Senate Bill No. 96

Introduced By grosfield

By Request of the Department of Justice

A Bill for an Act entitled: "An Act authorizing the department of justice to operate and maintain an automated accounting and reporting system for video gambling machines; eliminating the requirement that machine specifications must be substantially the same as the specifications required on September 30, 1989; assigning responsibility for payment of video gambling machine taxes to the owner of the machine; authorizing loans to video gambling machine owners with state participation to cover costs of converting to the automated system; providing a tax credit to machine owners who participate in the system; pledging an amount of the state's share of video gambling machine tax revenue to guarantee loans made to machine owners who convert video machines for the purpose of implementing the automated system; amending sections 23-5-116, 23-5-602, 23-5-610, and 23-5-621, MCA; and providing effective dates and a termination date."

STATEMENT OF INTENT

A statement of intent is required for this bill to provide guidelines for the adoption of rules by the department of justice to implement the automated accounting and reporting system provided for in [section 1]. The department's rules for an automated system should provide for simplified exchange of video gambling machine revenue information that the department is entitled by law to receive. The rules should require new video gambling machines or machines with software approved after the date the automated system becomes operational to be capable of being connected to the automated system. The rules should also provide for inspection of machine components and require, except when necessary to protect the integrity of the system or to prevent or detect criminal activity, prior notification to a licensee before a machine is disabled for malfunctions or violations detected by use of the automated accounting and reporting system. The rules should provide that funds may not be transferred electronically without the consent of the licensed operator.

Be it enacted by the Legislature of the State of Montana:

NEW SECTION. Section 1. Automated accounting and reporting system. (1) For the purposes of performing its duties under this chapter, minimizing regulatory costs, simplifying the reporting of video gambling machine revenue data, and preserving the integrity of video gambling machines within its jurisdiction, the department may operate and maintain an automated accounting and reporting system for video gambling machines.

(2) Except as provided in subsection (3), licensed operators and machine owners shall participate in the automated accounting and reporting system and all machines for which a permit has been issued under this part must be connected to the automated system within the time required by the department.

(3) The provisions of subsection (2) do not apply to:

(a) owners of five or fewer video gambling machines; or

(b) individual machines that, as determined by the department, are incapable of converting to the automated system.

NEW SECTION. Section 2. Loans to machine owners -- loan limit. (1) An owner of a video gambling machine who incurs actual hardware or software costs for conversion of a machine to make it compatible with the automatic accounting and reporting system authorized by [section 1] is eligible to receive a loan pursuant to 17-6-312(1) to cover the actual costs of conversion, not to exceed $300 for each machine, if the owner:

(a) is eligible to receive a tax credit under 23-5-610; and

(b) meets all other eligibility criteria required by the lending institution.

(2) The total amount of loans authorized under this section may not exceed $3.6 million.

Section 3. Section 23-5-116, MCA, is amended to read:

"23-5-116. Disclosure of information. (1) The department shall, upon request, disclose the following information from a license or permit application:

(a) the applicant's name;

(b) the address of the business where the activity under the license or permit is to be conducted;

(d) the types of permits requested by the applicant.

(2) The department shall, upon request, disclose:

(a) public criminal justice information, as defined in 44-5-103, as required by 44-5-301;

(b) all records and other information, except confidential criminal justice information, as defined in 44-5-103, that relates to:

(i) a sanction imposed under 23-5-136, for a violation of this chapter or a department rule; or

(ii) any other civil or administrative sanction or penalty imposed under a provision of this chapter or a department rule for a violation of this chapter or a department rule.

(3) In addition to the information enumerated in subsections (1) and (2), the department may disclose any other relevant information obtained in the application or tax reporting process or as a result of other department operations to:

(a) a federal, state, city, county, or tribal criminal justice agency;

(b) the department of revenue and the federal internal revenue service; and

(c) a gambling regulatory agency of another state, a local government unit of another state, a tribal government, or a foreign nation, provided that the disclosure of the information complies with the law of that jurisdiction and that the receiving entity has been approved for receipt by the Montana attorney general.

(4) In the event of delinquency or at the request of a video gambling machine permitholder, the department shall inform the permitholder of the status of a licensed machine owner's tax payments for a machine located at the permitholder's place of business."

Section 4. Section 23-5-602, MCA, is amended to read:

"23-5-602. Definitions. As used in this part, the following definitions apply:

(1) "Associated equipment" means all proprietary devices, machines, or parts used in the manufacture or maintenance of a video gambling machine, including but not limited to integrated circuit chips, printed wired assembly, printed wired boards, printing mechanisms, video display monitors, metering devices, and cabinetry.

(2) (a) "Bingo machine" means an electronic video gambling machine that, upon insertion of cash, is available to play bingo as defined by rules of the department. The machine utilizes a video display and microprocessors in which, by the skill of the player, by chance, or by both, the player may receive free games or credits that may be redeemed for cash.

(b) The term does not include a slot machine or a machine that directly dispenses coins, cash, tokens, or anything else of value.

(3) (a) "Draw poker machine" means an electronic video gambling machine that, upon insertion of cash, is available to play or simulate the play of the game of draw poker as defined by rules of the department. The machine utilizes a video display and microprocessors in which, by the skill of the player, by chance, or both, the player may receive free games or credits that may be redeemed for cash.

(b) The term does not include a slot machine or a machine that directly dispenses coins, cash, tokens, or anything else of value.

(4) "Gross income" means money put into a video gambling machine minus credits paid out in cash.

(5) (a) "Keno machine" means an electronic video gambling machine that, upon insertion of cash, is available to play keno as defined by rules of the department. The machine utilizes a video display and microprocessors in which, by the skill of the player, by chance, or both, the player may receive free games or credits that may be redeemed for cash.

(b) The term does not include a slot machine or a machine that directly dispenses coins, cash, tokens, or anything else of value.

(6) "Licensed machine owner" means a licensed operator or route operator who owns a video gambling machine for which a permit has been issued by the department.

(7) "Permitholder" means a licensed operator on whose premises is located one or more video gambling machines for which a permit has been issued by the department."

Section 5. Section 23-5-610, MCA, is amended to read:

"23-5-610. Video gambling machine gross income tax -- records -- distribution -- quarterly statement and payment. (1) A licensed ~~operator issued a permit under this part~~ machine owner shall pay to the department a video gambling machine tax of 15% of the gross income from each video gambling machine ~~licensed~~ issued a permit under this part. A licensed ~~operator~~ machine owner may deduct from the gross income amounts equal to amounts stolen from machines if the amounts stolen are not repaid by insurance or under a court order, if a law enforcement agency investigated the theft, and if the theft is the result of either unauthorized entry and physical removal of the money from the machines or of machine tampering and the amounts stolen are documented.

(2) (a) A licensed machine owner is entitled to a tax credit for each video gambling machine for which a permit has been issued under this part if:

(i) the permit was active for the machine on January 1, 1997;

(ii) the department determines that the machine is incapable, in the form in which it was approved by the department, of communicating with the automated accounting and reporting system authorized by [section 1]; and

(iii) the machine owner participates in the required automated system and incurs actual hardware or software costs for conversion of the machine to make it compatible with the automated accounting and reporting system.

(b) The amount of the tax credit allowed under subsection (2)(a) is $300 for each machine or the actual hardware and software cost necessary for conversion to the automated system, whichever is less.

(3) If a tax credit is claimed under subsection (2)(a), the credit is applied in equal amounts over 12 quarters, beginning with the quarter after the machine for which the tax credit is claimed is connected to the automated accounting and reporting system authorized by [section 1].

~~(2)~~(4) A licensed ~~operator issued a permit under this part~~ machine owner shall keep a record of the gross income from each machine issued a permit under this part in the form the department requires. The records must at all times during the business hours of the licensee be subject to inspection by the department.

~~(3)~~(5) A licensed ~~operator issued a permit under this part~~ machine owner shall, within 15 days after the end of each quarter and in the manner prescribed by the department, complete and deliver to the department a statement showing the total gross income from each video gambling machine ~~licensed to the operator~~ issued a permit under this part, together with the total amount due the state as video gambling machine gross income tax for the preceding quarter. The statement must contain other relevant information that the department requires.

~~(4)~~(6) (a) ~~The~~ Except as provided in subsection (7), the department shall, in accordance with the provisions of 15-1-501, forward one-third of the tax collected under subsection ~~(3)~~ (5) to the general fund.

(b) The department shall, in accordance with the provisions of 15-1-501, forward the remaining two-thirds of the tax collected under subsection ~~(3)~~ (5) to the treasurer of the county or the clerk, finance officer, or treasurer of the city or town in which the licensed machine is located, for deposit to the county or municipal treasury. Counties are not entitled to proceeds from taxes on income from video gambling machines located in incorporated cities and towns. The two-thirds local government portion of tax collected under subsection ~~(3)~~ (5) is statutorily appropriated to the department as provided in 17-7-502 for deposit to the county or municipal treasury.

(7) Receipts from the state's share of taxes collected under this section are pledged and dedicated to guarantee repayment of loans authorized by [section 2] in an amount sufficient to meet the prepayment obligation for the fiscal year during which the loans are made. The amount of taxes pledged by this subsection is the dollar amount of loans made under [section 2] and must be allocated to a separate account in the short-term investment pool. The board of investments is not entitled to use the proceeds from taxes collected under this section to repay a loan made under [section 2] unless the board certifies that all other commercially available means of collection on the loan have been exhausted."

Section 6. Section 23-5-610, MCA, is amended to read:

(2) (a) A licensed machine owner is entitled to a tax credit for each video gambling machine for which a permit has been issued under this part if:

(i) the permit was active for the machine on January 1, 1997;

(b) The amount of the tax credit allowed under subsection (2)(a) is $300 for each machine or the actual hardware and software cost necessary for conversion to the automated system, whichever is less.

~~(4)~~(6) (a) The department shall, in accordance with the provisions of 15-1-501, forward one-third of the tax collected under subsection ~~(3)~~ (5) to the general fund.

Section 7. Section 23-5-621, MCA, is amended to read:

"23-5-621. Video gambling machine specifications -- rules. (1) The department shall adopt rules ~~describing~~ that implement [section 1], describe the video gambling machines authorized by this part, and ~~stating~~ state the specifications for video gambling machines authorized by this part. ~~The specifications in the rules must substantially follow the specifications contained in 23-5-606 and 23-5-609 as those sections read on September 30, 1989.~~ The department shall adopt rules allowing video gambling machines to be imported into this state and used for the purposes of trade shows, exhibitions, and similar activities.

(2) The department's rules for an automated accounting and reporting system must, at a minimum:

(a) provide for confidentiality of information received through the system within the limits prescribed by 23-5-115(6) and 23-5-116;

(b) ensure the security and integrity of the automated accounting and reporting system and of the video gambling machines connected to the system;

(c) limit and prescribe the circumstances for electronic issuance of video gambling machine permits and electronic transfer of funds for payment of taxes, fees, or penalties to the department; and

(d) limit and prescribe the circumstances under which machines may be disabled for malfunctions or violations detected by use of the automated system or other violations of this chapter."

NEW SECTION. Section 8. Codification instruction. [Sections 1 and 2] are intended to be codified as an integral part of Title 23, chapter 5, part 6, and the provisions of Title 23, chapter 5, part 6, apply to [sections 1 and 2].

NEW SECTION. Section 9. Effective dates. (1) [Sections 1, 2, 7, and 8 and this section] are effective on passage and approval.

(2) [Sections 3 through 5] are effective July 1, 1997.

(3) [Section 6] is effective January 1, 2004.

NEW SECTION. Section 10. Termination. [Sections 2 and 5] terminate December 31, 2003.

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