HomeMy WebLinkAboutCasino Ordinance
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Tim Cooper, Assistant City Attorney
SUBJECT: Casino Ordinance
MEETING DATE: June 5, 2008
BACKGROUND: The City of Bozeman exercises authority over casinos in the Unified Development Ordinance. The City has legislatively defined and determined suitable locations for casinos
since 1991. That definition is based in part on the number of video gambling machines on the premises at a subject property.
Video gambling machines were originally considered accessory uses to establishments possessing liquor licenses. The original intent of the State legislature in permitting video gambling
was to provide an additional source of income for bars and taverns. By limiting the number of machines allowed a license holder, originally to no more than five (now no more than twenty),
the State was reportedly attempting to create an accessory use or supplementary income. However, the State of Montana soon experienced a rapid increase in businesses whose principal
use was video gambling, with food and alcohol sales ancillary to that use. The City’s initial ordinance was an effort to limit and specifically locate those businesses whose principal
use was gambling.
The City’s initial effort defined “casino” as an “establishment referenced as a casino by signage or name; has more than one card table on the premises; has fifteen or more gambling
machines on the premises; or, where the predominant source of income is from gambling.” The zoning ordinance limited casinos to the B-2 and B-3 business districts, and required a conditional
use permit to operate. The plain language of this definition effectively allowed businesses to place fewer than fifteen machines in their establishments, without restriction on location,
because they would not meet the definition of “casino” (provided they also did not reference their business as such.)
In 1996, the City adopted a moratorium on review of casinos to provide time to deliberate on potential, new restrictions. At a series of public meetings the vast majority of participants
advocated further restrictions in various forms, including closing the loopholes associated with the state restrictions on proximity of retail alcohol licenses to churches and schools.
Also, some discussion was had relating to reduction of the number of machines constituting a casino from 15 to 5. The Commission ultimately adopted (on St. Patrick’s Day, 1997) an
ordinance amending the definition of casino, removing casinos as conditional uses in the business districts, and creating Casino Overlay Districts, thereby requiring a
rezoning application (legislative enactment) rather than the administrative application for a conditional use permit. The requirement of 15 or more machines remained unchanged.
The UDO currently defines Casino as follows:
18.80.470 CASINO
A. An establishment whose primary use or activity is gambling, either in the form of gambling machines (video poker, keno, etc.), card games or other licensed gambling activity. A casino
will normally have beverage and restaurant facilities as accessory uses. In all instances, an establishment will be considered a casino for the purpose of these regulations if any of
the following characteristics apply:
1. The establishment is referenced as a casino by signage, advertisement or by name;
2. More than one card table is on the premises; and/or
3. Fifteen or more gambling machines are on the premises.
B. An applicant for a casino establishment must obtain a Montana state license to sell alcoholic beverages for consumption on the premises.
The “effectiveness” of the City’s ordinance is largely a matter of perspective. The number of establishments with 14 or fewer machines has increased measurably, to the dissatisfaction
of those opposed to any growth in gambling. Meanwhile, a group of alcoholic beverage and gambling licensees within the City of Bozeman insist that the ordinance violates Montana Constitutional
and Statutory provisions by its restrictions on the number of gambling machines permitted and the restrictions on advertising of those businesses.
DISCUSSION: Two questions are presented: 1.) Does the City have authority to reduce the number of machines or eliminate the number of machines in the “non-casino” districts? and 2.)
How strong is the authority?
The principal argument against the restrictions on the number of gambling machines permitted is based on the doctrine of preemption, or the authority of local government to exercise
a specific power. The Legislature has delineated five specific powers that local governments with self-government powers “are prohibited” from exercising “unless the power is specifically
delegated by law …” §7-1-112, MCA. The power to regulate gambling is one of those powers.
Power related to gambling specifically delegated to the City are found in §§23-5-171, and 23-5-620, MCA. §23-5-171 allows the City to “enact an ordinance or resolution zoning certain
areas within its incorporated limits in which gambling is prohibited.” §23-5-620 provides that, notwithstanding a general prohibition against playing video gambling machines between
the hours of 2 a.m. and 8 a.m. each day, the City may adopt an ordinance allowing play between 2 a.m. and 8 a.m. The City’s ordinance effects §23-5-171, by identifying specific areas
where a certain level of gambling is prohibited, but still allowing a more limited level of gambling to occur. §23-5-620 clearly contemplates that Cities may make allowances for gambling
despite general prohibitions. Therefore, the answer to the first question is that the City plainly has the authority to prohibit completely any gambling machines in establishments in
“non-casino” districts; and, assuming the
City is authorized to restrict without completely prohibiting and/or make certain limited allowances for gambling, the City is also authorized to reduce the number of machines allowed
in establishments in “non-casino” districts.
Opponents of the restriction recognize the City’s authority, but argue that the power is limited and that the ordinance is not within that limited power. They argue that the City’s
definition of “casino” is arbitrary and contrary to the state definition of “gambling.” The assertion that the definition is arbitrary is premised on the fact that all establishments
with video gambling machines, no matter the number, would constitute the activity of gambling under state law, and should not therefore be distinguished by the number of machines on
the premises. The conclusion drawn from these assertions is that the distinction is an unlawful effort to regulate those licensees who want to make full use of the gambling licenses
(up to 20 machines), as opposed to the admittedly lawful endeavor to simply prohibit the gambling altogether. (The argument that the ordinance is arbitrary also forms the basis of a
claim that it violates due process and equal protection.)
The argument is not well-supported. Logic – and a maxim of law, §1-3-227, MCA – dictates that a statute which clearly authorizes the greater power to completely prohibit gambling in
certain areas includes the lesser authority to merely limit gambling. Effect must also be given to the intent of the Legislature. Montana’s gambling laws have not preempted Bozeman’s
regulation of gambling. The state statutory framework for the regulation of gambling clearly contemplates that cities will impose local zoning that regulates gambling. Further, §23-5-620,
MCA provides that Cities may make allowances for gambling contrary to a general prohibition. The statute prohibits playing video gambling machines between the hours of 2 a.m. and 8
a.m., but authorizes Cities to allow it. The City may similarly prohibit establishments in certain area with 15 or more video gambling machines, but authorize establishments with fewer
machines.
Finally, it is arguable that defining casino for purposes of locating establishments “whose primary use or activity is gambling” and, in effect, exempting a slighter level of gambling
activity, does not constitute regulating gambling. In American Cancer Society v. State, 325 Mont. 70, 103 P.3d 1085 (2004,) it was argued that the City of Helena’s clean air ordinance
was an attempt to regulate “a form of gambling” in contravention of §7-1-112, MCA. The Supreme Court disagreed:
“The cities did not regulate gambling or video gaming in any sense of the word. They regulated clean indoor air. If the regulation of clean indoor air incidentally impacts VGM establishments,
that does not mean that they have been regulated qua [in the capacity of] VGM establishments. Rather, they have been regulated as buildings open to the public. The city ordinances have
incidental impacts on all buildings open to the public. This includes buildings housing state regulated and licensed enterprises, for example drug stores, chiropractic offices, and law
offices. In prohibiting indoor smoking, the cities have not infringed upon the state regulation of pharmacists and chiropractors or upon this Court's regulation of attorneys. Were a
city ordinance to require that owners of buildings (including VGM establishments) keep their sidewalks clear of snow, we would not conclude that the cities have regulated gambling.”
The City’s ordinance addresses the location of gambling when it reaches a certain level; i.e.
when the primary use or activity at an establishment is gambling, either in the form of gambling machines (video poker, keno, etc.), card games or other licensed gambling activity.
It is not an attempt to regulate gambling but rather the appropriate site for what is conservatively considered gambling. In defining casinos the City has not infringed upon the state
regulation of gambling.
Respectfully submitted,
____________________________________
Tim Cooper