HomePublicationsNewsletter ArchiveNewslettersVolume 21Issue 19Compliance Summary: Non-Gaming Licensing

In addition to its regular coverage of gaming news, The Michigan Gaming Newsletter will be providing compliance updates and summaries of the various legal and regulatory requirements for companies involved in the state’s gaming industry. This week, we have included a review of non-gaming licensure requirements. The following is a general discussion of the state’s compliance requirements and should not be considered legal advice.

The Michigan Gaming Control Board (“MGCB”), in addition to its oversight of gaming-related activities, has established a detailed list of licensing and approval requirements for those companies that provide the Detroit casinos with non-gaming goods and services. In general, non-gaming goods and services are defined as products that do not affect the outcome of a gambling game.

Importantly, companies that are interested in providing non-gaming products to the Detroit casinos should be knowledgeable of the licensing process and requirements before entering the casino market. As the gaming industry is highly regulated by the MGCB, including absolute bars for participation by certain individuals or entities, it is important to review and understand the regulatory requirements before soliciting casino business in the state. The below is a brief overview of the initial licensing requirements for non-gaming suppliers working in the commercial casino industry. If working with a Native American Tribe, it is important to contact the tribe directly as each maintains their own licensing and approval requirements that are unrelated to the MGCB requirements.

First, an interested party should ascertain if a license, exemption, or other approval is necessary. For non-gaming companies, the MGCB has established business volume thresholds that determine the appropriate level of licensure needed to work with the Detroit casinos. Board Resolution 2015-01, adopted in January 2015, requires companies that provide over $400,000 to one or more of the Detroit casinos in any rolling 12-month period to obtain a non-gaming supplier’s license. Companies providing between $50,000 and $399,999 must file for a licensing exemption, and those providing less than $50,000 are automatically exempt from licensing requirements. In addition, certain fields of commerce are exempt from licensing, such as governmental agencies, legal services, professional entertainers, and others. For more information on the non-gaming licensing exemption process, please see our previous coverage in Volume 21, Issue 16 (May 8, 2015) of The Michigan Gaming Newsletter.

As noted above, there are absolute bars to licensure. If a company or qualifier within the company has been convicted of any felony, misdemeanor involving gambling, theft, or dishonesty, or is an elected state official, they are ineligible to receive a supplier’s license under MCL 432.207a. Thus, it is important to review the applicable statute and regulations in advance of filing an application to determine whether the company and its qualifiers are eligible for licensure.

Before providing any goods or services, those companies that contemplate providing more than the $400,000 threshold must complete and file a Non-Gaming Supplier License Application with the MGCB. To complete the form, the applicant will need to provide responses related to basic identification information (address, phone, tax ID, etc.), corporate structure, management and ownership, litigation history, tax and bankruptcy matters, political contributions, and other information to allow the MGCB to determine whether the applicant meets the requirements of the Michigan Gaming Control and Revenue Act and the MGCB Administrative Rules. Each qualifier of the company applicant, such as its officers, directors, owners, key management, and those dealing directly with the casinos, will be required to submit a Personal Disclosure Form along with the company application. The Personal Disclosure Form requires disclosure of personal information, criminal and civil action history, financial status, taxes, family history and relationships, and other personal information related to the applicant’s history, experience, and character. There is a $1,000 (up to $500,000 in expected business) or $2,500 (over $500,000 in expected business) application fee.

After an initial review of the application materials has been completed by the MGCB, the applicant may seek to obtain a temporary supplier’s license that will allow the applicant to provide goods to the Detroit casinos while its application is being reviewed by the MGCB. The review process can take up to several months to complete, depending on the complexity of the applicant’s materials, so a temporary license is typically desired to allow business to proceed.

The MGCB investigation will include reviews of all application documents, follow-up response and clarifications, personal interviews with qualifiers and the company representative, and additional communications with MGCB staff. As this process can be cumbersome and complex, an applicant should consider obtaining legal or regulatory counsel to help guide the process and ensure that all filings are properly made.

After the investigation has concluded, applicants will be notified of the recommendation made by staff to the MGCB on whether to grant or deny the license. If a denial is indicated, the applicant may seek to cure the issues identified by the MGCB and, if no cure is accepted or possible, appeal the formal denial through the processes outlined in Part 7 of the MGCB Administrative Rules. Applicants that receive a denial are prohibited from reapplying for licensure for a period of one year.

If the MGCB approves the license, the applicant will need to make a $5,000 license fee payment to the MGCB before receiving the formal license. This fee is in addition to the application fee. Once this process has been completed, the licensee is able to provide any amount of non-gaming goods and/or services to the Detroit casinos under the license. Renewals are conducted on an annual basis and, on every fifth year, there is a full review of the applicant similar to the initial licensing process.

 

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