Traverse City Record-Eagle

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March 19, 2014

Forum: Explaining changes in gaming rules

Michigan Gaming Control Board staff has proposed rules to bring order to “charitable millionaire parties.” Currently, these events in many cases have become unauthorized, unregulated casinos.

In 1976, the Legislature authorized various nonprofits to hold occasional “Vegas Nights” as a means to raise money. This authority was expanded in 1999 to raise the annual chip sales from $6,000 to up to $240,000.

In 2004, the Bureau of Lottery authorized Poker as a permissible game at charitable events. Lottery began allowing multiple games 365 days a year. Reported revenue skyrocketed to over $530 million from 2010-2012. In 2011, Lottery issued a moratorium on new suppliers and locations due to the growth and inability to regulate. What was once an occasional Vegas Night became a de facto casino system with locations running the games, contrary to the Bingo Act, on behalf of the charities for 50 percent of the profits.

Once this gaming went from the occasional poker night to a quasi-casino, fraud became rampant. We routinely uncover falsified records, illegal gaming, kickbacks, embezzlement, and multiple games with no charity present. Some charities were forced to issue IOUs to operators to cover losses in blackjack. There is substantial risk when there are 365 days of poker at a location, hosting multiple games in this unlicensed environment..

In June 2012, Gov. Snyder transferred oversight and regulation of these games from Lottery to Gaming Control. He gave us a simple charge — enforce the Bingo Act and clean up these games. In 2013, we proposed a set of Administrative Rules to better regulate the games and ensure they are being run consistent with legislative authorization while allowing charitable groups to continue to raise funds.

The Gaming Control Board held public hearings and discussions with charitable groups, operators/suppliers, and members of the Legislature. These rules allow us to (1) apply the current law, which did not authorize “poker rooms/casinos”; (2) create a regulatory framework consistent with law keeping charities in control of their gaming; (3) remove control from unlicensed operators and profiteers, that have put volume and profit ahead of the charities’ interests; and (4) require internal controls of cash and criminal background checks of dealers to protect the integrity of the games. With these rules the charities will be in charge of their fundraising activities.

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