Charitable  Gaming  Division

Texas Hold’em Experience

Charitable  Gaming  History

• Charitable Gaming was created whenthe Traxler-McCauley-Law-BowmanBingo Act, PA 382 of 1972 was signedinto law. (Bingo Act)

• The Bingo Act allows for licensing andregulation of bingo, raffles, charity gametickets, and millionaire parties.

Mission  Statement

• Provide services to the general public in aprofessional, positive, and efficient manner.

• Ensure that only organizations that qualify inaccordance with the statute receive licenses.

• Ensure that licensed gaming events areconducted in a fair and honest manner.

• Ensure that funds received from the generalpublic through licensed gaming events areaccounted for and used for the lawful purposesof the organization.

Charitable  Gaming  History

• 70’s and 80’s, Bingo and Millionaireparties were the bulk of non profitfundraising.

• Bingo’s and Millionaire Parties died inthe 1990’s

• Non profits then looked for otheravenues of fundraising

Charitable  Gaming  History• Charitable Gaming recognized that charitable

organizations needed a kick start in generatingrevenue for their lawful purpose.

• New card games were authorized for play:– Let it Ride– Tournament Texas Hold'em– Fixed Limit Texas Hold'em– Seven Card Stud– Omaha Hi Lo– Blackjack

• Texas Hold’em became the most popular andsuccessful program to date.

Texas  Hold’em

Revenue increased by almost $20 millionfrom FY 2009 to FY 2010. TexasHold’em Poker is still the main draw forplayers.

As long as the popularity for TexasHold’em continues, Millionaire Partiesshould be a lucrative fundraiser forcharities.

Millionaire  Party  Game  Revenue

Previous  Game  Revenue  in  Millions

• 2003--$3.5• 2004--$3.7• 2005--$5.7• 2006--$8.9• 2007--$27.4• 2008--$70.9• 2009--$162• 2010--$185

Growth  in  Millionaire  Parties

• In 2004, 681 licenses were issued, by theend of 2010 we were up to 8,386 with noadditional staff to assist in regulating.

$185,261,723—Revenue$147,845,709—Prizes$18,439,146—Expenses$18,976,868 –Profit

Non  Profits  Types  That  Are  EligibleThere are nine types of organizations that have thepotential to be qualified:

• Educational• Educational Subordinate• Fraternal• Local Civic• Religious• Religious Subordinate• Senior Citizens• Service• Veterans

Example: Lions clubs qualify under “Service Organization”

Qualification  Example/Service  OrganizationIf the organization has never submitted qualifying information as a serviceorganization, the following information shall be submitted in the name of theorganization prior to being approved to conduct a bingo, millionaire party, raffle,or charity game. A previously qualified organization may be required to submitupdated qualification information to assure its continued eligibility under the act.

1. A signed and dated copy of the organization’s current bylaws or constitution,including membership criteria.

2. A complete copy of the organization’s Articles of Incorporation that have beenfiled with the Corporations and Securities Bureau, if the organization isincorporated.

3. A provision in the bylaws, constitution, or Articles of Incorporation that allassets, and real and personal property will revert to the local government oranother nonprofit organization should the organization dissolve.

4. A copy of the letter from the IRS stating the organization is exempt from federaltax under IRS code 501(c), OR, copies of one bank statement per year for theprevious five years, excluding the current year.

5. A copy of the charter or a directory published by the state or nationalorganization that lists the organization.

6. A copy of the state or national bylaws may need to be submitted. The state ornational bylaws shall provide for all requirements pursuant to R432.21202(4).

Qualification  Requirements(1) Each applicant applying for a gaming license who has not previously qualifiedshall first submit qualification information as required by the bureau.

(2) Except as provided in the act, each applicant shall provide proof that itsbylaws, constitution, articles of incorporation, or the bylaws or constitution of itsparent organization include a statement of dissolution. The statement ofdissolution shall state that all assets of the qualifying organization remainingupon dissolution, after satisfying its debts, be distributed to the local governmentor another nonprofit organization.

(3) The bureau, at its discretion, may require a previously qualified organizationto submit updated qualification information to assure the organization’scontinued eligibility under the act.

(4) In addition to the requirements of the act, the commissioner shall considercertain factors when determining if an applicant or licensee qualifies as a“branch,” “lodge,” or “chapter.”

Qualification  Requirements  Cont.These include, but are not limited to, the following:

(a) Charter or similar document issued by the national or state organization uponacceptance as a branch, lodge, or chapter.(b) Conditions established by the national or state organization for the revocationor suspension of the charter or relationship.(c) Dues or financial support submitted to the national or state organization bythe branch, lodge, or chapter.(d) Degree of control exerted by the national or state organization over theactivities of the branch, lodge, or chapter.(e) Oversight and control provided by the national or state organization over thefinancial affairs of the branch, lodge, or chapter, including the audit of financialrecords of the branch, lodge, or chapter.(f) Standard bylaws adopted by the branch, lodge, or chapter or bylaws submittedto the national or state organization for approval.(g) Appointed or elected officers of the branch, lodge, or chapter who areresponsible for the activities of the branch, lodge, or chapter.(h) Ability of the branch, lodge, or chapter to influence activities (normallydemonstrated by voting privileges) at the state or national level.

Gaming  License  Applications(1) A qualified organization, unless ineligible under the act, shall be eligible to apply

for a gaming license.(2) A qualified organization shall submit an application for a gaming license on a

form provided by or approved in writing by the bureau.(3) In addition to the gaming license application, the applicant shall submit

additional information as directed by the bureau.(4) The gaming license application shall be accompanied by the appropriate fee.(5) If a gaming license application is cancelled or denied, then the bureau may retain

a portion of the original statutory fee submitted to cover processing costs.(6) An applicant shall disclose to the bureau whether any individual, officer, or agent

of the applicant has ever been convicted or becomes convicted of, or forfeited bondupon a charge of, or pled guilty to any of the following offenses:(a) A felony.(b) A gambling offense.(c) Criminal fraud.(d) Forgery.(e) Larceny.(f) Filing a false report with a governmental agency.(7) Any changes to the information provided on or attached to the gaming licenseapplication shall be immediately reported to the bureau in writing.

Additional  Eligibility  FactorsIn addition to the requirements of the act, the commissioner shall consider the following factors

when reviewing a gaming license application or renewal application:

(a) The honesty and integrity of the applicant.(b) The veracity and accuracy of any information supplied to the bureau by the applicant.(c) The applicant’s indebtedness to local, state, or federal government.(d) A pending lawsuit or bankruptcy proceeding involving the applicant.(e) The applicant’s current or past history of compliance with the act, these rules, terms of

probation, directives of the bureau, public policy of the state of Michigan, or any other local,state, or federal law or regulation.

(f) Criminal convictions of the applicant or any individual, officer, or agent of the applicant forany of the following offenses:(i) A violation of the act.(ii) A felony.(iii) A gambling offense.(iv) Criminal fraud.(v) Forgery.(vi) Larceny.(vii) Filing a false report with a governmental agency.(g) Any other information considered advisable by the commissioner.

Millionaire  Party  License• A qualified organization may receive 4

millionaire party licenses per year

• Each license can be up to 4 consecutive days

• The fee is $50 for each day of the millionaireparty

ManagementOnly the Charity can manage the event– Cash– Chips– Game Records

• The payment of expenses incurred inconnection with the conduct of the licensedgaming event shall be necessary andreasonable, but shall not exceed 50% of thegross profit. This amount does not includethe license fee.

Operation

• Provide equipment• Location• Technical Advise• Training

All  License  Records• 3 years + current year• A copy of the current license and application• All game (event) records• Worker Service Record• Receipts, invoices and validated deposit slips• Cancelled checks and bank Statements• Financial Statement• House rules

The  Bureau  Must  Ensure  Fairness

• Arbitrary or capricious decisions cannotbe made

• Inspectors are required to do their duediligence in investigating and reporting

• Ensure lawful reasons for denying acharity event license at unsuitablelocations

Why  a  Moratorium  on  New  Locations

• Lack of staff to properly regulate• To protect the welfare of the public• Unable to effectively investigate complaints to

ensure properly, efficiently, and timelyinvestigations

• Bingo, Charity Game Ticket, Raffleinspections are suffering –all attention onTexas Hold’em

• Public Perception

Reoccurring  Problems• Millionaire Party locations are not required to be

licensed limiting Charitable Gaming authority anddifficult to regulate

• Playing without license• Advertising violations• Exceeding the $15,000.00 limit• Locations handling cash, chips and game records• Embezzlement from charities• Locations inappropriately training organizations• Completing accountability forms accurately, balancing

paperwork

Proposed  Improvements• Partner with other agencies, i.e. State Police, Liquor

Control Commission, our own Lottery• Possible Legislative Changes:

a) Imposing Fines—Inspectors issue citations on siteb) Fee Increasesc) License Locationsd) Limit Number of Licensees per daye) Increase $15,000 daily chip allowancef) Background Checks on location owners and dealers-would

include Financial-Credit Check (looking for debt to state andlocal government), Criminal Check, Owners of Property-lease holder, share holder

g) Tier system for licensesh) Prohibit use of the word “Casino” in Location Title

Reasons  to  Continue  Texas  Hold’em• Generates more revenue for charitable

organizations• Increases revenue for State of

Michigan’s general fund• Provides an additional gaming option to

existing and new players• Replacement to sluggish Bingo Game

fundraising• Affordable Entertainment• Allows for small business

Charitable  Gaming  Website

• Any questions, please feel free to contactus or check our website at:

• www.michigan.gov/cg• Lansing office 517-335-5780