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Montana Gaming Supplier Regulatory Overview

13 September 2011

Regulatory Management Counselors, P.C.

Introduction

The state of Montana offers limited commercial gaming as well as tribal casino gaming. These activities are regulated by the Gambling Control Division (“Division”), a subsection of the state Department of Justice. Authorized commercial gaming includes poker, raffles, bingo, keno, and other similar games. The Division also works with local tribal gaming agencies to enforce state-tribal compact agreements governing tribal gaming in the state. As of 2011, there are 14 tribal gaming facilities in the state that offer primarily Class II gaming and Class III slot machines and poker rooms.

In addition, Montana is one of only four states authorized to offer a form of sports wagering under the Professional and Amateur Sports Protection Act of 1992. As such, sports pools, fantasy sports games, and sports tabs wagering are legal in the state. For more information regarding Montana’s sports wagering activities, please visit the Montana Lottery’s website at http://montanalottery.com/.

Montana Gaming Provisions – Manufacturer and Distributor Licensing

Montana offers limited commercial gaming opportunities to companies holding a liquor license in the state. In connection with these operator licenses, the Division issues and enforces manufacturer and distributor licenses to companies providing gaming devices to the operator. For licensing purposes, a “gambling device” is defined as “a mechanical, electromechanical, or electronic device, machines, slot machine, instrument, apparatus, contrivance, scheme, or system used or intended for use in any gambling activity.”1

Duration
Licenses last for a period of one year and expire on June 30 of each year.2

Fees
An annual $1,000 licensing fee is associated with the license.3 There is an additional $1,000 licensing fee for each initial application.

Required Documents and Information

Interested persons must complete Form 17 – Manufacturer/Distributor/Route Operator/Associated Gambling Business License Application. In order to complete the form, the following information is necessary:

1. Nature of business;
2. Basic identification information;
3. Ownership structure;
4. Identity of each management employee;
5. Identity of all partners, officers, directors, and shareholders holding 5% or more ownership interest, and those having a management interest in the gaming activity or an option to purchase the business;
6. Identity of key employees and their family members holding a financial interest in any other gambling enterprise or anticipated licensee;
7. List of gambling licenses held or applied for in other jurisdictions;
8. List of all licensing actions taken against applicant or its key employees;
9. List of all bank accounts;
10. List of all outstanding loans and financial obligations;
11. Financial details regarding the applicant’s funding for the business;
12. Lease and contract details;
13. List of individuals responsible for record keeping; and
14. List of civil, criminal, and regulatory actions.4

In addition, the following documents must be included with the completed application:

1. Fingerprint card (with separate processing fee);
2. List of shareholders/partners/members;
3. List of officers and directors;
4. Organizational documents (Articles of Incorporation, Partnership Agreement, etc.);
5. Corporate governance documents (Bylaws, Partnership Agreement, etc.);
6. Copy of stock certificates;
7. Copy of authority to conduct business in the state;
8. Copy of assumed/trade name approval for use from state;
9. Copy of FEIN verification from IRS;
10. Copy of management agreements;
11. Most recent tax returns;
12. Most recent financial statements;
13. Lease agreements;
14. Copy of bank signature card for business bank account;
15. Copy of all purchase or transfer documents; and
16. List of all gambling devices sold.5

Montana – Key Persons Requirements

Key individuals associated with a manufacturer or distributor license applicant must complete Form 10 – Personal/Criminal History Statement. These individuals include owners, shareholders holding over 5% of a publicly traded applicant, partners, managers involved with the gaming activity, officers, directors, and those having an option to purchase the applicant’s business.

Fees

While there is no independent fee associated with an individual, the business with which the applicant is associated is responsible for all reasonable investigation costs associated with the review of the completed corporate and individual applications.

Required Documents and Information

Those individuals identified above must complete Form 10 – Personal/Criminal History Statement. In order to complete the form, the following information is necessary:

1. Basic identification information;
2. Citizenship information;
3. Driver’s license number and state of issue;
4. Professional and business license history;
5. List of criminal history;
6. List of civil litigation history;
7. Employment history, past 10 years; and
8. Residence history, past 10 years.6

In addition, a fingerprint card with a separate processing fee must be submitted for each key individual listed above.

Tribal Gaming – Supplier License Provisions

Although several tribes operate gaming facilities in the state, tribal-state compacts do not establish independent licensing requirements or procedures for suppliers of gambling equipment. However, compacts typically require that all equipment meet federal NIGC and Montana state technical standards.

In addition, some compacts require that manufacturers and distributors of gaming equipment be licensed through the state in addition to any tribal licensing requirements. Although tribes may adopt the state licensing process, they may also establish independent licensing requirements in addition to or instead of the state process. Therefore, it is important to work with the local tribal gaming commission in assessing the licensing requirements for suppliers to any particular tribal gaming establishment.

Gaming Technology Standards

The state must review and approve all gaming devices prior to their use within the state.7 Manufacturers of gaming devices must pay the anticipated costs of the review and evaluation process.8 The Division maintains detailed regulations regarding the specific hardware and software requirements for all gaming devices. These regulations can be found under Subchapter 19 of the Division’s regulations, Sections 23-16-1901 to 23-19-1946.9

In addition to tribal gaming commission requirements, electronic games of chance and other similar games must meet National Indian Gaming Commission standards, including the requirement that equipment be examined and approved by an independent testing laboratory in accordance with individual tribal ordinances.10 Tribal-state compacts may also contain additional technical requirements related to gaming machines.
1Mont. Code Ann. § 23-5-112(13).
2Mont. Code Ann. § 23-5-128; see also Mont. Admin. Register § 23-16-1916; Mont. Admin. Register § 23-16-2001.
3Mont. Code Ann. § 23-5-128; see also Mont. Admin. Register § 23-16-1916; Mont. Admin. Register § 23-16-2001.
4Form 17 – Manufacturer/Distributor/Route Operator/ Associated Gambling Business License Application.
5Form 17 – Manufacturer/Distributor/Route Operator/ Associated Gambling Business License Application.
6Form 10 – Personal/Criminal History Statement.
7Mont. Stat. Ann. § 23-5-631.
8Mont. Stat. Ann. § 23-5-631.
9Mont. Admin. Register § 23-19-1901 et seq.
10See 25 CFR 542, 547.

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