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Shelby Township

August 13, 2014

The River closes its doors

Manager said emergency rules strangled charity poker lounge

By Sarah Wojcik
C & G Staff Writer

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The River is dark and unoccupied on Tuesday, Aug. 5. Its last day of business was Saturday, Aug. 2.

SHELBY TOWNSHIP — What began as a fear recently turned into reality for Lisa Baratta, general manager of The River, a charity poker lounge in Shelby Township — the business closed indefinitely on Aug. 2.

Baratta said the reason was the implementation of the Michigan Gaming Control Board’s (MGCB) emergency rules, which went into effect July 1. A court document stated, “The Constitution demands that a Court not entrench upon executive powers.”

In June 2012, Gov. Rick Snyder tasked MGCB Executive Director Rick Kalm with enforcing the Bingo Act and cleaning up ‘millionaire parties’ after a rash of criminal activity at unregulated venues, including liquor law violations, fraud and illegal gambling.

The new rules reduced the numbers of charities allowed to host events at a time and the number of days per week room operators were allowed to host millionaire parties, or casino-style events in which nonprofit organization split costs with locations or suppliers of all the necessary accommodations.

The Court of Appeals allowed the MCGB’s enforcement of emergency rules after Judge Pat Donofrio’s prior decree on May 30 to allow an injunction on the new rules, technically effective May 14, to allow charities to keep running in their old capacity.

Kalm said the emergency rules are similar but are fewer than the rule package that was initially made known.

“We requested those that were absolutely necessary to protect the safety and welfare, along with the integrity of gaming, such as three charity members to sell chips, take money and ensure everyone is legally of age to participate, ensure there is a demarcated area where the game is to take place if it occurs in a bar or bowling alley,” he wrote in an email.

He said the emergency rules require charities to hire licensed suppliers to assist or run the event themselves.

“No longer will unlicensed poker rooms or unlicensed sub lessors be operating there — be able to host, supply and run charity games,” he wrote.

Kalm said the MGCB approved five new locations to be supplied by a supplier, and that there are currently 38 approved locations for charity poker. He said about half of locations did not have a licensed supplier supplying their charities, and that charities wishing to use them would now have to hire a licensed supplier to run the events themselves.

“Since the rules went into effect July 1, 42 licenses have been issued allowing for four event days for each license,” Kalm said. “We have about 260 licenses pending, but many were submitted before the emergency rules or without suppliers.”

He said the pending licenses are being sent back for charities to modify or reschedule due to the emergency rules. In addition, he said expenses submitted to be paid to some suppliers does not conform to the necessary and reasonable standard required by law.

“We are also working to educate those suppliers of what we believe is a necessary and reasonable expense to be charged to a charity for supplying them,” Kalm wrote. “This has caused a lull and temporary backlog in licenses issued.”

Kalm said the next step is working through the multiple changes in rules prompted by litigation and applying those rules to the licenses coming in and to eliminate the backlog caused by that.

Baratta said the The River could not survive without charitable gaming. She said more than 50 people lost their jobs, and it negatively impacted more than 100 Macomb County charities.

“A state of emergency does not exist. The charities are very happy with the way things were operating,” Baratta said in an email. “These emergency rules have eliminated stand-alone charity poker rooms, like the River, and limited suppliers to operate four days per week with one charity per event.”

She added that suppliers’ expense lists are not being approved and licenses not being issued.

“In the past four years, I have worked closely with the (Michigan Bureau of Stare Lottery) and the MGCB to operate a professional establishment. I have never received any warning or violations from either government entity,” she said. “If they implemented a new rule, I acted promptly to ensure that The River was in compliance.”

Baratta said the charities The River served appreciate the business’s efforts to provide a safe working environment and the opportunity to raise money to assist Michigan’s most vulnerable citizens.

“I am devastated by the reckless actions of our government leaders and the effect these decisions will have on the charities, my employees and my family,” she said.

Stephanie Van Koevering, a spokesperson for the Michigan Charitable Gaming Association (MCGA), a nonprofit group that advocates for the positive impact charitable gaming has on communities, said the implementation of the emergency rules punted the litigation to the original case.

“We’re anticipating continued legal action,” she said. “We’re trying to figure out what our next steps are. We’re very frustrated, and this has gotten to the point now where we’re not sure what victory looks like anymore.”

Baratta said that on Aug. 8, Donofrio granted the plaintiffs’ motion for summary disposition, so they won the case, but poker lounges still cannot operate because of the emergency rules.

The emergency rules document posted on www.michigan.gov states that the emergency rules shall remain in effect for six months.

You can reach C & G Staff Writer Sarah Wojcik at swojcik@candgnews.com or at (586)498-1029.