Michigan Gaming Laws


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Internet Cafe Shutdowns Could Mar Prospect Of Online Gambling In Michigan

The state of Michigan is many things to many people. For some it is the epicenter of the auto industry, while for others it represents the backdrop for the artists and legends that created the “Motown Sound.” But there’s one more thing that many Americans outside the state lines may not realize that Michigan is known for–gambling. Since the early 1970s, Michigan has been home to one of the country’s most prosperous lotteries. Currently, three commercial casinos operate within the Detroit city limits, and 12 different Native American tribes operate 22 casinos throughout the state. Standardbred horse racing is also plentiful, with four tracks in operation. The only form of gambling that Michigan hasn’t legalized–online gambling–recently caused a stir within state boundaries, and the result could mean that state lawmakers won’t be too eager to examine the pros and cons of online gambling legislation anytime soon.

online gambling in michiganA May 2012 sting on eight separate “Internet cafes” scattered in Flint, Grand Rapids, Lansing, and Saginaw brought to a screeching halt the operation of what authorities have called “pop-up casinos.” The cafes were bringing in customers with the promise of sweepstakes entries and opportunities to win cash prizes. But the state of Michigan’s cease and desist letters shut each cafe down indefinitely, justifying the action by saying that the cafes did not have gambling licenses.[1] And while gambling proponents are saying there isn’t enough definitive legislation regarding the legality of online gambling, the state says there’s plenty, and they proceeded with the crackdowns. Punishment includes a $1,000 fine or a possible two-year prison sentence for anyone operating or maintaining a gaming room, gaming table, or a game of chance.

A month later, Michigan Attorney General Bill Schuette sent “cease and desist” orders to nine more Internet cafes to shut down all operations or face legal action. The Michigan government didn’t leave much gray area concerning its view on any kind of online gambling. The state’s official website issued a release on June 12 outlining the stance being taken against the “Internet Sweepstakes Cafes” due to the state’s strict prohibition against unregulated gambling stating that “the only gambling authorized under state law includes pari-mutuel horse racing, bingo, the state-sponsored lottery, certain charity events and casino gambling licensed under the Michigan Gaming Control and Revenue Act.”[2]

A couple months prior to the sting on the Internet cafes, Michigan revealed yet another dislike for online gambling when the sale of lottery tickets over the Internet was made illegal. Senate Bill No. 1003 left no doubts about the legality of selling lottery tickets online, as the amended law read, “The Commissioner shall not allow tickets or shares in the state lottery to be sold over the Internet.”[3]

Although Michigan is vehemently opposed to selling lottery tickets online and the Internet cafes that were allegedly dens of illegal online gambling, other forms of regulated gambling are permitted in the Great Lakes State. For instance, in April 2011, Gov. Rick Snyder signed an order that gave the Michigan Gaming Control Board authority over “millionaire parties,” during which civic organizations offer participants casino-style games as a fundraiser. Previously, the Michigan State Lottery was in charge of the regulation of millionaire parties. Snyder said the order will make regulation of such activity easier to regulate as well as a better way to ensure that the organizations aren’t a front for any kind of organized crime. “Many of Michigan’s fine nonprofits and charities count on these games to raise revenue,” Snyder said.[4]

Not Just Motown and Hot Rods–Michigan’s History of Gambling

online gambling billMichigan’s history of legal gambling began in the 1930s when Gov. William Comstock signed legislation permitting wagering on horse racing.

The first legal pari-mutuel race was held at the Detroit Fair Grounds on Sept. 2, 1933. Mayco takes the honor of being the first horse to win a pari-mutuel race in Michigan.

At odds of 10-1, gamblers won $22 for each $2 win bet. The month long event brought in more than $3.5 million. Pari-mutuel harness racing began in 1944 with the opening of Northville Downs, which was the first racetrack to offer night harness racing. Jackson Harness Raceway followed in 1948, and Hazel Park opened in 1949. Northville Downs and Hazel Park are still in operation today.[5]

In 1972, Michigan voters approved an amendment to create a state lottery. The first drawing took place on November 24, 1972. Throughout its nearly 40-year history, the lottery has raked in more than $48 billion in total ticket sales, with $16.6 billion in revenue going to state education, $3.2 billion to the retail outlets that sell lottery tickets, and $26 billion in prize money. In 2011 the lottery earned $2.34 billion, sending $727.3 million to the School Aid Fund.[6]

Casinos became a reality for Michigan in 1999 following a vote by state residents in November 1996 that found favor with a proposal to allow up to three casinos to be built within Detroit city limits. The first to be completed was the “temporary” version of MGM Grand Detroit[7] in July 1999. The permanent casino resort opened in October 2003. The MotorCity Casino[8] opened in December 1999. A third casino, Greektown Casino Hotel[9], opened in November 2000. All of the Detroit casinos followed the opening of Caesars Windsor[10], which is actually located in Windsor, Ontario, Canada, but is separated from Detroit by only the Detroit-Windsor Tunnel. The 1998 opening of Caesars Windsor and the attraction it became for Michigan residents who traveled over the border to gamble is the prime reason the Wolverine State opened up three casinos of its own.

Michigan is also home to 22 Native American casinos owned by 12 different tribes. As is the case throughout the U.S., the tribal casinos are regulated by the National Indian Gaming Commission and the tribe’s own government. Each casino is permitted to operate through tribal-state gaming compacts signed by the governor. These compacts allow the Michigan Gaming Control Board the authority to ensure that each casino is in compliance with the compacts.[11]

Michigan Not Yet Ready For Online Gambling

Despite allowing every other form of gambling within its borders, the state of Michigan will certainly not be in the forefront of any online gambling legislation. With a law against Internet lottery sales and a crackdown on Internet cafes that were accused of being fronts for illegal online gambling just a few months ago, it seems as though Michigan lawmakers may be going in the opposite direction when it comes to permitting gambling over the Internet. However, when the Caesars Windsor casino opened up just over the U.S.-Canadian border and Michigan residents flocked to the casino, lawmakers saw the revenue that could be had by opening casinos in Detroit. The same thing may happen with online gambling. Once Michigan legislators see the profits that Nevada and Delaware and perhaps a few other states who are likely to legalize online poker and gambling are taking in, they may also change their stance to reap the expected rewards.

Sources

[1] Internet cafes in Michigan shut down for alleged illegal gambling activities – AaronKellyLaw.com
[2] Attorney General Bill Schuette Orders 9 More “Internet Cafes” To Cease Illegal Gambling Operations – Michigan.gov report
[3] Senate Bill 1003 to amend the Michigan state lottery act and ban internet sales of lottery tickets – Michigan State Legislature
[4] Governor signs order to more effectively regulate charitable gaming – Michigan.gov
[5] The history of pari-mutuel horse racing in the state of Michigan
[6] Facts about the Michigan state lottery – Michigan.gov
[7] The MGM Grand Hotel and Casino in Detroit – Wikipedia.org
[8] MotorCity Casino in Michigan – Wikipedia.org
[9] About Greektown Casino and Hotel
[10] Caesars Casino in Windsor – Wikipedia.org
[11] About tribal casinos in Michigan – Michigan.gov