HomePublicationsNewsletter ArchiveNewslettersVolume 21Issue 18Court of Appeals Overturns Charity Game Rules Injunction

On Thursday, May 28, 2015, the Michigan Court of Appeals overturned an injunction against the Michigan Gaming Control Board (“MGCB”) and its Executive Director that had prevented the implementation of new charity gaming rules governing Millionaire Parties. The rules, which originally went into effect on May 14, 2014, had been suspended following a Court of Claims ruling that the regulations did not follow the proper administrative procedures during the review, comment, and enactment periods.

The regulations have been challenged by the Michigan Charitable Gaming Association, which consists of a coalition of charity organizations that operate Millionaire Parties as fundraising events. On August 7, 2014, the Court of Claims placed an injunction on enforcement of the May 14, 2014 rules, finding that the rules were not properly instituted, as the Michigan Gaming Control Board was allowed, at the direction of state officials, to withdraw and make amendments to 3 of 50 rules before resubmitting the regulations for consideration. The charities argued that the rules could not be amended after the withdrawal.

In overturning the Court of Claims ruling, the Court of Appeals held that “we find nothing in the plain language of Section 245a [of the Administrative Procedures Act] that would prohibit an agency from making changes to a rule upon resubmission.” Although the Court qualified its ruling by stating that significant changes to rules, which are more burdensome than originally drafted, may require an agency to restart the administrative approval process, and it found “that did not occur in the instant case. The agency made changes that were less burdensome to the affected industries and that were in accordance with the regulatory impact statements and small business impact statements.” Furthermore, the changes were adequately explained to state officials and were in response to public comments.

In a press release on the matter, MGCB Executive Director Richard Kalm stated “[t]his victory goes a long way toward insuring the integrity of gaming and the future of millionaire parties as a fundraising option for charities. The court recognized our ability to change the rules in response to legislative input.”

The case has been remanded to the Court of Claims for reconsideration in light of the Court of Appeals ruling.

The case is Michigan Charitable Gaming Association, et. al. v. State of Michigan, et. al., Michigan Court of Appeals, Case No. 323410.

 

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