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Montana Casino and Card Room Gaming

Montana offers commercial gaming in the form of video gaming machines (VGMs), live keno, bingo and non-banking card games. Montana casinos are allowed a maximum of 20 machine games in one facility, live poker, raffle tickets and pull-tabs. Most are located in bars and small, local venues. Montana casinos do not offer slot machines, blackjack, roulette or craps. To be licensed for commercial gaming, by state law, a business must first hold a liquor license issued by the Department of Revenue. Initially, the regulation of most forms of gambling in Montana was under the control of local governments, which stemmed from passage of the Hickey Act in 1937. The Act legalized some games in specified locations, if licensed by a county. While there were municipalities that doggedly enforced gambling laws within their jurisdictions, there were others that took a more lenient approach. This decentralization resulted in uneven administration of the gambling laws throughout the state.

Video gaming was first legalized in 1976 after a Montana Supreme Court ruled that video keno was a form of live bingo, and therefore legal. But in 1985, the Legislature passed the broader Video Poker Machine Act, which authorized five poker VGMs per liquor license and unlimited keno VGMs. The law established license fees for VGMs in lieu of a tax. The following year, 1986, almost 3,000 video poker licenses were issued by the GCD. In 1987, the Legislature passed a 15% tax on VGM machine income, effective July 1988. The tax was collected by the state Department of Commerce, at the time, with one-third of the proceeds given to the state general fund and the remaining two-thirds to local governments.

During the 1991 General Assembly, legislators raised the restriction on the number of poker VGMs from five to 20 per liquor license, but rejected a bill allowing blackjack.

In 1995, the Legislature passed HB527, which increased the maximum payout on video poker machines from $100 to $800. However, attempts by legislators to raise the machine tax on gross machine income failed in committee.

In 1989, to correct this untenable situation, the Legislature passed SB431, which moved all gambling regulation under the control of the state Department of Justice (DOJ), thus centralizing and consolidating all gambling regulation. The Gambling Control Division (GCD) within the DOJ was created at this time as the regulatory body for the administration, licensure and enforcement of all gaming laws, except those for the Montana Lottery and pari-mutuel wagering. The GCD also collects gambling revenue for the state and local governments. Since Montana law requires that establishments hold a liquor license before having a gambling license, the GCD also serves as liaison for businesses wishing to obtain liquor licenses.

The Gaming Advisory Council (GAC), also created in 1989, serves as an advisory board on gaming policy including amendments to the gambling statutes and additional or modified departmental rules clarification of existing rules operation of the Gambling Control Division.

The most significant source of gambling revenue is generated by the VGMs. Licensed VGM operators are required to pay a 15% tax on gross machine income from all line game, keno and poker VGMs. Gross machine income is the total machine income less cash payouts. By law, this tax must be transferred to the state general fund.

Legislation (HB643, Clean Indoor Air Act) was passed to prohibit smoking in many public locations, but bars with gaming were specifically exempted from this ban. The law went into effect 1 October 2005. Bars, casinos and restaurants were given until 1 October 2009 to prepare for the smoking ban after HB661 was passed in 2007.

A court ruling in May 2005 opened the way for out-of-state investors to participate in the Montana gaming market. The ruling nullified Montana laws requiring that gambling licenses and liquor licenses be owned by establishments within the state on the grounds that those laws violated federal constitutional protection of interstate commerce.

1 October 2009 was the deadline by which bars, casinos and restaurants were required to abide by the Clean Indoor Air Act passed in 2005. Casino and bar owners were unsuccessful in their efforts to continue their exemption from the smoking ban, claiming that the ban would negatively affect their profits. Proving them right, VGM revenue declined in 2010 by more than 15% compared to 2009 and continued to trend downward until 2012, the year line VGMs were approved by lawmakers.

During the 2011 legislative session, SB361 was passed, which authorized the addition of video line games to keno and poker on VGMs. It is believed that the new games, which unlike poker and keno require no skill, were allowed because of the fall in gambling tax revenue in the prior two years. The GCD was given until 1 January 2012 to have licensing, regulations and procedures in place for the new game. The GCD also needed to test and approve the games before any VGMs could be available for operation. The bill also increased the maximum prize payout for bingo to $800, and a rule was adopted to increase the bill acceptor maximum in VGMs to allow for $50 and $100 denomination bills.

In February 2013, Mountain Magic Pubs LLC, owned by Dan Fillinger, who wanted to open a Mountain Magic Casino in a Florence convenience store, withdrew its application for a liquor and beer license after receiving over 400 protest letters from local residents. Lucky Lil's attempted to open a casino in the same space in 2000 and was denied a liquor and wine license from the DOR Liquor Control Board after more than 800 residents testified against the casino. Residents argued that the demand for alcohol and gambling in the area was already met by three bar-casinos and several Town Pump casinos located within less than 10 miles of Florence.

In March 2013, Gov. Steve Bullock signed into law legislation that increased the pot limits for live poker games from $300 to $800. The new law also provided for a $20 boost in annual permit fees for each VGM to narrow the gap on a projected shortfall at the GCD. The fee increased from $220 to $240 a year.

Montana Casino and Card Room Gaming Properties

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