BEFORE THE STATE LOTTERY AND SPORTS WAGERING COMMISSION

DEPARTMENT OF ADMINISTRATION

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 2.63.203, 2.63.401, 2.63.403, 2.63.407, 2.63.611, and 2.63.1201 pertaining to definitions, places of sale, applications and fees, commission, revocation or suspension of license, and prizes

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NOTICE OF AMENDMENT

 

TO: All Concerned Persons

 

1. On November 5, 2021, the State Lottery and Sports Wagering Commission published MAR Notice No. 2-63-621 pertaining to the proposed amendment of the above-stated rules at page 1441 of the 2021 Montana Administrative Register, Issue Number 21. On November 19, 2021, the commission published an amended notice at page 1569 of the 2021 Montana Administrative Register, Issue Number 22, that provided proper notice to the appropriate legislative interim committee without changing the substance of the proposed amendments.

 

2. All comments received concerned the proposed amendment of ARM 2.63.407. The commission has thoroughly considered the comments received. The comments received are summarized as follows with responses from the commission:

 

Comment #1: One commenter expressed support for the proposed amendment of ARM 2.63.407 to allow the State Lottery and Sports Wagering Commission to lower the commissions of sports wagering sales agents as part of a broader reset of commissions to reduce the overall cost to consumers of participating in sports wagering. The commenter mentioned complaints that the cost of sports wagering exceeded the price some consumers were willing to pay.

 

Response #1: The commission appreciates the comment and agrees it is necessary for the commission, its vendor, and sales agents to reduce their fees to decrease the cost of sports wagering for consumers and to make the sports wagering products offered by the lottery and its sales agents more competitive with sports wagering products offered by others.

 

Comment #2: A commenter recommended that all parties involved in sports wagering through the lottery receive comparable reductions in their commission percentages. The commenter further requested that the rule provide parameters for changing sales agent commissions and setting a minimum percentage or floor for such commissions.

 

Response #2: The commission agrees that all parties should reduce current sports wagering fees to decrease the cost to consumers. The commission also agrees it is appropriate to establish parameters to ensure future commission changes are fair and equitable. The commission has amended the rule accordingly and added language to reflect the commission's intent to provide notice and an opportunity for public comment prior to adjusting sales agent fees.  The lottery considered setting a minimum commission percentage but ultimately decided not to set a floor to allow the lottery more flexibility to adjust fees when necessary to address changes in the highly competitive and dynamic sports wagering market.

 

Comment #3: One commenter cautioned that the proposed amendment of ARM 2.63.407 may violate the rulemaking requirements of the Montana Administrative Procedure Act (MAPA) and the provisions of 23-7-202 and 23-7-301, MCA. The commenter suggested that rulemaking was required whenever the State Lottery and Sports Wagering Commission proposed to adjust sales agent fees and that the statutes in Title 23, chapter 7, MCA require sales agent commissions be set by rule.

 

Response #3: The commission respectfully disagrees. The commission believes it has satisfied the requirements of MAPA through this rulemaking process. Under 23-7-202(10), MCA, the commission is required to "adopt rules relating to lottery and sports wagering and sales agents' commissions." Section 23-7-301(10), MCA, allows the lottery to "adopt rules providing additional commissions to sales agents based on incremental sales." Neither statute requires the lottery to fix the amount or percentage of sales agents' commissions in rule. Instead, the statutes allow the lottery to adopt rules relating to sales agents' commissions, and in accordance with the rulemaking authority granted by the legislature, the lottery has amended ARM 2.63.407 to specify in rule how sales agents' commissions will be established and the parameters for doing so.

 

3. The department has amended the following rules as proposed: ARM 2.63.203, 2.63.401, 2.63.403, 2.63.611, and 2.63.1201.

 

4. The department has amended the following rule as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:

 

2.63.407 SALES AGENT COMMISSION (1) through (5) remain as proposed.

(6) The sales agent commission for sports wagers will be set by the State Lottery and Sports Wagering Commission. Prior to changing the sales agent base commission rate for sports wagers, the State Lottery and Sports Wagering Commission shall:

(a) provide notice of the proposed change and opportunity for public comment;

(b) consider the impact of the proposed change on sales agents, the state, and other parties involved in the operation of sports wagering; and

(c) ensure the proposed change is equitable and does not disproportionally impact or burden sales agents, the state, and other parties involved in the operation of sports wagering.

 

 

By:   /s/ Leo Prigge                                             By:   /s/ Don Harris                             

Leo Prigge, Acting Chair                                    Don Harris, Rule Reviewer

State Lottery and                                               Department of Administration

Sports Wagering Commission

 

Certified to the Secretary of State January 4, 2022.