BEFORE THE DEPARTMENT OF JUSTICE
OF THE STATE OF MONTANA
In the matter of the adoption of NEW RULE I concerning change in business entity type, and amendment of ARM 23.16.117, 23.16.125, 23.16.126, 23.16.1101, 23.16.1713, 23.16.1901, and 23.16.1908, concerning transfer of interest to a new owner; change of liquor license type; change of location for a licensed manufacturer, distributor, or route operator; card game tournaments; licensure of sports tab sponsors; video gambling machine bill acceptors; and software specifications for video keno machines
NOTICE OF PUBLIC HEARING
ON PROPOSED ADOPTION AND AMENDMENT
TO: All Concerned Persons
1. On November 17, 2011, at 9:00 a.m., the Montana Department of Justice will hold a public hearing in the conference room at the Gambling Control Division, 2550 Prospect Avenue, Helena, Montana, to consider the proposed adoption and amendment of the above-stated rules.
2. The Department of Justice will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, contact the department no later than 5:00 p.m. on November 10, 2011, to advise the department of the nature of the accommodation that you need. Please contact Rick Ask, Gambling Control Division, 2550 Prospect Avenue, P.O. Box 201424, Helena, MT 59620-1424; telephone (406) 444-1971; fax (406) 444-9157; Montana Relay Service 711; or e-mail firstname.lastname@example.org.
3. The proposed new rule provides as follows:
NEW RULE I CHANGE IN BUSINESS ENTITY TYPE (1) Except as otherwise required by ARM 23.16.116 or ARM 23.16.117, when the owner of a gambling operator license proposes a change in business entity, the owner must submit an amended gambling license application on Form 39 and obtain department approval.
(2) The department may conduct an investigation to determine whether the proposed change meets the licensure requirements in 23-5-176, MCA, and department rules.
(3) The applicant may continue to operate during the time the amended application is being processed.
AUTH: 23-5-115, MCA
IMP: 23-5-115, 23-5-118, MCA
RATIONALE AND JUSTIFICATION: In its continued efforts to streamline licensing processes, the department proposes this new rule to reduce the paperwork necessary to be filed by a licensee proposing only to change its business entity-type. This proposed new rule is reasonable and necessary because it will coordinate processes with the Department of Revenue, Liquor Control Division, to implement a new short form application (Form 39), and will allow licensees to apply for approval of a change in business entity-type using an abbreviated application form, rather than the current long form application, thus reducing unnecessary paperwork.
4. The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:
23.16.117 TRANSFER OF INTEREST TO NEW OWNER (1) through (7) remain the same.
(8) Transfers of ownership in a
gambling operator license licensed gambling operation resulting from foreclosure on a contract for deed or other instrument of transfer require an amended application submission of an application as described as follows .:
(a) remains the same.
(i) the party foreclosing has had no change in ownership since last licensed, and is the licensee's immediate predecessor;
the foreclosure takes place within five years or half the term of the contract, whichever is less; an amended license application is required up to two years following the sale; after two years, a new license application is required including all applicable fees, but the business will be allowed to operate as long as the owner meets the criteria contained in (8)(a)(i), (iii), and (v);
(iii) the foreclosing party is suitable for licensure;
(iv) (iii) all applicable permit fees are paid; and
(v) (iv) the former licensee has notified the department of the foreclosure at the time the foreclosure is executed; notification must be made within five working days of execution and an application must be received by the department within 30 working days following notification; failure to notify the department within this time frame may result in department action to cause gambling operations to cease immediately, and:
(A) the foreclosure takes place within two years following the sale, in which case an amended license application may be submitted on a Form 37, together with a personal history statement (Form 10) for each person applying for licensure, and a complete set of fingerprints (Form FD-258) obtained and certified by a local law enforcement agency, the department, or a private security company approved by the department, for each person required to complete a personal history statement, and a copy of the licensee's most recent financial statements or tax returns; or
(B) the foreclosure takes place more than two years but fewer than five years following the sale, a new license application is required, including all applicable fees, as long as the owner meets the criteria contained in (8)(a)(i), (ii), (iii), and (iv).
(b) through (9) remain the same.
AUTH: 23-5-115, MCA
IMP: 23-5-115, 23-5-118, 23-5-176, MCA
RATIONALE AND JUSTIFICATION: These proposed rule amendments are part of the department's effort to streamline licensing processes for gambling licensees. The proposed amendments are reasonable and necessary to allow a party who forecloses on a security interest within two years of a sale of a licensed gambling operation to use the department's abbreviated application form (Form 37), together with necessary personal history and financial documents, in order to apply for transfer of ownership of the business to the former owner(s). Currently, a party who forecloses in the first two years uses a standard amended application form. This amendment will allow those applicants to use the shorter Form 37, instead of the standard amended application form. This change is intended to result in reduced paperwork for the applicant and the department.
The amendments correct the mistaken reference to the transfer of ownership in a "gambling operator license." Because gambling licenses are nontransferable, the proposed amendment to the rule will change the reference to a transfer of ownership in a "licensed gambling operation," as properly stated elsewhere in the rule.
Additionally, the proposed amendments include stylistic and structural changes to the rule which are designed only to clarify the current distinction in application process depending on the timing of the foreclosure; these amendments do not signal any change to department policies or processes.
23.16.125 CHANGE OF LIQUOR LICENSE TYPE (1) Except as otherwise required by ARM 23.16.116 or ARM 23.16.117, when an owner of a gambling operator license changes the type of alcoholic beverage license, the owner must submit an amended gambling license application on Form 39 and obtain department approval.
(2) and (3) remain the same.
AUTH: 23-5-115, MCA
23-5-115, 23-5-119, MCA
RATIONALE AND JUSTIFICATION: Similar to the purpose of New Rule I of this notice, the department proposes this rule amendment to reduce the paperwork to be filed by a licensee who proposes only to change its liquor license type. This proposed new rule is reasonable and necessary because it will coordinate the application process with the Department of Revenue, Liquor Control Division's requirements, and will implement a new short form application (Form 39), that will allow the use of an abbreviated application form. This rule change is intended to result in reduced paperwork for the licensee and the department.
23.16.126 CHANGE OF LOCATION (1) remains the same.
(2) A licensed manufacturer, distributor, or route operator may report a change of location on a Form 37 amended application.
(2) and (3) remain the same but are renumbered (3) and (4).
AUTH: 23-5-115, MCA
IMP: 23-5-117, MCA
RATIONALE AND JUSTIFICATION: Similar to the purpose of New Rule I of this notice, this rule amendment is reasonable and necessary to reduce unneeded paperwork. The department recognizes that these particular licensees are not subject to the Liquor Control Division's reporting requirements, unlike most gambling licensees. This proposed rule amendment will allow manufacturers, distributors, and route operators to report a change of location to the department using an abbreviated application form. This rule change is intended to result in reduced paperwork for the licensee and the department.
23.16.1101 CARD GAME TOURNAMENTS (1) through (8) remain the same.
(9) Winners are determined
by at the conclusion of the tournament based upon points or chips accumulated during throughout the course of a game the tournament. Prizes may only be awarded at the conclusion of the tournament.
(10) through (15) remain the same.
AUTH: 23-5-115, 23-5-311, MCA
23-5-115, 23-5-311, 23-5-317, MCA
RATIONALE AND JUSTIFICATION: The proposed amendments to this rule are reasonable and necessary to clarify that individual card game tournaments must be conducted as a single tournament, with prizes awarded only at the conclusion of the tournament. The Legislature has limited licensees to 12 card game tournaments each year, and a permit must be obtained from the department for each tournament. The department discovered a licensee who paid prizes multiple times throughout a scheduled tournament, which is the same as offering a series of tournaments under a single tournament permit. These amendments are intended to clarify that prizes may be awarded and paid only at the conclusion of the tournament, and enforce the Legislature's restriction on the number of card game tournaments.
23.16.1713 PURCHASE AND SALE OF SPORTS TABS BY SPONSOR – LICENSURE (1) through (3) remain the same.
(4) Except for the owner of the licensed premises under (2) who holds a gambling operator's license, every sports tab game sponsor must possess a current Montana Associated Gambling Business License.
AUTH: 23-5-115, 23-5-178, MCA
IMP: 23-5-178, 23-5-502, 23-5-503, MCA
RATIONALE AND JUSTIFICATION: This proposed rule is reasonable and necessary to require that sports tabs be sold only by a person or entity licensed by the department. In 2011, the department discovered illegal sports tabs being sold on the premises of a licensed gambling operator. The operator claimed to have no knowledge of the illegal activity occurring on its premises, because the seller was not the operator's employee, but an independent sports tab seller (sponsor). The sports tab sponsor, who made gambling devices available to the public, was unknown to the department and had not been vetted by the department because he was not required to possess any kind of gambling license.
This proposed rule requires sports tabs be sold only by a gambling licensee, either a licensed gambling operator, or an Associated Gambling Business licensee. The 2009 Legislature enacted 23-5-178, MCA which grants the department authority to adopt rules for licensing associated gambling businesses. This proposed rule will require licensure for sports tab sponsors to enable the department to ensure that anyone who sells sports tabs meets the department's suitability requirements.
23.16.1901 GENERAL SPECIFICATIONS OF VIDEO GAMBLING MACHINES (1) through (1)(d)(v)(A) remain the same.
(B) a mechanism that accepts cash in the form of bills that do not exceed
(1)(d)(vi) through (3) remain the same.
AUTH: 23-5-115, 23-5-602, 23-5-621, MCA
23-5-115, 23-5-136, 23-5-602, 23-5-603, 23-5-606, 23-5-608, 23-5-609, 23-5-610, 23-5-621, 23-5-637, MCA
RATIONALE AND JUSTIFICATION: The Gaming Advisory Council recommended the department amend this rule to allow video gambling machines to accept the same dollar denominations as accepted by Montana Lottery kiosks. This proposed rule amendment is reasonable and necessary to implement the Gaming Advisory Council recommendation to allow bill acceptors in video gambling machines that accept bills up to a $100 denomination.
23.16.1908 SOFTWARE SPECIFICATIONS FOR VIDEO KENO MACHINES
(1) through (1)(d) remain the same.
(i) game marked spots can be used to trigger free games, games with altered play,
or bonus games, award multipliers, or additional credit that can be redeemed for cash;
(ii) game marked spots in combination with a keno win can be used to trigger bonus games, award multipliers, or award additional credit that can be redeemed for cash;
(iii) remains the same but is renumbered (ii).
(e) remains the same.
AUTH: 23-5-602, 23-5-621, MCA
IMP: 23-5-602, 23-5-621, MCA
RATIONALE AND JUSTIFICATION: The 2011 Legislature enacted SB 361, which in part amended 23-5-602, MCA, to define a "bonus game" as a prize for achieving a "defined outcome," rather than for achieving a "win." This proposed rule amendment is therefore reasonable and necessary to amend the rule establishing keno software specifications to recognize that bonus games may be awarded as the result of a defined outcome, specifically, an outcome resulting from game marked spots, as opposed to a win which results only from player marked spots.
5. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to Rick Ask, Gambling Control Division, 2550 Prospect Avenue, P.O. Box 201424, Helena, MT 59620-1424; fax (406) 444-9157; or e-mail email@example.com, and must be received no later than November 25, 2011.
6. An electronic copy of this Notice of Proposed Amendment is available through the Department of Justice's web site at http://doj.mt.gov/resources/administrativerules.asp. The department strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the Department of Justice works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.
7. The Department of Justice maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request which includes the name and mailing address of the person to receive notices and specifies that the person wishes to receive notices of rules regarding the Crime Control Division, the Central Services Division, the Forensic Sciences Division, the Gambling Control Division, the Highway Patrol Division, the Law Enforcement Academy, the Division of Criminal Investigation, the Legal Services Division, the Consumer Protection Division, the Motor Vehicle Division, the Justice Information Systems Division, or any combination thereof. Such written request may be mailed or delivered to Rick Ask, 2550 Prospect Avenue, P.O. Box 201424, Helena, MT 59620-1424; fax (406) 444-9157; or e-mail firstname.lastname@example.org, or may be made by completing a request form at any rules hearing held by the Department of Justice. A copy of the interested persons request form may be printed from the Department of Justice's web site at http://www.doj.mt.gov/resources/forms/interestedperson.pdf, and mailed to the rule reviewer.
8. Cregg Coughlin, Assistant Attorney General, Gambling Control Division, has been designated to preside over and conduct the hearing.
9. The bill sponsor contact requirements of 2-4-302, MCA, do apply and the primary bill sponsor was initially contacted on September 8, 2011 by U.S. Postal mail.
By: /s/ Steve Bullock /s/ J. Stuart Segrest
STEVE BULLOCK J. STUART SEGREST
Attorney General, Department of Justice Rule Reviewer
Certified to the Secretary of State October 17, 2011.