In 1976, the Legislature authorized various non-profits 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. Currently, these events, in many cases, have become unauthorized, unregulated casinos.
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 to 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. Rick 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 MGCB held public hearings and discussions with charitable groups, operators and 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.
The rules determine the number of games and charity members required to be present during their events. They prohibit locations from getting a percentage of the charities’ profits and cap the rent charged to charities. They increase the charities’ split to at least 55 percent of the profits. They will allow charities to hold events where they choose, allowing increased business to new locations. Michigan is the most liberal state in the United States,
allowing up to 16 events for each qualified organization per year.
Michigan Gaming Control Board