertising of Class III banked table games, which are illegal in Montana.
Huntington said the Blackfeet maintain all gaming at their new casino at Browning is Class II bingo-based gaming, for which tribes need no compact with states. He said federal authorities are aware of the situation on the Blackfeet reservation and that "any decision there is up to the feds."
He said negotiations with the Confederated Salish and Kootenai Tribes of the Flathead reservation are wrestling with two "very difficult" issues.
First, he said, is the state's ability to maintain limits by only agreeing to games and limits authorized by the Legislature--"all of which is limited."
Second is over whether the state has any jurisdiction on reservations and particularly over non-tribal licensees on reservations.
"The state believes there are limits" to what games, wagers and prizes can be offered on reservations, and that it does exercise jurisdiction over non-tribal licensees, Huntington said.
He said he doesn't see "much of a chance for a breakthrough."
If no new compact is settled by Nov. 30, all Class III gaming, which includes video poker and keno, would have to cease on the reservation, leaving several dozen non-tribal licensees without gaming, while the tribes would be able to continue to operate their Class II "bingo" machines that play like slots and offer potentially unlimited prizes.
Switching gears, Huntington advised licensees to "pay attention to your mail" because notices of changes to gaming machine regulations are coming soon along with the roll-out of the new internet-based reporting system.
Primarily, he said, changes in the way permits are used and affixed to machines are on their way. There will be a new decal and ID number for every machine that will supplant previous permit numbers, machine serial numbers and ID numbers. He also advised that machine owners secure the new ID numbers even for machines not currently in service because they will be required before any machine can be returned to the live line-up.
Huntington described the Gaming Advisory Council's work on live poker law revisions as "a long process." The GAC Poker Subcommittee, headed by Sen. Tropila, has been working on the revisions for over a year and is encountering snags.
He said the division needs additional fees to cover the cost of dealer licensing and game regulation, while tournament formats and pot limit discussions are ongoing.
Next up was Liquor Division head Helfert, who addressed new rules being considered regarding administrative violations.
In the past, she said, after a certain period of time with no further problems, a first offense with "mitigating circumstances" could "informally" be expunged from a licensee's file. In effect, this could allow an unlimited number of "first" offensives, without a cumulative toll taking effect. After four violations, a license can be suspended. Apparently, the Division is now considering formalizing the entire policy.
Helfert acknowledged that a department rule change a few years ago has resulted in the rampant license speculation predicted by business associations at the time.
When a municipal population increases, notice is issued that a new "floater" license can be brought into the city. interested applicants file for the opportunity to acquire a license, and applicants are entered in a random lottery.
Prior to the rule change, applicants were required to demonstrate they had a viable premise in hand in which they intended to operate a bona fide adult beverage business. The rule change deleted that requirement so now anyone, even with no vested interest or intent to seriously go into business, can apply.
The result has been speculators are swamping the application process in the hope of being drawn in the lottery, securing a relatively inexpensive "floater" license from an under-quota area, bringing it into a city, "parking it" at any business premise for the requisite three years, then selling it at a substantial profit on the open market.
MTA's Staples suggested that rule be reconsidered in order to assure that license applicants are "poised and ready to put a license to use."
Helfert said the division "has concerns" and "is open to your thoughts and comments."
One MTA member suggested that lottery license winners should be expected to pay market value for a license, assuring that those actually interested in launching a new business might secure a new license. Helfert said the division "would take that into consideration." And Bucks said the court's decision overturning residency requirements for license holders "may put a different light on the (lottery speculation) situation."
Finally, Jerry Evans, General Chairman of the Montana Shrine Bowl football game, credited tavern owners with keeping the annual East-west football game alive. After thanking them for their fund raising activities on behalf of the event, he said, "You guys are picked on. The public doesn't appreciate what you do for charity. Well, we do. I'm not sure we could even hold the Shrine game without you."
Source: The Montana Tavern Times, Oct., 2006, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.