Lawsuit over casinos opening smoking shelters

GREAT FALLS (AP) — The Cascade County health department and the owners of several casinos in Great Falls are in a battle over a workaround the casino owners believe allows their customers to gamble while smoking.

Brothers Doug and K.C. Palagi and their attorney and business partner Gregory Smith filed a lawsuit against the Cascade City-County Board of Health after they were threatened with a misdemeanor citation alleging their smoking shelters violated Montana's Clean Indoor Air Act, the Great Falls Tribune reported Sunday.

The act prohibits smoking in enclosed public places, but allows for smoking shelters that "are partially open to the outside air."

The Palagis say their five shelters, built at a cost of $50,000 each, have open slots where the walls meet the roof. Employees don't deliver drinks to the shelters, which are closed off from the rest of the casino.

The state Gambling Control Division requires video gambling machines to be in enclosed public spaces, where the clean air act says smoking is not allowed.

Competitors also argue that the Palagis aren't playing by the same rules they have to, while the Palagis argue they're businessmen who have found a competitive advantage within the law.

Bars and casinos saw trade decline when the Montana Clean Indoor Air Act went into effect for such businesses in October 2009.

The Gambling Control Division said between 2009 and 2010, the division saw its first decline in tax revenue from video gambling machines. Part of the decline was due to the recession.

The Palagis' first smoking shelter opened in August 2011.

"When we decided to build the first two (smoke shelters), it wasn't like we decided we discovered this great loophole," Smith said. "We were thinking: 'Hey, this is a win-win.'"

He said when customers walk into casinos they have to walk past people who are outside smoking.

"We were thinking we'll get these people out of the way so nonsmokers don't have to walk through the smoke. They're happy, and we are," Smith said.

Court records say the Palagis submitted proposed floor plans for the roofed smoking structures to the Liquor Licensing Division and the Gambling Control Division and that they were approved by the County Board of Health.

In April, District Judge Greg Pinski denied the health department's request for an order closing the shelters until the issue is decided at trial.

"The board failed to show it will suffer any irreparable harm," Pinski wrote. He said the health board failed to present evidence that an injunction was in the public interest while the Palagis presented evidence that the public is better served by the smoking structures.

Following Pinski's decision, a group of residents including those in the health profession and business owners sought to intervene in the lawsuit. They created a nonprofit group called Montanans Who Support the Montana Clean Indoor Air Act.

Former lobbyist Jim Ahrens was appointed president of the nonprofit. He says a couple of bar owners also joined the group because they don't want patrons smoking indoors and see the Palagis smoking shelters as an illegal competitive advantage.

"It's a public health issue," Ahrens said. "I've been around Montana with all that smoking stuff, and I'm more than happy now to not have to go into any public buildings with smoke," he said.

A trial is expected this fall.