Council examines rules, regulations
"You want the good news first or the bad news?"
That rhetorical question could have framed the Gaming Advisory Council (GAC) meeting discussion that occurred at the Holiday Inn Grand in Billings May 18. They started with the bad news.
The Council serves to provide policy direction regarding gaming matters to the Attorney General, the Legislature and the public and is comprised of representatives from the Legislature, local government, the tribes, the gaming and tavern business and the public.
Business conditions
Rick Ask, Gambling Control Division (GCD) administrator, reeled off the latest Third Quarter statistics gathered in routine division reports: gaming tax collections down over 20 percent, liquor license applications up 146, gaming machine permits down 514, live card and bingo licenses down 27, card dealer licenses down 123, bingo and keno licenses up nine, and 99 percent of gaming machines reporting electronically.
Steve Arntzen of Century Gaming was in the audience and queried Ask, "What do you think the fourth quarter will look like in terms of taxes?"
Ask responded, "We could run a test (mid-quarter) to see."
Councilman Tim Carson, who is president of Amusement Service, a gaming machine route vendor, added, "I think we're going to be on the same trend. I think tax collections will be off $12 million to $13 million for the year."
That grim prediction would mean businesses licensed for gaming would see gaming revenues alone down over $80 million for the year or close to $50,000 each on average.
John Tooke, council chairman, said, "The winter was tough, the (Oct. 1) smoking ban had an effect. Hopefully summer will see a pickup in traffic. Tourism is expected to be up. The economy seems to be on the cusp of picking up."
Problem gambling
Mark Kennedy, who servers on the council, is also President of the Montana Council on Problem Gambling. He reported the MCPG is financially in satisfactory shape, supported mostly by donations from the Montana Tavern Association, Gaming Industry Association, Montana Coin Machine Operators Association and Town Pump.
"We're very thankful for our support from businesses and business associations," Kennedy said. "Contributions have been slower to come in, but they're coming in." Kennedy also noted a couple of operators who were charged with credit gambling violations in 2008 chose to make donations to the MCPG in lieu of paying fines at the time, but no other such violations had occurred or donations made since.
To an enthusiastic response, later in the meeting Kennedy interrupted the proceedings to announce he had received an e-mail indicating Intralot, the State Lottery's system contractor, which had contributed in 2008 but not in 2009, would be donating $25,000 to the MCPG again during 2010.
New rules reviewed
Ask reminded the council rules had been drafted and implemented to streamline the gaming license amendment process and the result is a one-page form that replaces 18 pages for cases of simple amendments.
He said more work is being done to similarly streamline the process for cases where existing owners sell shares to other existing owners all on the same license. As such, he presented the council with draft rules that would allow the owner-to-owner transfers which met with council approval.
He also said rules had been written to implement legislation from the 2009 legislative session that required clarification of the lender/ownership status of parties who are loan guarantors in license transactions. Ask said it required a "work-around" but the job was done by defining a loan guarantor as a "non-institutional lender," meaning they will have to provide finger prints and a financial history. This will be accomplished during the license application process, he said.
Neal Peterson, Executive Director of the Gaming industry Association, said from the audience, "From our standpoint, it was important for financial institutions to continue lending while not inhibiting banks in collecting on loans. This added a little complexity but is worth it."
VGM/Poker Issues
Rep. Pat Noonan, chairman of the subcommittee, told the council his group, after two meetings, had formulated some preliminary recommendations which can be implemented by rule-making or need to be included in legislation, while other items under consideration were tabled or withdrawn.
The committee recommended a statutory amendment that would allow route vendors to lease machines to each other and that would allow gaming machines to be bought and sold between operators, route vendors and manufacturers.
Another recommendation was to establish a roundtable to work with GCD personnel to clarify in rule how to account for bonus wins for the purpose of meeting the statutory requirement that at least 50 percent of the total win will be the result of the authorized game. The group is to produce a paper that clarifies the subject.
The GAC voted to endorse the subcommittee recommendations.
Calcuttas
Ask told the council that recently calcuttas had been operating where up to 99 percent of wagers have been returned in the form of prizes. He said more typically calcuttas are run by charities with a substantial portion of wagers retained by the sponsor.
After some discussion in which council member Nick Murnion said restrictions would interfere with the viability of calcuttas such as those run at rodeos, the council voted to recommend against new restrictions.
Regular council business was set aside for a few minutes when Atty. Gen. Steve Bullock addressed the group (see side bar on next page) and lunch was enjoyed.
Proposed legislation
The legislation being prepared by the GCD would generally revise gambling laws to:
• Revise bingo regulations to define a bingo "session" as lasting a minimum of two hours or a minimum of 20 games; set the maximum price for a bingo card at $1; set the maximum payout per game at $800 with total session payouts to not exceed $3,000; operators may be allowed to apply to conduct up to five "special sessions" a year where total prizes per session could be up to $5,000; some additional bingo patterns approved by the department may used to award a win; some unconventional bingo cards may be used with prior approval from the department; exempts charitable organizations conducting bingo games away from their premises (county fairs) from per-session prize payout limits and restricts card prices to 50¢ and game prizes to $100.
• Allow the department to establish by rule a reasonable redemption time limit for gaming machine win tickets.
• Allow route vendors, operators and manufacturers to sell or lease equipment to one another.
• Allows more than one lessee to share in gaming machine revenue with location operator
The Council endorsed the proposed legislation, then set Sept. 24 for its next meeting which will take place in Missoula.