- Associated Press - Thursday, April 24, 2014

LANSING, Mich. (AP) - Gov. Rick Snyder and lawmakers remain at odds over how much to rein in the charitable gambling industry featuring games such as Las Vegas-style poker, after the state Senate voted unanimously Thursday to ease regulations that could go into effect next month.

All sides agree that there should be criminal background checks and licensing of poker rooms that run popular Texas Hold ‘Em and blackjack fundraisers for charities in exchange for a cut of the profits. But they differ over how profits should be split, caps on the number of charities hosting the casino-style events concurrently at a single location and how many days a year poker rooms can operate.

The Senate’s approval of legislation came less than a week before tighter rules proposed by the Michigan Gaming Control Board will take effect unless a legislative committee objects.

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The bill sponsor, Republican Sen. Rick Jones of Grand Ledge, said service organizations, churches, veterans’ groups and school foundations that depend on charitable gambling for fundraising are concerned.

“I think it’s extremely unfair for the gaming commission to suddenly say, ‘We’ve allowed this for over a decade and now we’re going to change the rules,” Jones said. “So I’m hoping that the House takes this and we get it to the governor, and I hope we can keep this form of revenue for the little charities.”

But Snyder remains committed to putting in place the administrative rules. Snyder aides expect the legislation to die in the House and the 10-lawmaker Joint Committee on Administrative Rules to not act by Wednesday’s deadline, allowing the administration’s regulations to take effect in May.

“We believe these reforms - which incorporated legislative and stakeholder feedback and changes along way after numerous public hearings and comments - are vital and necessary to ensure the integrity of the process, stem abuses and put safeguards in place for charities so we can continue to allow charitable gaming,” Snyder spokesman Dave Murray said.

Messages seeking comment were left Thursday with leaders of the legislative panel considering the rule changes.

While legislation would let poker rooms host charity games 365 days a year, the rules would allow them to operate 208 days. The bill would allow four charities to host games in a poker room at one time - with the potential for eight or more events to be held onsite per day - while the rules would authorize no more than two parties per location in a day.

Other differences remain over how many members of a charity must be on hand to help run the games and keeping intact a $15,000 limit per event on chips or raising it to $20,000 to let charities make more. Poker rooms could continue taking a 50 percent cut under the legislation; the rules would lower their take to 45 percent.

Tension has built ever since Snyder in 2012 transferred oversight of the charitable gambling from the Lottery Bureau to the Gaming Control Board and its regulators familiar with monitoring highly regulated operations at casinos. The agency cracked down on some larger bars that contributed to a 22 percent drop in licenses issued for millionaire parties through the first half of last year.

Revenue from the events reported to the state was only $7.9 million in 2002, but surged to a peak of $197 million in 2011 and dipped to $184 million in 2012. Charities’ profits rose from $3.6 million in 2002 to $19.2 million two years ago before leveling at $15.8 million.

The state says charities got 81 percent of the proceeds a decade ago but now receive half under profit-sharing agreements never envisioned when the charity games were authorized in a 1976 update of the Bingo Act. Charities say that while they are taking less of the cut on a percentage basis, they are still raising much more money than previously.

Richard Kalm, the Gaming Control Board’s executive director, said he will lift a moratorium on new charitable gambling sites once the rules are in place, opening up opportunities for bars and restaurants to host millionaire parties.

Twenty-two sites have been closed for illegal gambling since 2010, and in recent days authorities found a poker hall where two of four dealers were felons, he said.

“We want to inject licensed suppliers back into the process … and get away from this quasi-casino environment where profits and volume are driving what’s going on,” Kalm said.



Senate Bill 878: https://1.usa.gov/QJbcR9


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