GIA looks at tough biz
New liquor rules drafts provided some consternation for Gaming Industry Association directors when they conducted their annual convention business meeting at the Billings Holiday Inn Grand May 19.
The chief question for the over 50 people on hand seemed to be, what is the impetus for – what is the problem that is being addressed by – the new rules that most saw as potentially problematic. And some wondered why the industry was never consulted when the rules draft was contemplated and when it was written.
New liquor rules
One new Department of Revenue rule draft would allow off-premise sales only in a beverage's original package and in an individual serving size not to exceed 16 ounces.
Another proposed rule would add new parameters to the definition of "premise," for example requiring a minimum of 12 seats with at least six of those positioned at a bona fide customer bar and seats at gaming machines not counted.
Further, the rules draft would require that an establishment with a beer license and wine endorsement (commonly known as a "beer and wine" license) operate as a restaurant with a menu,and would require outdoor customer areas to be enclosed by a fence at least three feet high and only be accessible from inside the premise.
Taverns with an all-beverage license that also have an off-premise bottle sale business would be required to physically separate the off premise sale area from the on-premise consumption area under the rules draft, resulting in required new construction in numerous locations, directors said.
While existing and currently approved configurations would be allowed to continue under a grandfather clause, any alterations to a premise or sale of it would require the new rules to be invoked, the draft says.
Other elements in the rules draft would further define use of a restaurant beer and wine "cabaret" license and requirements for obtaining one, would add requirements to concession arrangements and catering endorsements, and would, in essence, allow licensed business loan guarantors to be treated as non-institutional lenders.
GIA decided to make sure the drafts were thoroughly analyzed and responsive testimony prepared, and that an adequate presence was established at the hearing to make the weight of their concerns full known. Carefully prepared written testimony would also be submitted to bolster the hearing record, GIA Executive Director Neil Peterson assured directors.
Falling gaming revenues
The group's agenda shifted gears to the more pressing concern of sharply declining gaming revenues in the face of a poor economy and the Oct. 1, 2009 full implementation of the indoor smoking ban. Both factors have pushed gaming revenue from year-over-year growth in the 6 percent range to levels more than 20 percent below one year ago.
Steve Arntzen of Century Gaming observed that well executed outdoor customer areas have not seemed to make the difference hoped for in attracting or holding customers. Nor has improved weather brought about the hoped for rebound, he said. "We're just at a new level," he said, which is about the same as in 2004.
GIA President John Tooke said, "Everyone is looking at improved customer service, but what else? Can we change the games? Should we be looking at baby steps or giant leaps? We can't continue running in place. We need to make fundamental changes to our business models."
Gaming Advisory Council
Tim Carson, who also serves on the Gaming Advisory Council (GAC) as a GIA representative, said the council has been doing good work and has significant accomplishments, such as streamlining the process for license amendments and updating bingo rules.
After lunch the group delved deeper into the substantive issues such as poker rules.
It was noted that previously it was thought the outdated Scarne poker rules guide was an impediment to advancing the game as it has been in other jurisdictions. Carson told the group that upon closer examination of existing statute and rules, however, needed adjustments are already allowable so Scarne can be kept in place.
He said an industry roundtable sponsored by the Gambling Control Division will be convened soon to thresh the minutia into viable statutory, rules and policy positions.
Gaming revisions
Arntzen said the objective must be to help revive the industry without favoritism or divisiveness.
"The question has to be, will it help and stimulate the business without harming anyone," he said.
Kent Frampton agreed. "We have to know, will it help? Who will it help? Some games are also getting too complex for players to learn and understand."
Dave Kraft of U 1 Gaming said it is also important to try to develop some uniformity with other gaming jurisdictions. "And why would anyone oppose changes if there's no harm? I think we can make the games easier for players to understand."
Carson said new game concepts could come in already regular upgrade cycles and would not in themselves dictate a new upgrade round.
Frampton continued, "I don't know that anyone has the answers" to what steps are required to improve business. "But the continuous upgrades are costing way more than they help. Manufacturers need to be more concerned about the operator position and health."
Kraft said, "South Dakota is still running 1989-vintage equipment and they've seen no growth, whereas we enjoyed 5 to 6 percent growth year after year."
Frampton said, "South Dakota's situation is mostly tax related; they can't afford upgrades. Good promotions mean more than game enhancements."
Arntzen said new and enhanced bonus games are meant to attract new customers whose tastes and expectations in video game entertainment are more sophisticated, as well as to offer more entertainment for current players. "If they don't like the game, then it doesn't matter," he said.
Sandy Jones said narrow profit margins mean she has had to lay off staff and the rest are under a pay freeze. Any game changes that could negatively affect profitability would be intolerable in this climate, she said.
Legislation
On the subject of legislation, Frampton voiced concerns over further industry consolidation in reference to a Gaming Advisory Council recommendation to allow vendor-to-vendor leasing, and how that might pertain to sharing of player information. He said he needed assurances that kind of data would remain highly secure and proprietary to the location owner.
Both Frampton and Steve Morris contended the education process needs to take place before policy decisions are made, and that more education needed to occur on these matters before legislation is advanced.
A motion was made and passed to quickly draft a "white paper" that takes a thorough look at these issues for distribution to, and consideration of, all industry association members.
GIA business
Earlier GIA Executive Director Neil Peterson went over an organization profit-and-loss and balance sheet, noting $5,000 from the previous evening's poker tournament would bolster income, but that payments yet remained to be made to the Montana Council On Problem Gambling in support of its compulsive gambler treatment program.
Peterson said membership renewals are "almost 100 percent" and that several new members have joined. He said almost 175 locations are represented in the membership roster.
Next, an examination of legislative primary races was conducted, with Peterson noting authorities are predicting a closely contested majority in House of Representatives with a number of close Senate races as well. He said political contributions from members need to be made earlier these days since campaigns crank up earlier due to the increased amount of absentee voting and mail-in ballots.
With that, the group selected August 4 as the date for the next board meeting to take place at the Best Bet in Helena.