Hookers, Gambling, & Blackmail: Montana Supreme Court Justice Gene Daly & the Legacy of Judicial Corruption

February 18, 2025 portneymk .

How a Supreme Court Justice's Favoritism Shaped Montana's Political Landscape

By Michael Kelman Portney

Montana has always prided itself on rugged individualism, but beneath the surface of its judicial system lies a long, quiet history of backroom deals, political manipulation, and legal rulings that protected the powerful. Nowhere is that more evident than in the story of Gene Daly, the Montana Supreme Court justice whose rulings may have been influenced by his personal alliances—including one that allegedly altered the trajectory of state politics.

Montana's judicial history is a tapestry woven with tales of independence and integrity, yet it is not without its darker threads. The state's judiciary has long been a cornerstone of its democratic framework, intended to uphold the law impartially and protect the rights of its citizens. However, like many institutions, it has not been immune to the influences of power and politics. The story of Gene Daly serves as a poignant reminder of how personal alliances and political favoritism can undermine the very foundations of justice.

Gene Daly, a figure of considerable influence in Montana's legal circles, rose through the ranks to become a Supreme Court Justice. His career, however, is marred by allegations of corruption and favoritism that suggest his decisions were not always guided by legal principles alone. Daly's legacy is a complex one, intertwined with the fortunes of powerful individuals and industries, and it raises critical questions about the integrity of Montana's judicial system.

Before ascending to the Montana Supreme Court, Gene Daly served as the Cascade County Attorney. His political career was marked by ambition and a keen understanding of the power dynamics within the state. Daly's rise to prominence was not without controversy, as his path was allegedly paved with political manipulation and coercion.

The most striking allegation against Daly involves his reelection as Cascade County Attorney. According to Steve Potts, a longtime Great Falls, Montana attorney, Daly's reelection was secured through the machinations of Zollie Kelman, a powerful figure in Montana's gambling circles, and Potts’ former long-time client. Daly's Republican challenger made a critical error by visiting a brothel and paying for services with a check. This check found its way into Kelman's hands, who used it to pressure the challenger into withdrawing from the race. As a result, Daly won reelection uncontested, solidifying his position in Montana's judicial system.

The raven keno issue came up long before I was an attorney and before any of our current gambling laws, so I don't know how it worked or what the court was thinking when it ruled that raven keno was legal. The judge (Gene Daly) who wrote the opinion was an old friend of Zollie. My impression of Gene Daly was that he didn't know much law, didn't care about that, and would have done anything he could to help Zollie and possibly other people involved in gambling. He was a "good ol' boy." Zollie told me once that when Daly was the Cascade County Attorney, was running for reelection, and was being challenged by a Republican, Zollie found out that the challenger had gone to a whore house on Wire Mill Road in Black Eagle and paid for service with a check. Zollie got the check and met the challenger. He told the guy not to run too hard against Daly because if he did, the check would be made public. Daly won the election. I met Gene Daly many years later. David Kelman had a company named Big Ten Electronics, which manufactured gambling machines, and which I believe Zollie had started. Daly was on the board of directors of the corporation (so was Tom Judge, a former Montana governor). All of the circumstances tell me Daly and Zollie were really close. Daly would have made sure that the court ruling was what Zollie and other gambling operators wanted.

Steven T. Potts

This incident represents a direct manipulation of Montana's democratic process. It suggests that the state's judiciary may have been influenced by political power brokers long before legal precedent was ever considered. Such actions undermine the very essence of democracy, where elections should be decided by the will of the people, not by coercion and blackmail.

In the 1970s, Montana's legal landscape regarding gambling was restrictive, with most forms of gambling being illegal except for bingo. This environment set the stage for a significant legal battle over the introduction of a new gambling machine called "Raven Keno," which was marketed as a bingo variant to circumvent existing restrictions.

As a Supreme Court Justice, Gene Daly played a pivotal role in the Raven Keno case. The Montana Attorney General had declared the machine illegal, but when the case reached the Montana Supreme Court, Daly authored the opinion that ultimately favored the machine's manufacturer. This decision was a turning point for Montana's gambling industry, opening the door for the legalization of poker and keno machines in 1985.

The ruling in favor of Raven Keno had far-reaching consequences for Montana's gambling industry. It not only legitimized the machine but also set a precedent for the expansion of gambling in the state. This decision benefited not only the manufacturers but also those with vested interests in the gambling industry, raising questions about the motivations behind the ruling.

After his tenure on the court ended in 1983, Gene Daly's involvement in the gambling industry appears to have continued. Potts suggests that he later sat on the board of Big Ten Electronics, a gambling-machine manufacturer owned by David Kelman. This connection raises serious ethical concerns about the relationship between Montana's judiciary and private enterprise.

Daly's alleged involvement with Big Ten Electronics suggests a potential conflict of interest, where his judicial rulings may have laid the groundwork for his own future business opportunities. Such actions blur the line between public service and private gain, undermining public trust in the judiciary.

The implications of Daly's actions for judicial integrity are profound. They highlight the potential for personal and political interests to influence judicial decisions, eroding the impartiality and fairness that are the hallmarks of a just legal system. This case serves as a cautionary tale about the need for transparency and accountability within the judiciary.

The allegations surrounding Gene Daly's election, his Supreme Court rulings, and his later business dealings paint a picture of a legal system that may have been compromised by personal connections and political favors. The lasting impact of these actions is evident in the continued scrutiny of Montana's judiciary and the ongoing debate about the influence of power and politics on legal decisions.

Potts was sanctioned by the Montana State Supreme Court in 2007 for his role in misrepresenting a client’s disputed estate. David Kelman alleges that his father Zollie Kelman’s judicial connections allowed for Potts to escape from harsher consequences.

Daly's legacy raises important questions about the current state of Montana's judiciary. Have the lessons of the past been learned, or do similar issues persist today? The integrity of the legal system depends on its ability to operate free from undue influence, and it is crucial to ensure that the judiciary remains a bastion of fairness and justice.

Former Montana Supreme Court clerk and Helena Attorney Brian J. Miller was made aware of these allegations and chose not to act, effectively protecting the Montana legal community and judicial system, perhaps at the highest level, as opposed to his client. Miller went out of his way to ensure that a change of venue out of Great Falls would be impossible, despite the known Kelman family influence. This begs the question: why was he trying to limit the venue to Great Falls? Was he trying to avoid a racketeering case with the potential to ensnare multiple former Montana State politicians? The stench of Gene Daly's ghost lingers in the state capital and beyond.

The Montana Bar Association and state judiciary should examine these claims, review historical records, and determine whether the legal system has done enough to prevent conflicts of interest from influencing its rulings. This is not just a story of the past—it’s a warning for the future. Because when a state’s highest court is willing to rewrite laws for its friends, what does justice even mean?

The story of Gene Daly and the legacy of judicial corruption in Montana is a complex narrative of power, politics, and personal alliances. From allegations of political manipulation to controversial legal rulings, Daly's career raises critical questions about the integrity of the state's judiciary.

Judicial integrity is the cornerstone of a fair and just legal system. It ensures that decisions are made based on the law and not influenced by personal or political interests. The allegations against Daly serve as a stark reminder of the importance of maintaining transparency and accountability within the judiciary.

As Montana continues to grapple with the legacy of its judicial past, it is imperative to ensure that the legal system remains a pillar of integrity and fairness. By learning from the lessons of history and taking proactive steps to prevent conflicts of interest, Montana can safeguard the future of its judiciary and uphold the principles of justice for all its citizens.

The information for this story was provided by long-time Great Falls Montana resident Steven T. Potts, who was Zollie Kelman’s attorney and friend. Potts could not be reached for comment.