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June 11, 2014

Temporary injunction allows charitable poker rooms to stay open

By Sarah Wojcik
C & G Staff Writer

METRO DETROIT — On May 30, a Michigan Court of Claims judge in Lansing listened to charitable gaming plaintiffs and called for a break of enforcement on new rules established by the Michigan Gaming Control Board.

The new rules, technically effective May 14, would severely reduce the amount and type of activity allowed at charitable poker lounges throughout the state. In June 2012, Gov. Rick Snyder tasked Michigan Gaming Control Board 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.

Millionaire parties are defined as casino-style events in which nonprofit organizations split costs with locations that supply all the necessary accommodations.

Judge Pat Donofrio decreed that the new rules would cause irreparable harm and issued a temporary injunction until the court case is resolved.

Michigan Charitable Gaming Association spokesperson Stephanie Van Koevering said she expected the injunction to last several years due to appeals, depositions and revisits in the court process.

The next step is a pretrial conference to be held via telephone with Donofrio and representatives of the Michigan Gaming Control Board and the Michigan Charitable Gaming Association at 11 a.m. June 12.

“This is a huge win for our industry right now,” Van Koevering said. “After several years of losing, we’re just pleased that the mousetrap has not snapped our necks and we are able to raise funds on behalf of the charities that serve many communities across Michigan.”

The new rules limit charitable gaming venues to four days from seven, allow one charity at a time to host an event instead of three, and require three charity members to be present instead of two. They also call for charities to hire and split revenue with a licensed supplier instead of a location and conduct events at a venue at which charity gaming is not the prime source of income.

The Michigan Charitable Gaming Association president’s affidavit stated, “If the rules … are allowed to go into effect, there will be approximately 11,014 fewer charitable gaming events in the state in the next 12 months. That equates to 2,753 fewer licenses being issued in a calendar year. This equates to approximately $9,635,000 less that charitable organizations will have to put back into Michigan’s communities in the next 12 months. At least 75 percent of the profit the charities realized in 2013 will be eliminated.”

Kalm wrote in an email that he could not discuss pending litigation, but that the Michigan Gaming Control Board respects the court and would comply with the injunction that allows the new rules to go in effect, given that the board enforces them as the old rules. He said he anticipated further litigation.

“The new rules sought to only use licensed suppliers to assist charities,” he wrote. “Poker rooms and locations that exist are not licensed and are not recognized under the current law (Bingo Act).”

Without licensing, venues do not have to provide background checks, surveillance, internal controls and all the normal regulations employed by casino rooms to prevent or deter illegal activity, Kalm said.

“Twenty-three poker rooms were banned for falsifying gaming records, violating criminal law or skimming money from charities,” he wrote. “The rules outlined and addressed those issues.”

He added that the Michigan Gaming Control Board has 19 new suppliers who would be available for charities to hire. In a previous interview with C & G Newspapers, Kalm said his hope was to transition the millionaire parties from charity poker lounges to bowling alleys, restaurants and bars. He said charities would just have to do a little more research to hire a supplier.

“Our goal is and always has been to ensure the fairness and integrity of the games, and we will do our best to do so while this matter is sorted out,” he wrote.

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