HomePublicationsNewsletter ArchiveVolume 19Issue 24Court Allows Implementation of Most MGCB Updates with Regard to Charitable Gaming Requirements

In an important decision determining the scope of discretion of the Executive Director of the Michigan Gaming Control Board (“MGCB”) over the licensing and permitting of charitable “millionaire party” operations, the Ingham County Circuit Court ruled that most (7 out of 8 requirements) of some recently issued regulatory guidance to licensees will be allowed to take effect. Although most of the recently announced guidelines were affirmed as being within the discretion of the MGCB, the Court did indicate that a formal Administrative Rule change would be required for the MGCB to require such charitable gaming operations to close at midnight and thus indicated that it would enter a partial preliminary injunction on this point.  The case is still pending, and thus there will be further proceedings in the coming months. 

As background, on July 29th, MGCB Executive Director Richard Kalm issued regulatory “updates” to the charitable gaming operational standards setting forth several requirements for such operations to meet in order for them to be licensed and permitted to operate (under the exercise of discretion by the MGCB Executive Director). 

On August 22, at the request of 19 charitable organizations, Ingham County Circuit Judge Clinton Canady III issued an ex parte temporary restraining order and order to show cause restraining the implementation of the updates temporarily and scheduling a show cause hearing for September 5th.   The charities asserted that the announcement of the “updates” constituted a form of improper rulemaking under the Administrative Procedures Act.  Notably, on August 29, 2013, MGCB Executive Director Kalm issued a letter rescinding the July 29thletter, and indicating that it was not intended to be any form of rulemaking activity.  The letter stated:

Unfortunately, some have misconstrued the purpose of the letter as an attempt to rule make.  The letter provided updates that were advisory and interpretative of specific areas of needed enforcement concerning the regulation and licensing of millionaire party gaming.  These measures are necessary to protect the charities and the integrity of gaming and have their basis in my existing authority under the Bingo Act and rules.  Accordingly, I will continue to regulate millionaire party gaming consistent with that authority. 

Although an Order has not yet been entered, at the September 5thshow cause hearing, the Court refused to enter a preliminary injunction with respect to most of the guidance announced by the Executive Director.  The Court indicated that it would enter a preliminary injunction with regard to the proposed closing time change that the Executive Director had outlined (requiring such events to conclude at midnight instead of 2:00 a.m.).  Importantly, however, it did not enter a preliminary injunction with regard to any of the other updatesthat were issued on July 29th.  Thus, the MGCB will be permitted to move forward with these interpretations unless or until further court or legislative action.  Among other things, the new requirements will cap the number of charities at each site at three, limit the number of chips in play at a table to 15,000 and prohibit the use of poker chips as tips for dealers and others. The Executive Director plans to begin enforcing the new requirements once the Court has issued a written order supporting his rulings in the case.

Notably, as reported in last week’s Michigan Gaming Newsletter HB 4960 was introduced on Sept 4thseeking to make major changes to the Bingo Act that are supported by the Michigan Charitable Gaming Association. 

 

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