The Michigan Senate recently unanimously approved Senate Bill 878 which would allow charity poker rooms to host games 365 days a year, with four charities hosting games in a poker room at the same time and eight or more events per poker room per day. At the same time, the Michigan Gaming Control Board has proposed rules that only would let the charity poker rooms operate 208 days with no more than two parties per location per day. The board’s proposal will go into effect next month unless the Joint Committee on Administrative Rules stops it.
Lawmakers and the board also disagree on other issues. Legislators want to increase the daily chip-sales limit to $20,000 from $15,000, with an option of a $50,000 limit if charities run the games themselves. They also want to continue to allow poker rooms to take a 50 percent cut, whereas the board wants to lower that to 45 percent. But both sides agree that poker rooms that run so-called millionaire parties for charities should be subject to criminal background checks and licensing.
Revenue at the so-called millionaire parties reported to the state was only $7.9 million in 2002, but reached a record high of $197 million in 2011 before dropping to $184 million in 2012. Profits for charities increased from $3.6 million in 2002 to $19.2 million in 2011, then leveled out at $15.8 million in 2012.
The charity games were authorized in 1976 through an update of the Bingo Act. State officials contend the law was never designed for what has become a multi-million dollar industry. In 2012, Governor Rick Snyder transferred charitable gambling oversight from the Lottery Bureau to the Gaming Control Board. That agency wanted stricter rules to address problems, including gaming violations and violence, at some permanent poker rooms. After investigating some of the larger bars where millionaire parties had been held, 22 percent fewer party licenses were issued through the first half of 2013.
The board made several concessions to address charities’ concerns before submitting its latest proposals. Still, charities, poker room operators, dealers and players oppose them, claiming tougher rules would essentially shut down the industry, hurt nonprofit fundraising and cause poker room employees to lose their jobs.
Rick Kalm, executive director of the Gaming Control Board, said he was not asked for input on the Senate bill. He said if the board’s rules go into effect he will lift the 2011 moratorium on new millionaire party locations, which was intended to slow the rapid growth of the charity party business. Today there are 30 authorized poker rooms. Since 2010, 22 sites have been shut down for illegal gambling. And recently, he said, authorities discovered a poker hall where two of four dealers were felons. “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.
State Senator Rick Jones, the bill’s sponsor, said, “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.’ 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 spokesman Dave Murray said, “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.”
