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Montana Administrative Register Notice 23-16-236 No. 10   05/22/2014    
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BEFORE THE DEPARTMENT OF JUSTICE

OF THE STATE OF MONTANA

 

In the matter of the adoption of NEW RULE I concerning electronic submission of documents and electronic signatures, and the amendment of ARM 23.16.101, 23.16.508, 23.16.1102, 23.16.1103, 23.16.1201, 23.16.1202, 23.16.1225, 23.16.1705, 23.16.1929, 23.16.3501 and 23.16.3801 pertaining to definitions, records, and devices, changes in managers, officers, and directors, charitable card game tournaments, types of card games authorized, house players, authorized sports pools, repairing machines – approval, department approval of promotional games of chance, devices, or enterprises, and review of carnival games

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION AND AMENDMENT

 

 

 

TO: All Concerned Persons

 

1. On June 12, 2014, at 10:00 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 Department of Justice no later than 5:00 p.m. on June 5, 2014, to advise us of the nature of the accommodation that you need. Please contact Rick Ask, Administrator, Gambling Control Division, 2550 Prospect Avenue, P.O. Box 201424, Helena, Montana, 59620-1424; telephone (406) 444-1971; fax (406) 444-9157; Montana Relay Service 711; or e-mail rask@mt.gov.

 

3. The proposed new rule provides as follows:

 

NEW RULE I   ELECTRONIC SUBMISSION OF DOCUMENTS AND ELECTRONIC SIGNATURES (1) The department may accept electronic submission of certain documents through the licensing portal.

(2) An electronically submitted document is only complete if:

(a) all requested information is provided; and

(b) the submitter is the applicant, licensee, or an authorized representative of the applicant or licensee.

(3) By electronically submitting a document, the submitter declares, under the penalty, that:

(a)  the information submitted is true, correct, and complete; and

(b) the submitter is the applicant, licensee, or an authorized representative of the applicant or licensee.

(4) An electronically submitted document is subject to the same deadlines as a document submitted in paper form.

 

            AUTH:            23-5-115, 23-5-621, MCA

            IMP:                23-5-115, 23-5-118, 23-5-128, 23-5-129, 23-5-177, 23-5-178, 23-5-308, 23-5-324, 23-5-407, 23-5-409, 23-5-513, 23-5-621, 23-5-625, 23-5-705, MCA

 

            RATIONALE AND JUSTIFICATION: The department is proposing to adopt New Rule I to recognize that it will accept electronic signatures on certain documents submitted for gambling licensure and related filings. The Department of Revenue's Liquor Control Division is also in the process of creating an online program that will enable individuals to apply for an alcoholic beverage license and manage those licenses electronically through the Taxpayer Access Point program. This proposed rule authorizes electronic submission of documents and promotes continuity between both agencies regarding document submissions.

 

4. The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

            23.16.101 DEFINITIONS As used throughout this subchapter, the following definitions apply:

            (1) through (7)(a) remain the same.

            (b) is identified as a regulated lender in 31-1-111, MCA, which, in addition to lenders identified in (6)(7)(a), includes bank holding companies, consumer loan licensees owned by bank holding companies, mutual or stock insurance companies, and federal and state agencies authorized to lend money.

            (8) through (10) remain the same.

            (11) "Manager" means a person employed or authorized by the licensee to supervise personnel and or business functions of the licensed operation.

            (12) through (20) remain the same.

 

            AUTH:            23-5-115, 23-5-621, MCA

            IMP:                23-5-112, 23-5-115, 23-5-118, 23-5-176, 23-5-629, 23-5-637, MCA

 

            RATIONALE AND JUSTIFICATION: This amendment is necessary to correct internal references to the rule subsections. The amendment also clarifies that a management employee is one who supervises personnel, the licensee's business functions, or both. 

 

23.16.508 CHANGES IN MANAGERS, OFFICERS, AND DIRECTORS

(1) remains the same.

(2) New management employees, officers, and directors shall submit a personal history statement and a complete set of fingerprints (Forms 10 and FD-258). A written management agreement must also be submitted for each new management employee.

(3) remains the same. 

 

AUTH:            23-5-112, 23-5-115, 23-5-176, MCA

            IMP:                16-4-414, 23-5-176, 23-5-177, MCA

 

            RATIONALE AND JUSTIFICATION: This amendment is necessary to clarify that the department requires a written management agreement when a licensee seeks approval for each new management employee. The term "management agreement" is defined under department rules, but the term is not currently utilized in substantive rules. In practice, a written management agreement has been required in part, because the Department of Revenue's liquor control rules require a written management agreement. Additionally, a written management agreement allows the department to determine whether the scope of authority granted to the management employee improperly constitutes a transfer of ownership interest. 

 

23.16.1102 LARGE-STAKES CARD GAME TOURNAMENTS (1) through (7)(c) remain the same.

 (d) For each charitable tournament, the permit holder conducting the tournament shall maintain for a period of 12 months from the date of the tournament, and provide to the department upon request:

            (i) a record of the total amount of entry and reentry fees collected in the charitable tournament;

            (ii) a description of how the tournament was publicly identified as a charitable tournament;

            (iii) the name and address of each charitable, educational, or recreational nonprofit organization that received a distribution of the charitable proceeds; and

(iv) the amount of money distributed to each charitable, educational, or recreational nonprofit organization.  

(8) through (8)(c) remain the same.

 

AUTH:            23-5-115, MCA

            IMP:                23-5-317, MCA

 

            23.16.1103 SMALL-STAKES CARD GAME TOURNAMENTS (1) through (3) remain the same.

(4) A small-stakes card game tournament permit holder may conduct a small-stakes card game tournament for charitable purposes.

(5) For each charitable tournament, the permit holder conducting the tournament shall maintain for a period of 12 months from the date of the tournament, and provide to the department upon request:

            (a) a record of the total amount of entry and reentry fees collected in the charitable tournament;

            (b) a description of how the tournament was publicly identified as a charitable tournament;

            (c) the name and address of each charitable, educational, or recreational nonprofit organization that received a distribution of the charitable proceeds; and

(d) the amount of money distributed to each charitable, educational, or recreational nonprofit organization.  

 

AUTH:            23-5-115, MCA

            IMP:                23-5-317, MCA

 

            RATIONALE AND JUSTIFICATION: The 2013 amendments to 23-5-317, MCA, authorize and govern charitable tournaments. The law requires that at least 50 percent of the total amount of the entrance fees for any large-stakes or small-stakes tournament that is represented as a charitable tournament must be paid to a charitable, educational, or recreational nonprofit organization. These amendments are necessary to implement a record-keeping requirement, similar to that required for raffles, to ensure that permit-holders who conduct charitable tournaments disburse the required minimum amount of proceeds, and that the entity that received the proceeds is a qualified organization.

 

23.16.1201  DEFINITIONS  As used throughout this subchapter, the following definitions apply:

            (1) remains the same.

            (2)  "Authority reference" means the Official Montana Poker Rulebook (1990 Edition) (version 2014) and Scarne's Encyclopedia of Card Games, copyright 1983, by John Scarne, pages 18 through 276.  These books will be used by the department as the authority on how to play authorized card games.  The authority references are adopted and incorporated by reference; copies of Scarne's Encyclopedia of Card Games may be obtained from local bookstores and copies of the Official Montana Poker Rulebook may be obtained from the Gambling Control Division web site www.doj.mt.gov/gaming. The sections of the books cited as authority will not apply where there is a conflict with state law or department rule.

            (3) through (19) remain the same.

 

            AUTH:            23-5-115, MCA

            IMP:                23-5-115, 23-5-311, MCA

 

            23.16.1202  TYPES OF CARD GAMES AUTHORIZED  (1) remains the same.

            (a)  the poker games of Texas Hold'em, Draw Poker, Omaha, Seven Card Stud, and their variations as well as general poker rules and practices, according to the Official Montana Poker Rulebook (1990 edition) (version 2014); and

            (b) through (6) remain the same.

 

            AUTH:            23-5-115, MCA

            IMP:                23-5-311, MCA

 

            RATIONALE AND JUSTIFICATION: The department has revised its official poker rulebook. The revised poker rulebook can be viewed on the department’s web site at https://doj.mt.gov/gaming/.

 

            23.16.1225 HOUSE PLAYERS (1) remains the same.

(2) House players may be used by the The operator or card room contractor who is conducting a live card game may use house players only for the purpose of starting and/or maintaining sufficient number of players in the card game. 

(3) The operator or card room contractor may:

(a) provide chips owned by the house to a house player for use in a live card game conducted by the operator or card room contractor;

(b) require the house player to return to the operator or card room contractor all house chips that remain with the house player when the house player exits the game;

(c) make the house player an employee who is paid a wage; and

(d) allow a house player to keep all of the winnings or a portion of the winnings derived from the use of house chips in a game conducted by the operator or card room contractor.

(4) The operator or card room contractor may not ask or require the house player to return any house chips, or the value of any house chips, that the house player lost in a game.

(5) No house players may be used by the operator or card room contractor in a card game tournament.

 

AUTH:            23-5-115, 23-5-325 MCA

            IMP:                23-5-311, 23-5-324, 23-5-325, MCA

 

            RATIONALE AND JUSTIFICATION: This amendment is necessary to clarify the financial arrangements a gambling operator or card room contractor may have with a house player, and it introduces a minor change in agency interpretation regarding who may own the money or chips provided to a house player. 

A gambling operator or a card room contractor who conducts a live card game (the house) may provide money or chips to a house player to use in its live card game. The department has previously interpreted the rules to mean, in part, that any cash or chips advanced to a house player belonged to the house player, and the house player kept any chips possessed at the time the house player exited the game. Under new (3), the house may declare, before providing money or chips to a house player, that the money or chips remain the house's property until the house player exits the game. New (4) clarifies that, while house money or house chips advanced to a house player may belong to the house, if the house player loses house money in a game, the house incurs the loss. Further, the house may not seek to recover the lost house money or chips, and the loss does not become a debt of the house player. 

The following examples illustrate the rule:

Example One: Acme Card Room needs another player in order to have enough players to start a live card game, so it asks Joe Smith to be a house player. Acme provides Joe with $40 in house chips (the chips belonging to the house). After playing for an hour, another participant wants to join the game, so Joe cashes out with $25 remaining in chips. Under their arrangement, all $25 in chips belong to the house. The house may not ask Joe to reimburse it for the $15 in chips that were lost in the game. 

Example Two: Acme Card Room uses Joe Smith as a house player under an agreement that the house will provide Joe with $40 in house chips (the chips belong to the house), and Joe and the house will evenly split any money or chips Joe wins in the game. Joe cashes out of the game with $60 in chips. Acme keeps $50 (the $40 initially advanced to Joe, plus $10 as half of Joe's winnings above the house chip buy-in), and Joe walks away with $10. 

Example Three: Acme Card Room provides house player Joe Smith $40 in house chips to help start a game, and agrees Joe can keep any winnings. After several hands, Joe exits the game having lost all of the house chips. Two hours later, a few of the regular players leave the game, so Acme again asks Joe to be a house player in order to keep the game going. The house provides Joe with an additional $40 in house chips, again with the understanding that Joe can keep any winnings. Joe cashes out of the game that night with $100 in chips. Acme is only entitled to its $40 in chips provided in that game. Acme cannot require Joe to reimburse it for any money he lost in a prior game.

 

23.16.1705 AUTHORIZED SPORTS POOLS (1) through (3)(c) remain the same.

(d) A "selected point sports pool" in which the winner is the participant whose randomly assigned competitor is the first to attain a final score that matches a predetermined number (e.g., 28, 39). If in a given week none of the competitors' scores match the predetermined number, the prize is carried over to the next and subsequent weeks until a match occurs. However, the pool must be designed to ensure that a prize does not exceed the value of $2,500. The number of participants in a selected point sports pool is limited to the number of competitors in an established league. Competitors are randomly assigned to the participants and may be assigned for a single week or the duration of the pool.

(i) The number of participants in a selected point sports pool is limited to the number of competitors in an established league. Competitors are randomly assigned to the participants and may be assigned for a single week or the duration of the pool.

(ii) If declared by publicly posted rules before the sale of any chances, the pool may be designed to carry over the prize from week to week until a competitor's score matches the preselected score, or until the pool's predetermined conclusion if none of the competitor's scores match the preselected score. Subject to the limits provided in (d)(iii), participants may be required to increase their wager each week until a match occurs, or until the pool's predetermined conclusion if none of the competitor's scores match the preselected score. A competitor assigned to a participant who fails to pay the increased wager or otherwise drops out of the pool at any time before a winner is declared must be deleted from the list of competitors in the league.

(iii) The pool must be designed so that the total of each participant's wager(s) does not exceed $25, the total value of all prizes equals the total of all wagers, and the total value of all prizes awarded does not exceed $2,500.

(iv) If no competitor obtains the preselected score before the predetermined conclusion to the pool, the prize(s) must be awarded to the participant(s) whose assigned competitor has achieved a score closest to the preselected score, or an alternate score, as may be established by publicly posted rules before the sale of any chances.

(e) through (g) remain the same.

 

            AUTH:            23-5-115, 23-5-512, MCA

            IMP:                23-5-502, 23-5-503, 23-5-512, MCA

 

            RATIONALE AND JUSTIFICATION: These amendments are necessary to clarify selected point sports pools. While the previous rule allowed pools to extend beyond one week, these amendments authorize additional wagers for each additional event period, so long as the wager and prize limitations are not exceeded. The amendments clarify that, even with the authorization of additional wagers, the total amount of a participant's wagers may not exceed $25, the maximum sports pool wager authorized by the law. 

            These amendments also clarify that sports pools must have a predetermined end, either by matching the preselected score, or by reaching an end date if the score is not matched. If the score is not matched before the predetermined end to the pool, the participant or participants whose competitor most closely matched the score, or matched an alternate score, as established by pool rules, must be declared the winner. For example, the pool rules may establish that, if none of the competitors matched the preselected score, the participant or participants whose team most closely matched, but did not exceed, the selected point score by the end of the season is declared the winner. In the same way, the pool rules may establish that, if none of the competitors matched the preselected score by the end of the season, the participant or participants whose team matched a previously selected alternate score shall be declared the winner. 

            Finally, the amendments establish that, if a participant drops out of a pool in a game that requires additional wagers, then the participant's competitor must be struck from the pool. 

 

            23.16.1929 REPAIRING MACHINES - APPROVAL (1) through (4) remain the same.

            (5) To assure ensure the integrity, security, and monitoring of machines in service, a permitted machine may not be substituted or replaced until the replacement machine has been issued a permit by the department.

 

            AUTH:            23-5-115, 23-5-621, MCA

            IMP:                23-5-603, 23-5-616, 23-5-621, 23-5-631, MCA

 

            RATIONALE AND JUSTIFICATION: This amendment merely corrects a grammatical error. No substantive changes are intended by this rule amendment.  

 

23.16.3501 DEPARTMENT APPROVAL OF PROMOTIONAL GAMES OF CHANCE, DEVICES OR ENTERPRISES (1) through (7) remain the same.

(8) No department approval is required for ticket or card devices described under 23-5-112(16)(19)(a), MCA, and promotional wheel devices as defined herein, so long as such devices are bona fide promotional games of chance; and the ticket or card devices described under 23-5-112(16)(19)(a), MCA, comply with (7)(f) of this rule; and promotional wheel devices comply with (7)(e), (f), and (g) of this rule. For the purposes of this rule, a promotional wheel device is defined as one or more vertically constructed circular frames or disks, displaying various symbols, such as numbers or pre-identified sectors, that is freely spun for the random selection of a symbol as determined by a permanently stationary mark for selecting the particular symbol when the wheel stops spinning.

(9) through (12) remain the same.

 

            AUTH:            23-5-115, MCA

            IMP:                23-5-112, 23-5-115, 23-5-152, MCA

 

            RATIONALE AND JUSTIFICATION: These amendments are necessary to correct internal references to statute subsections.  No substantive changes are intended by these rule amendments.  

 

            23.16.3801 REVIEW OF CARNIVAL GAMES   (1) Carnival games that are intended to be operated at a fair or carnival may be submitted to the department for analysis with the purpose of determining if the games meet the requirements of 23-6-102, MCA. No games shall be authorized unless specifically approved by the department following a review of the game and how it is played. The department may authorize a game not listed in 23-6-104, MCA, if, after careful review, it can be demonstrated that winning is not contingent upon lot or chance and is based upon the skill of the player as defined under 23-6-104(2)(h)(xiv), MCA. No device, machine, instrument, apparatus, contrivance, scheme, or system which meets the definition of gambling as in 23-5-112(11), MCA, shall be approved.

            (2) through (5) remain the same.

 

            AUTH:            23-5-115, MCA

            IMP:                23-6-104, MCA

 

            RATIONALE AND JUSTIFICATION: This amendment is necessary to delete internal references to a statute subsection which changed due to prior amendments.  No substantive change is intended by this rule amendment.  

 

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, Administrator, Gambling Control Division, 2550 Prospect Avenue, P.O. Box 201424, Helena, Montana, 59620-1424; telephone (406) 444-1971; fax (406) 444-9157; or e-mail rask@mt.gov, and must be received no later than 5:00 p.m., June 19, 2014.

 

6. The department 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 that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the contact person in 5 above or may be made by completing a request form at any rules hearing held by the department.

 

7. An electronic copy of this proposal notice is available through the department's web site at https://doj.mt.gov/agooffice/administrative-rules. 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 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.

 

8. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

9. With regard to the requirements of 2-4-111, MCA, the department has determined that the adoption and amendment of these rules will not significantly and directly impact small businesses.

 

/s/ Tim Fox                                                                /s/ Matthew T. Cochenour

TIM FOX                                                                    MATTHEW T. COCHENOUR

Attorney General, Department of Justice               Rule Reviewer

 

Certified to the Secretary of State May 12, 2014.

 

 

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