Michigan Court of Claims Judge Pat Donofrio recently issued a temporary restraining order against new regulations on charitable gambling events in the state. The new rules took effect earlier this month. A gambling organization, 11 charities and other groups filed suit, claiming the regulations would cost them millions of dollars in revenue.
Donofrio wrote the economic harm to the groups that filed the lawsuit “outweighs the harm” to the state and Michigan’s Gaming Control Board if the injunction is issued. He noted the board did not conduct a public hearing on the rules, although board members said a first draft met that requirement. The judge added the old rules may apply while the injunction is in place. He scheduled a June 12 pre-trial conference.
The new rules would have resulted in an estimated 11,000 fewer charitable gambling events, a loss of more than $9.6 million, over the next 12 months. In addition, the rules would have given charities a larger take and but allowed fewer events.
In 2002, charitable gambling reported to the state was $7.9 million. By 2011, it reached a peak of $197 million. In 2012, before leveling off, charities’ profits rose to $19.2 million, up from $3.6 million in 2002. In 2004, charities received 81 percent of the proceeds but today receive half under profit-sharing agreements that were not envisioned when the games were authorized in a 1976 update of the Bingo Act.
After complaints that charities were being treated unfairly by the gambling groups operating the events, the state gaming board decided to introduce stricter regulations. However, charities said although they are taking less of the cut on a percentage basis, they still are raising much more money than they did before.
