Lottery on cusp of offering sports betting

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In this March 15, 2018 photo, people watch coverage of the first round of the NCAA college basketball tournament at the Westgate Superbook sports book in Las Vegas. (AP Photo/John Locher)

Montanans will be able to bet on sports in designated locations by the end of the year, if the Montana Lottery Commission approves the final rules at its Nov. 21 meeting.

The state legalized sports wagering earlier this year through House Bill 725, which established that the Montana State Lottery would oversee legalized sports betting in the state. Gov. Steve Bullock signed the bill into law on May 3.

But as the rules stand, Montanans will not be able to legally wager from home. Online gambling remains illegal in Montana, so Montanans will only be able to place bets at designated locations. These locations will need both a gambling operators license and an all-beverage liquor license.

“We’re anticipating taverns and casinos and sports bars” will offer sports betting, according to Jennifer McKee, communications manager for Montana Lottery.

McKee anticipates that bettors will make wagers at electronic kiosks or through a phone application in a secure location.

“It is very different than the Vegas experience,” McKee said. “It won’t be a destination activity … you’re in a sports bar with your friends, you’re not traveling to do it.”

But some elements of the plan proved contentious.

Sen. Dee Brown, R-Hungry Horse, did not vote for either the House or Senate bills legalizing sports wagering, and is skeptical of the Lottery’s implementation of sports betting in Montana.

“We know this thing is going to implode,” she said.

Brown does not believe a full liquor license should be a prerequisite for getting into sports wagering, as the regulation shuts out potential entrepreneurs. She said the Montana Tavern Association and its lead advocate, John Iverson, influenced the Lottery into incorporating this requirement.

They “left out every entrepreneur who wanted to make a business out of this,” Brown said.

The Montana State Administration and the Veterans Affairs Interim Committee, which conducts administrative rule review, program monitoring and bill drafting authorization, discussed the issue at its Sept. 3 and Oct. 29 meetings, and one of the main concerns was over the Lottery’s current contract. Brown is a member of the committee.

The Lottery signed a seven-year contract in 2016 with IntraLot, a Greek company that runs the Lottery’s gaming operations throughout the state. IntraLot’s website advertises a “next-generation Sports Betting platform” with kiosks and digital applications.

However, since sports betting was illegal when the Montana Lottery signed the contract, some committee members felt the Lottery should submit a new request for proposal, or RFP, specifically for its sports-betting operation.

Rep. Forest Mandeville, R-Columbus, asked at the Sept. 3 meeting how the Lottery contracted for something in 2016 that was not legal in the state at the time.

“The scope of the contract allows for the management of future games. We’re a heavily regulated entity and industry, and the way that the contract is written provides for room if there are legislative changes,” responded Angela Wong, the director of Montana Lottery.

In a Sept. 25 letter to the committee, Mike Manion, chief legal counsel for the Montana Department of Administration, addressed these concerns.

“The Lottery’s 2014 RFP required vendors to demonstrate that they could implement entirely new lottery games,” he wrote. “Sports wagering was not a lottery game in Montana at the time. But the gaming industry generally believed that it would soon be legalized across the United States. Both firms that responded to the 2014 RFP — which IntraLot was awarded in 2016 — addressed their ability to integrate new games and both specifically detailed their capacity to offer sports wagering.”

He said that the Legislature classified sports wagering within the definition of “lottery game” in the bill that passed.

At the committee’s Oct. 29 meeting, Don Harris, an attorney for the Montana Department of Administration, addressed the concern over the liquor-license requirement. He said the proposal to add the requirement was a way to keep sports betting under control.

“Beverage licenses are very concerned with sufficiency of licenses that serve the public and they’re limited by a quota system,” he said. If anyone with a gambling license could offer sports wagering, he added, a “bingo hall” or “someone holding a casino night” could do legal sports betting.

“The lottery did not believe this is what the Legislature intended,” he said.

Brown said she believes limiting sports betting to liquor establishments “is the wrong thing to do.

“I think that our alcohol system is already broken and to give them an exclusive contract, if you will, for the sports gambling is the wrong thing to do,” she said.

The committee considered a motion to reject the Lottery’s rules and delay adoption to allow more time for discussion, but the motion failed due to a tie vote.

Now, if the Lottery Commission adopts the final rules on Nov. 21, which it is expected to do, Montanans will soon be able to participate in legal sports betting.

“We are ready to go,” McKee said. “We’ve been working really hard … designing a product and a system that will be robust enough to handle who wants to play.

“We think Montanans are going to like it,” she added.

Brown knows there’s nothing she or the committee can do at this point. But she believes the 2021 Montana Legislature “will be cleaning the sports wagering mess up.”

“Let the chips fall where they may … I think it’s going to be a train wreck,” she said.

Reporter Colin Gaiser may be reached at 758-4439 or at cgaiser@dailyinterlake.com

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