Montana would switch permanently to an auction system to award liquor licenses under a bill proposed Thursday.
The state used to hold lotteries for liquor licenses but during a special session in November 2017 called to fix a revenue shortage, lawmakers changed to a competitive bidding process. That way of distributing licenses was meant to increase money for the state's coffers.
This fiscal year, the process is estimated to raise about $600,000 for the state's general fund. That jumps to $800,000 and then $1 million in subsequent years.
But the bill passed in 2017 didn't make the auction system permanent, instead opting for a temporary testing period.
State Sen. Ed Buttrey, who is carrying House Bill 35, said Thursday the bidding system should be how things operate moving forward.
"We believe that the auction process ... is going to work. It's going to generate revenue for the state, so we no longer need the lottery process," Buttrey said.
Long-term, a bidding process is estimated to generate between $2-$4 million more than the lotto system would for the state's general fund.
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Buttrey disclosed to the committee that he owns bars and casinos in the Flathead and around Great Falls, but said the bill would not affect him.
The bill passed during the special session also aimed to alleviate the problem of combined quota areas. Towns like Bozeman and Belgrade share the same area and licenses that could float from the smaller Belgrade to the larger Bozeman often did because they were worth more in the bigger city. That created concern at smaller towns in those areas could be left without any licenses.
Because the bill during the special session was hastily crafted — the session only lasted two days — the legislation didn't clarify how to break apart some of the quota areas. Buttrey's bill would fix that.
Other areas with quota issues are Helena and East Helena; Whitefish, Columbia Falls and Kalispell; and Pinesdale and Hamilton.
The administrator of the Alcoholic Beverage Control Division spoke in support of the bill, saying it is needed to clear up confusion from the 2017 legislation. The Montana Tavern Association also supports the bill.
John Iverson, with the association, said the state for a long time had given away through a lottery process something that was very valuable. In August 2017, there were three liquor licenses listed for sale in Missoula for $750,000, showing how valuable a commodity they can be.
Iverson also said some businesses would game the lotto system by creating dozens of limited license companies and entering multiple times.