BEFORE THE GAMBLING CONTROL DIVISION
OF THE DEPARTMENT OF JUSTICE
OF THE STATE OF MONTANA
In the Matter of the Application of Rewards, LLC, for a Declaratory Ruling on the Applicability of 23-5-621(1)(e)(i), MCA and ARM 23.16.2115
CASE NO. 1-273-424-896
Rewards, LLC, filed this administrative declaratory judgment action on December 19, 2019.
Rewards, LLC, filed this administrative declaratory judgment action on December 19, 2019. Shortly afterward, on January 3, 2020, the Gambling Control Division (GCD) filed a separate proposed department action initiating discipline based on similar facts. In the Matter of the Proposed Department Action Against Rewards, LLC, d/b/a Platinum Plus Player Rewards System, Dept. of Justice, Gambling Control Div'n Case No. 0-034-546-688. Since the matters contained common factual and legal issues, the Hearing Examiner on January 26, 2020, consolidated the two cases.
The matters proceeded together until May 2020 when the parties reached a settlement on the disciplinary portion of the consolidated cases and agreed to proceed separately on Rewards' declaratory judgment action. In that settlement, the parties agreed to resolve the remaining declaratory judgment action through briefing on two legal issues based on stipulated facts.
At issue was the legality of Rewards, LLC's, video gambling machine player tracking systems called PlatinumPlus Method 2 and Method 3. The Gambling Code and companion administrative rules restrict player tracking systems. The statute prohibits use of "data made available as a result of an approved automated accounting and reporting system . . . for player tracking purposes." Mont. Code Ann. § 23-5-621(1)(e); Mont. Admin. R. 23.16.2115. The parties briefed whether Method 2 or Method 3, as specifically described, would violate either the statute or the rule promulgated to implement that statute.
On November 5, 2020, Hearing Examiner Chris D. Tweeten issued his Proposed Declaratory Ruling. That decision adopted the parties' Statement of Agreed Facts as the Hearing Examiner's findings of fact. The decision included a reasoned memorandum of law supported by authority, which applied the facts to two issues of law the Hearing Examiner captioned this way:
First, do Methods 2 and 3 violate any statute or administrative rule? Second, if Methods 2 or 3 violate an administrative rule, does the rule violate the Montana Administrative Procedure Act because it either exceeds or deviates from the authority provided in statute?
After completing that legal analysis, the Hearing Examiner reached expressed conclusions of law. From those findings of fact, legal memorandum, and conclusions of law, the Hearing Examiner proffered a proposed declaratory ruling holding, "that Methods 2 and 3 of the PlatinumPlus system violate Admin. R. Mont. 23.16.2115(1)." The Hearing Examiner served a copy of his proposed decision on both parties on November 5, 2020.
On November 12, 2020, the undersigned served notice on the parties of their right under the Montana Administrative Procedure Act to file exceptions to the Hearing Examiner's proposed decision. That notice afforded the parties 20 days in which to file written exceptions with the Attorney General and to request oral argument. The time in which to submit exceptions expired on December 2, 2020, with neither party filing exceptions.
MAPA, Mont. Code Ann. § 2-4-501, requires all agencies to promulgate rules for dispositions of petitions for declaratory rulings. The Attorney General's model rules on declaratory rulings appear at Mont. Admin. R. 1.3.226, et seq. This matter has proceeded regularly under MAPA and the model rules.
As required by the Montana Administrative Procedure Act, Mont. Code Ann. § 2-4-623, the Department of Justice, Gambling Control Division, now enters this Final Agency Action.
The Hearing Examiner's Proposed Declaratory Ruling, including findings of fact, memorandum, conclusions of law, and declaratory ruling, are adopted and incorporated in their entirety. The complete record, as defined in Mont. Code Ann. § 2-4-614, including the parties' Statement of Agreed Facts and the Hearing Examiner's Proposed Declaratory Ruling, is available for public inspection as required by Mont. Code Ann. § 2-4-623. Interested persons may contact the Gambling Control Division located at 2550 Prospect Avenue, Helena, Montana, (406) 444-1971.
Based on the foregoing, the Department of Justice, Gambling Control Division, enters the following:
CONCLUSIONS OF LAW
This is an appropriate case for issuance of a declaratory ruling.
Mont. Code Ann. 23-5-621(1)(e)(i) requires the Department of Justice to adopt a rule "specify[ing] that the data made available as a result of an approved automated and reporting system ("AARS") may not be used by licensees for player tracking purposes."
To comply with that requirement, the Department of Justice adopted Admin. R. Mont. 23.16.2115, which states: "Data acquired by an automated accounting and reporting system may not be communicated or transferred to any player tracking system by any electronic communications, media, or storage device."
The difference between "data acquired by" an AARS and "data made available as a result of an AARS" is immaterial. Gaming machines collect twelve different categories of data for purposes of participation in an AARS. Admin. R. Mont. 23.16.2105(2)(a). Rewards intends to capture this data and divert it to the PlatinumPlus player tracking system. This data is "acquired" pursuant to an AARS, and it is "made available" because of an AARS. Rewards concedes that PlatinumPlus seeks to make use of the same data that the AARS uses.
5. Rewards seeks a ruling on two methods of operating its PlatinumPlus system. Both depend on the electronic transmission of AARS data to PlatinumPlus. Both therefore violate Admin. R. Mont. 23.16.2115(1).
6. Mont. Code Ann. § 23-5-621(1)(e)(1) flatly prohibits the use of AARS data for player tracking. Admin. R. Mont. 23.16.2115(1) covers a different, smaller scope of conduct, facially prohibiting only electronic transmission of such data.
7. Rewards' proposals violate the clear language of the governing rule. Rewards therefore lacks standing to complain that the rule is underinclusive when compared to the scope of the conduct the statute directs the Department of Justice to prohibit.
8. A rule is invalid if it creates new requirements not envisioned by the authorizing statute, or if it adds a requirement that is contrary to statutory language. Clark Fork Coalition v. Tubbs, 2016 MT 229, ¶ 25, 384 Mont. 503, 511, 380 P.3d 771, 779. Admin. R. Mont. 23.16.2115(1) does not violate these standards. The conduct prohibited by the rule is subsumed within the conduct described in the authorizing statute.
Methods 2 and 3 of the PlatinumPlus system violate Admin. R. Mont. 23.16.2115(1).
As required by Mont. Code Ann. § 2-4-501, a copy of this declaratory ruling shall be filed with the Montana Secretary of State for publication in the Montana Administrative Register.
Dated this 10th day of December 2020.
/s/ Angela Nunn, Administrator
Gambling Control Division
Montana Department of Justice
CERTIFICATE OF SERVICE
I hereby certify that I caused to be mailed a true and accurate copy of the foregoing to the following:
Charles E. Hansberry, Esq.
HANSBERRY & JOURDONNAIS, PLLC
Michael L. Fanning
Montana Department of Justice
Gambling Control Division
Montana Secretary of State
Att'n Tom Kreissler, Editor-Administrative Rules Services
Date: 12/10/2020 /s/ Jean Saye