HB-4926, As Passed House, June 12, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 4926

 

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to create the lawful internet gaming act; to impose

 

requirements for persons to engage in internet gaming; to create

 

the division of internet gaming; to provide for the powers and

 

duties of the division of internet gaming and other state

 

governmental officers and entities; to impose fees; to impose a tax

 

on the conduct of licensed internet gaming; to create the internet

 

gaming fund; to prohibit certain acts in relation to internet

 

gaming and to prescribe penalties for those violations; to require

 

the promulgation of rules; and to provide remedies.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"lawful internet gaming act".


     Sec. 2. (1) The legislature finds that the internet has become

 

an integral part of everyday life for a significant number of

 

residents of this state, not only in regard to their professional

 

lives, but also in regard to personal business and communication.

 

Internet wagering on games of chance and games of skill is a core

 

form of entertainment for millions of individuals worldwide. In

 

multiple jurisdictions across the world, internet gaming is legal,

 

regulated, and taxed, generating billions of dollars in revenue for

 

governments.

 

     (2) In an opinion dated September 20, 2011, the United States

 

Department of Justice reversed its previous interpretation of 18

 

USC 1084, commonly referred to as the federal wire act, allowing

 

states, subject to certain restrictions, to legalize and regulate

 

internet gaming and capture the revenue for the benefit of state

 

governments.

 

     (3) In order to protect residents of this state who wager on

 

games of chance or skill through the internet and to capture

 

revenues and create jobs generated from internet gaming, it is in

 

the best interest of this state and its citizens to regulate this

 

activity by authorizing and establishing a secure, responsible,

 

fair, and legal system of internet gaming that complies with the

 

United States Department of Justice's September 2011 opinion

 

concerning 18 USC 1084.

 

     (4) The legislature additionally finds that this act is

 

consistent and complies with the unlawful internet gambling

 

enforcement act of 2006, 31 USC 5361 to 5367, and specifically

 

authorizes use of the internet to place, receive, or otherwise


knowingly transmit a bet or wager if that use complies with this

 

act and rules promulgated under this act.

 

     (5) The legislature additionally finds that this act is

 

consistent and complies with the state constitution of 1963 by

 

ensuring that internet gaming only occurs in casinos that are

 

lawfully operating in this state.

 

     Sec. 3. As used in this act:

 

     (a) "Athletic event" means a sports activity that involves the

 

athletic skill of 1 or more players or participants. Athletic event

 

does not include any of the following:

 

     (i) Horse racing.

 

     (ii) College, high school, or other amateur sports.

 

     (iii) Roulette, poker, blackjack, a card game, a dice game, or

 

any other game or contest typically offered in a casino.

 

     (b) "Authorized participant" means an individual who has a

 

valid internet wagering account with an internet gaming licensee

 

and is at least 21 years of age.

 

     (c) "Board" means the Michigan gaming control board created

 

under section 4 of the Michigan gaming control and revenue act,

 

1996 IL 1, MCL 432.204.

 

     (d) "Class III gaming" means that term as defined in 25 USC

 

2703.

 

     (e) "Casino" means a building or buildings in which gaming is

 

lawfully conducted under the Michigan gaming control and revenue

 

act, 1996 IL 1, MCL 432.201 to 432.226, or in which class III

 

gaming is lawfully conducted by an Indian tribe under a facility

 

license issued in accordance with a tribal gaming ordinance


approved by the chair of the National Indian Gaming Commission.

 

     (f) "Division" means the division of internet gaming

 

established under section 5.

 

     (g) "Fantasy sports game" means a fantasy or simulation sports

 

game or contest with a cash or cash equivalent entry fee that meets

 

all of the following conditions:

 

     (i) The value of all prizes offered to winning game

 

participants is established and made known to the game participants

 

in advance of the fantasy sports game and their value is not

 

determined by the number of game participants or the amount of any

 

fees paid by the game participants.

 

     (ii) All winning outcomes reflect the relative knowledge and

 

skill of game participants and are determined predominantly by

 

accumulated statistical results of the performance of athletes in

 

real-world athletic events.

 

     (iii) A winning outcome is not based on the score, point

 

spread, or performance of a single real-world team or any

 

combination of teams or on any single performance of an individual

 

athlete in a single athletic event.

 

     (h) "Fund" means the internet gaming fund created under

 

section 15.

 

     (i) "Gross gaming revenue" means the total of all internet

 

wagers actually received by an internet gaming licensee licensed by

 

the division, less the total of all winnings paid out to authorized

 

participants. As used in this subdivision:

 

     (i) "Prizes" includes both monetary and nonmonetary prizes

 

received directly or indirectly by an authorized participant from


an internet gaming licensee licensed by the division as a direct or

 

indirect result of placing an internet wager. The value of a

 

nonmonetary prize is the actual cost of the prize.

 

     (ii) "Winnings" includes all of the following:

 

     (A) The total amount authorized participants receive as prizes

 

during the accounting period.

 

     (B) Stakes returned to authorized participants.

 

     (C) Other amounts credited to authorized participants'

 

accounts, including the monetary value of loyalty points, free

 

play, and other similar complimentaries and incentives granted to

 

authorized participants as a result of participation in internet

 

games.

 

     (j) "Institutional investor" means a person that is any of the

 

following:

 

     (i) A retirement fund administered by a public agency for the

 

exclusive benefit of federal, state, or local public employees.

 

     (ii) An employee benefit plan or pension fund that is subject

 

to the employee retirement income security act of 1974, Public Law

 

93-406.

 

     (iii) An investment company registered under the investment

 

company act of 1940, 15 USC 80a-1 to 80a-64.

 

     (iv) A collective investment trust organized by a bank under

 

12 CFR part 9.

 

     (v) A closed end investment trust.

 

     (vi) A chartered or licensed life insurance company or

 

property and casualty insurance company.

 

     (vii) A chartered or licensed financial institution.


     (viii) An investment advisor registered under the investment

 

advisers act of 1940, 15 USC 80b-1 to 80b-21.

 

     (ix) Any other person that the division determines should be

 

considered to be an institutional investor for reasons consistent

 

with this act.

 

     (k) "Internet" means the international computer network of

 

interoperable packet-switched data networks, inclusive of such

 

additional technological platforms as mobile, satellite, and other

 

electronic distribution channels approved by the division.

 

     (l) "Internet game" means a game of skill or chance that is

 

offered for play through the internet in which a person wagers

 

money or something of monetary value for the opportunity to win

 

money or something of monetary value. For purposes of this

 

definition, free plays or extended playing time that is won on a

 

game of skill or chance that is offered through the internet is not

 

something of monetary value. Internet game includes gaming

 

tournaments conducted via the internet in which persons compete

 

against one another in 1 or more of the games approved by the

 

division or in approved variations or composites as approved by the

 

division.

 

     (m) "Internet gaming" means operating, conducting, or offering

 

for play an internet game.

 

     (n) "Internet gaming licensee" means a person that is issued

 

an internet gaming license from the division to conduct internet

 

gaming or is otherwise authorized to conduct internet gaming under

 

section 7.

 

     (o) "Internet gaming platform" means an integrated system of


hardware, software, and servers through which an internet gaming

 

licensee conducts internet gaming under this act.

 

     (p) "Internet gaming vendor" means a person that provides to

 

an internet gaming licensee goods, software, or services that

 

directly affect the wagering, play, and results of internet games

 

offered under this act, including goods, software, or services

 

necessary to the acceptance, operation, administration, or control

 

of internet wagers, internet games, internet wagering accounts, or

 

internet gaming platforms. Internet gaming vendor does not include

 

a person that provides to an internet gaming licensee only such

 

goods, software, or services that it also provides to others for

 

purposes not involving internet gaming, including, but not limited

 

to, a payment processor or a geolocation service provider.

 

     (q) "Internet wager" means money or something of monetary

 

value risked on an internet game offered under this act.

 

     (r) "Internet wagering" means the placing of wagers with an

 

internet gaming licensee using a computer network of both federal

 

and nonfederal interoperable packet switched data networks through

 

which the internet gaming licensee may offer internet games to

 

authorized participants who have established a wagering account

 

with the internet gaming licensee.

 

     (s) "Internet wagering account" means an electronic ledger in

 

which all of the following types of transactions relative to the

 

internet gaming platform are recorded:

 

     (i) Deposits.

 

     (ii) Withdrawals.

 

     (iii) Amounts wagered.


     (iv) Amounts paid on winning wagers.

 

     (v) Service or other transaction-related charges authorized by

 

the authorized participant, if any.

 

     (vi) Adjustments to the account.

 

     (t) "Person" means an individual, partnership, corporation,

 

association, limited liability company, federally recognized Indian

 

tribe, or other legal entity. Person does not include this state or

 

any department or agency of this state.

 

     Sec. 4. (1) Internet gaming may be conducted only to the

 

extent that it is conducted in accordance with this act. A law that

 

is inconsistent with this act does not apply to internet gaming as

 

provided for by this act. This act does not apply to lottery games

 

offered by the bureau of state lottery either through the internet

 

or via its online terminal and network systems.

 

     (2) An internet wager received by an internet gaming licensee

 

is considered to be gambling or gaming that is conducted in the

 

licensee's casino located in this state, regardless of the

 

authorized participant's location at the time the participant

 

initiates or otherwise places the internet wager.

 

     (3) An internet wager received by a federally recognized

 

Michigan Indian tribe is considered to be gambling or gaming that

 

is conducted wholly within that Indian tribe's casino on Indian

 

tribal lands located in this state, regardless of the authorized

 

participant's location at the time the participant places the

 

internet wager.

 

     (4) All internet wagers placed in accordance with this act are

 

considered placed when received by the internet gaming licensee,


House Bill No. 4926 as amended June 19, 2018

regardless of the authorized participant's location at the time the

 

participant initiates the wager. Any intermediate routing of

 

electronic data in connection with a wager, including across state

 

lines, does not determine the location or locations in which the

 

wager is initiated, received, or otherwise made, and does not

 

affect the fact that the wager is considered placed in the internet

 

gaming licensee's casino.

 

     (5) An internet gaming licensee's primary internet gaming

 

operation, including facilities, equipment, and personnel who are

 

directly engaged in the conduct of internet gaming activities, must

 

be located in a restricted area on the premises of the internet

 

gaming licensee's casino. Backup equipment may be located outside

 

the internet gaming licensee's casino, as long as any wager is

 

placed with the internet gaming licensee on equipment that is

 

physically located within the internet gaming licensee's casino.

 

     (6) Only an internet gaming licensee at its casino may

 

aggregate computers or other internet access devices in order to

 

enable multiple players to simultaneously play an internet game.

 

Except as provided in this subsection, a person shall not aggregate

 

computers or other internet access devices in a place of public

 

accommodation in this state, including a club or other association,

 

in order to enable multiple players to simultaneously play an

 

internet game.

[(7) An internet gaming licensee licensed by the division shall, on

 the internet gaming platform used by the licensee, display in a clear, conspicuous, and accessible manner evidence of the licensee's internet gaming license issued under this act.]

(8] This act does not apply to a fantasy sports game.                                                                                                                                                                                                                                                                                                   

 

     Sec. 5. (1) The division of internet gaming is established in

 

the board. The division has the powers and duties specified in this

 

act and all other powers necessary to enable it to fully and


effectively execute this act to administer, regulate, and enforce

 

the system of internet gaming established by this act.

 

     (2) The division has jurisdiction over every person licensed

 

by the division and may take enforcement action as provided in

 

section 9(2) against a person that is not licensed by the division

 

that offers internet gaming in this state.

 

     (3) The division may enter into agreements with other

 

jurisdictions to facilitate, administer, and regulate

 

multijurisdictional internet gaming by internet gaming licensees to

 

the extent that entering into the agreement is consistent with

 

state and federal laws and if the gaming under the agreement is

 

conducted only in the United States.

 

     (4) The division may permit an internet gaming licensee

 

licensed by the division to conduct internet wagering under this

 

act on any amateur or professional sporting event or contest, if

 

that internet wagering is not prohibited by federal law.

 

     Sec. 6. (1) The division may issue an internet gaming license

 

only to a person that holds a casino license under the Michigan

 

gaming control and revenue act, 1996 IL 1, MCL 432.201 to 432.226.

 

The division shall issue an internet gaming license to the person

 

described in this subsection after receiving the application

 

described in subsection (3) and the application fee if the division

 

determines that the internet gaming proposed by the person complies

 

with this act.

 

     (2) An internet gaming license issued under this act is valid

 

for the 5-year period after the date of issuance and, if the

 

division determines that the licensee continues to meet the


eligibility standards under this act, is renewable for additional

 

5-year periods. An internet gaming licensee shall not conduct

 

internet gaming until 1 year after the date this act is enacted

 

into law.

 

     (3) A person may apply to the division for an internet gaming

 

license to offer internet gaming as provided in this act. Subject

 

to subsection (4), the application must be made on forms provided

 

by the division and include the information required by the

 

division, including, but not limited to, all of the following:

 

     (a) Detailed information regarding the ownership and

 

management of the person.

 

     (b) Detailed personal information regarding the person.

 

     (c) Financial information regarding the person.

 

     (d) The gaming history and experience of the person in the

 

United States and other jurisdictions.

 

     (4) A person does not need to provide any information in an

 

application under subsection (3) that the person has previously

 

provided to the division unless the division notifies the applicant

 

that the division cannot locate the previously provided

 

information.

 

     (5) An initial application for an internet gaming license must

 

be accompanied by an application fee of $100,000.00. The rules

 

promulgated under section 10 may include provisions for the refund

 

of an application fee, or the portion of an application fee that

 

has not been expended by the division in processing the

 

application, and the circumstances under which the fee will be

 

refunded.


     (6) The division shall keep all information, records,

 

interviews, reports, statements, memoranda, or other data supplied

 

to or used by the division in the course of its review or

 

investigation of an application for an internet gaming license or a

 

renewal of an internet gaming license confidential and shall use

 

that material only to evaluate the application for an internet

 

gaming license for the license or renewal of the license. The

 

materials described in this subsection are exempt from disclosure

 

under section 13 of the freedom of information act, 1976 PA 442,

 

MCL 15.243.

 

     (7) An application under this section must be submitted and

 

considered in accordance with this act and any rules promulgated

 

under this act.

 

     (8) An internet gaming licensee licensed by the division shall

 

pay a license fee of $200,000.00 to the division at the time the

 

initial license is issued and $100,000.00 each year after the

 

initial license is issued. The division shall deposit all

 

application and license fees paid under this act into the fund.

 

     (9) An institutional investor that holds for investment

 

purposes only less than 30% of the equity of a person applying for

 

an internet gaming license under this section is exempt from the

 

licensure requirements of this section.

 

     Sec. 7. (1) A federally recognized Michigan Indian tribe that

 

operates a casino in this state in which class III gaming is

 

conducted may conduct internet gaming at that casino under this

 

act, commencing no sooner than 1 year after the effective date of

 

this act, if authorized by a compact the tribe has entered into


with this state under the Indian gaming regulatory act, Public Law

 

100-497, subject to the terms of the compact or amendment, and

 

requirements of applicable federal law.

 

     (2) With respect to a request for a compact amendment or a new

 

compact to permit an eligible Indian tribe to conduct internet

 

gaming under this act, the tribe shall request the amendment or new

 

compact by letter from the tribal chairperson on behalf of the

 

tribe to the governor on behalf of this state. The letter described

 

in this subsection must include proposed terms consistent with this

 

act.

 

     (3) With respect to a request to authorize an Indian tribe to

 

conduct internet gaming authorized under this act under the terms

 

of an existing compact that authorizes the Indian tribe to request

 

the addition of new class III games with approval by the governor,

 

the tribe shall request that internet gaming be added as an

 

additional class III game under the compact.

 

     (4) The governor, on behalf of this state, may negotiate and

 

enter into a compact, on behalf of this state, with a federally

 

recognized Indian tribe, that expressly authorizes internet gaming

 

under this act. The terms of a compact or amendment to a compact

 

under this subsection must address the following:

 

     (a) The amount and manner of revenue sharing payments to be

 

made to this state related to internet gaming.

 

     (b) The legal and equitable remedies and process by which this

 

state may enforce, in federal courts, the terms of the compact or

 

amendment to a compact, including, but not limited to, the Indian

 

tribe's agreement to make revenue sharing payments to this state


based on revenues generated by the internet gaming conducted by the

 

Indian tribe.

 

     (c) The types of internet games to be offered for play and

 

that the tribe may only offer for play those internet games that

 

the division has approved for internet gaming licensees licensed by

 

the division to offer.

 

     (d) The tribe's commitment to develop and utilize responsible

 

gaming programs similar to those described in section 12.

 

     (e) The tribe's obligation to develop and utilize financial

 

standards for internet wagering, internet wagering accounts, and

 

internet gaming platforms, systems and software, and other

 

electronic components for internet gaming that are similar to the

 

standards imposed by the division, or to standards promulgated by

 

the state of Nevada or the state of New Jersey.

 

     (f) The tribe's obligation to develop and utilize 1 or more

 

mechanisms designed to reasonably verify that an individual who

 

desires to wager over the internet gaming platform used by the

 

tribe is 21 years of age or older.

 

     (g) The tribe's obligation to develop and utilize verification

 

mechanisms designed to detect and prevent the unauthorized use of

 

internet wagering accounts and to detect and prevent fraud, money

 

laundering, and collusion.

 

     (h) The tribe's obligation to ensure that its internet gaming

 

platform provider, if not tribally owned, is licensed as an

 

internet gaming vendor under this act.

 

     (i) The tribe's obligation to cease all internet gaming

 

operations permitted by this act if a court enters a judgment or


order that has the effect of invalidating or otherwise rendering

 

inoperative section 6(1) or otherwise nullifies the ability of a

 

person that holds a casino license under the Michigan gaming

 

control and revenue act, 1996 IL 1, MCL 432.201 to 432.226, to

 

offer internet gaming under this act.

 

     (j) The tribe's obligation to cease all internet gaming

 

operations if the tribe ceases operating its casino or the tribe

 

fails to offer class III games other than internet gaming at its

 

casino.

 

     (5) The governor shall negotiate in good faith regarding an

 

eligible Indian tribe's request for a compact amendment or a new

 

compact under subsection (2). If the governor fails to negotiate

 

with an Indian tribe or fails to negotiate in good faith with

 

respect to any request that addresses the provisions set forth in

 

subsection (4), the Indian tribe may initiate a cause of action in

 

federal court as authorized under 25 USC 2710(d)(7).

 

     (6) An Indian tribe authorized to conduct internet gaming

 

under this act pursuant to a compact, or amendment to a compact,

 

entered into with this state is authorized to become a party to any

 

multijurisdictional agreement entered into by the division under

 

section 5(3) of this act and may enter into agreements with other

 

Indian tribes to facilitate, administer, and regulate

 

multijurisdictional internet gaming to the extent that the

 

agreement is consistent with applicable tribe, state and federal

 

laws, including the Indian gaming regulatory act, Public Law 100-

 

497, and the unlawful internet gambling enforcement act of 2006,

 

Public Law 109-347.


     Sec. 8. (1) The division may issue an internet gaming vendor

 

license to a person to provide goods, software, or services to

 

internet gaming licensees. A person that is not licensed under this

 

section shall not provide goods, software, or services as an

 

internet gaming vendor to an internet gaming licensee.

 

     (2) On application by an interested person, the division may

 

issue a provisional internet gaming vendor license to a person that

 

applies for an internet gaming vendor license. A provisional

 

license issued under this subsection allows the person applying for

 

the internet gaming vendor license to conduct business with an

 

internet gaming licensee or person applying for an internet gaming

 

license before the internet gaming vendor license is issued to the

 

person. A provisional license issued under this subsection expires

 

on the date provided in the license by the division.

 

     (3) An internet gaming vendor license issued under subsection

 

(1) is valid for the 5-year period after the date of issuance. An

 

internet gaming vendor license is renewable after the initial 5-

 

year period for additional 5-year periods if the division

 

determines that the internet gaming vendor continues to meet the

 

eligibility standards under this act.

 

     (4) A person may apply to the division to become an internet

 

gaming vendor licensee as provided in this act and the rules

 

promulgated under this act.

 

     (5) Subject to subsection (6), an application under this

 

section must be made on forms provided by the division and include

 

the information required by the division, including, but not

 

limited to, all of the following:


     (a) Detailed information regarding the ownership and

 

management of the person applying for the internet gaming vendor

 

license.

 

     (b) Detailed personal information regarding the person

 

applying for the internet gaming vendor license.

 

     (c) Financial information regarding the person applying for

 

the internet gaming vendor license.

 

     (d) The gaming history and experience of the person applying

 

for the internet gaming vendor license.

 

     (6) If the person applying for the internet gaming vendor

 

license is licensed as a supplier under the Michigan gaming control

 

and revenue act, 1996 IL 1, MCL 432.201 to 432.226, the person does

 

not need to provide any information that it has previously provided

 

to the division unless the division notifies the person that the

 

division cannot locate the previously provided information.

 

     (7) An application under this section must be accompanied by a

 

nonrefundable application fee in an amount to be determined by the

 

division, not to exceed $5,000.00.

 

     (8) The division shall keep all information, records,

 

interviews, reports, statements, memoranda, or other data supplied

 

to or used by the division in the course of its review or

 

investigation of an application for licensure as an internet gaming

 

vendor confidential and use the materials only to evaluate the

 

application for licensure. The materials described in this

 

subsection are exempt from disclosure under section 13 of the

 

freedom of information act, 1976 PA 442, MCL 15.243.

 

     (9) An internet gaming vendor shall pay a license fee of


$5,000.00 to the division at the time an initial license is issued

 

to the vendor and $2,500.00 each year after the initial license is

 

issued. An internet gaming platform provider shall pay a license

 

fee of $100,000.00 to the division at the time the initial license

 

is issued to the provider and $50,000.00 each year after the

 

initial license is issued.

 

     (10) The division shall deposit all application and license

 

fees paid under this act into the fund.

 

     (11) An institutional investor that holds for investment

 

purposes only less than 30% of the equity of a person applying for

 

the internet gaming vendor license under this section is exempt

 

from the licensure requirements of this act.

 

     Sec. 9. (1) Except for internet gaming conducted by an Indian

 

tribe under a compact or an amendment to a compact described in

 

section 7, the division has jurisdiction over and shall supervise

 

all internet gaming operations governed by this act. The division

 

may do anything necessary or desirable to effectuate this act,

 

including, but not limited to, all of the following:

 

     (a) Develop qualifications, standards, and procedures for

 

approval and licensure by the division of internet gaming licensees

 

and internet gaming vendors.

 

     (b) Decide promptly and in reasonable order all license

 

applications and approve, deny, suspend, revoke, restrict, or

 

refuse to renew internet gaming licenses and internet gaming vendor

 

licenses. A party aggrieved by an action of the division denying,

 

suspending, revoking, restricting, or refusing to renew a license

 

may request a contested case hearing before the division. A request


for hearing under this subdivision must be made to the division in

 

writing within 21 days after service of notice of the action by the

 

division.

 

     (c) Conduct all hearings pertaining to violations of this act

 

or rules promulgated under this act.

 

     (d) Provide for the establishment and collection of all

 

license fees and taxes imposed by this act and the rules

 

promulgated under this act and the deposit of the fees and taxes

 

into the fund.

 

     (e) Develop and enforce testing and auditing requirements for

 

internet gaming platforms, internet wagering, and internet wagering

 

accounts.

 

     (f) Develop and enforce requirements for responsible gaming

 

and player protection, including privacy and confidentiality

 

standards and duties.

 

     (g) Develop and enforce requirements for accepting internet

 

wagers.

 

     (h) Adopt by rule a code of conduct governing division

 

employees that ensures, to the maximum extent possible, that

 

persons subject to this act avoid situations, relationships, or

 

associations that may represent or lead to an actual or perceived

 

conflict of interest.

 

     (i) Develop and administer civil fines for internet gaming

 

licensees licensed by the division and internet gaming vendor

 

licensees that violate this act or the rules promulgated under this

 

act. A fine imposed under this subdivision must not exceed

 

$5,000.00 per violation.


     (j) Audit and inspect, on reasonable notice, books and records

 

relevant to internet gaming operations, internet wagers, internet

 

wagering accounts, internet games, or internet gaming platforms,

 

including, but not limited to, the books and records regarding

 

financing and accounting materials held by or in the custody of an

 

internet gaming licensee or internet gaming vendor licensee.

 

     (k) Acquire or lease real property and make improvements to

 

the property and acquire by lease or by purchase personal property,

 

including, but not limited to, any of the following:

 

     (i) Computer hardware.

 

     (ii) Mechanical, electronic, and online equipment and

 

terminals.

 

     (iii) Intangible property, including, but not limited to,

 

computer programs, software, and systems.

 

     (2) The division may investigate, issue cease and desist

 

orders, and obtain injunctive relief against a person that offers

 

internet gaming in this state and is not an internet gaming

 

licensee.

 

     (3) The division shall keep all information, records,

 

interviews, reports, statements, memoranda, and other data supplied

 

to or used by the division in the course of any investigation of a

 

person licensed under this act strictly confidential and shall use

 

that material only for investigative purposes. The materials

 

described in this subsection are exempt from disclosure under

 

section 13 of the freedom of information act, 1976 PA 442, MCL

 

15.243.

 

     Sec. 10. The division shall promulgate rules governing the


licensing, administration, and conduct of internet gaming necessary

 

to carry out this act within 1 year after the effective date of

 

this act. The promulgation of emergency rules does not satisfy the

 

requirement for the promulgation of rules to allow a person to

 

conduct internet gaming under this act. The division shall

 

promulgate the rules pursuant to the administrative procedures act

 

of 1969, 1969 PA 306, MCL 24.201 to 24.328. The rules may include

 

only things expressly authorized by this act, including all of the

 

following:

 

     (a) The types of internet games to be offered, which must

 

include, but need not be limited to, poker.

 

     (b) The qualifications, standards, and procedures for approval

 

and licensure by the division of internet gaming licensees and

 

internet gaming vendor licensees consistent with this act.

 

     (c) Requirements to ensure responsible gaming.

 

     (d) Technical and financial standards for internet wagering,

 

internet wagering accounts, and internet gaming platforms, systems,

 

and software or other electronic components integral to offering

 

internet gaming.

 

     (e) Procedures for conducting contested case hearings under

 

this act.

 

     (f) Procedures and requirements for the acceptance, by an

 

internet gaming licensee licensed by the division, of internet

 

wagers initiated or otherwise made by persons located in other

 

jurisdictions.

 

     (g) Requirements for multijurisdictional agreements entered

 

into by the division with other jurisdictions, including


qualifications, standards, and procedures for approval by the

 

division of vendors providing internet gaming platforms in

 

connection with the agreements.

 

     Sec. 11. (1) An internet gaming licensee licensed by the

 

division must provide 1 or more mechanisms on the internet gaming

 

platform that the licensee uses that are designed to reasonably

 

verify that an authorized participant is 21 years of age or older

 

and that internet wagering is limited to transactions that are

 

initiated and received or otherwise made by an authorized

 

participant located in this state or a jurisdiction in the United

 

States in which internet gaming is legal.

 

     (2) An individual who wishes to place an internet wager under

 

this act must satisfy the verification requirements under

 

subsection (1) before he or she may establish an internet gaming

 

account or make an internet wager on an internet game offered by an

 

internet gaming licensee licensed by the division.

 

     (3) An internet gaming licensee licensed by the division shall

 

require its internet gaming platform provider to include mechanisms

 

on the internet gaming platform the internet gaming licensee uses

 

that are designed to detect and prevent the unauthorized use of

 

internet wagering accounts and to detect and prevent fraud, money

 

laundering, and collusion.

 

     (4) An internet gaming licensee licensed by the division shall

 

not knowingly authorize any of the following individuals to

 

establish an internet gaming account or knowingly allow them to

 

wager on internet games offered by the internet gaming licensee,

 

except if required and authorized by the division for testing


purposes or to otherwise fulfill the purposes of this act:

 

     (a) An individual who is less than 21 years old.

 

     (b) An individual whose name appears in the division's

 

responsible gaming database.

 

     Sec. 12. (1) The division may develop responsible gaming

 

measures, including a statewide responsible gaming database

 

identifying individuals who are prohibited from establishing an

 

internet wagering account or participating in internet gaming

 

offered by an internet gaming licensee licensed by the division.

 

The executive director of the board may place an individual's name

 

in the responsible gaming database if any of the following apply:

 

     (a) The individual has been convicted in any jurisdiction of a

 

felony, a crime of moral turpitude, or a crime involving gaming.

 

     (b) The individual has violated this act or another gaming-

 

related law.

 

     (c) The individual has performed an act or has a notorious or

 

unsavory reputation such that the individual's participation in

 

internet gaming under this act would adversely affect public

 

confidence and trust in internet gaming.

 

     (d) The individual's name is on a valid and current exclusion

 

list maintained by this state or another jurisdiction in the United

 

States.

 

     (2) The division may promulgate rules for the establishment

 

and maintenance of the responsible gaming database.

 

     (3) An internet gaming licensee, in a format specified by the

 

division, may provide the division with names of individuals to be

 

included in the responsible gaming database.


     (4) An internet gaming licensee licensed by the division

 

shall, on the internet gaming platform used by the licensee,

 

display in a clear, conspicuous, and accessible manner the number

 

of the toll-free compulsive gambling hotline maintained by this

 

state and offer responsible gambling services and technical

 

controls to participants, consisting of both temporary and

 

permanent self-exclusion for all internet games offered and the

 

ability for participants to establish their own periodic deposit

 

and internet wagering limits and maximum playing times.

 

     (5) An authorized participant may voluntarily prohibit himself

 

or herself from establishing an internet wagering account with an

 

internet gaming licensee licensed by the division. The division may

 

incorporate the voluntary self-exclusion list into the responsible

 

gaming database and maintain both the self-exclusion list and the

 

responsible gaming database in a confidential manner.

 

     (6) The self-exclusion list and responsible gaming database

 

established under this section are exempt from disclosure under

 

section 13 of the freedom of information act, 1976 PA 442, MCL

 

15.243.

 

     Sec. 13. (1) Except as otherwise authorized in the opinion

 

described in section 2(2), a person shall not do any of the

 

following:

 

     (a) Offer internet gaming for play in this state if the person

 

is not an internet gaming licensee.

 

     (b) Knowingly make a false statement on an application for a

 

license to be issued under this act.

 

     (c) Knowingly provide false testimony to the board or an


authorized representative of the board while under oath.

 

     (2) A person that violates subsection (1) is guilty of a

 

felony punishable by imprisonment for not more than 10 years or a

 

fine of not more than $100,000.00, or both.

 

     (3) The division shall not issue a license under this act to a

 

person that violates subsection (1).

 

     (4) The attorney general or a county prosecuting attorney

 

shall bring an action to prosecute a violation of subsection (1),

 

in the attorney general's or prosecuting attorney's discretion, in

 

the county in which the violation occurred or in Ingham County.

 

     Sec. 14. (1) A person that receives an internet gaming license

 

from the division is subject to a tax of 8% on the gross gaming

 

revenue received by the internet gaming licensee from internet

 

gaming conducted under this act.

 

     (2) An internet gaming licensee that is subject to subsection

 

(1) shall pay the tax under subsection (1) on a monthly basis. The

 

payment for a month is due on the tenth day of the following month.

 

     (3) The tax imposed under this section must be allocated as

 

follows:

 

     (a) Fifty-five percent to the city in which the internet

 

gaming licensee's casino is located, for use in connection with the

 

following:

 

     (i) The hiring, training, and deployment of street patrol

 

officers in that city.

 

     (ii) Neighborhood and downtown economic development programs

 

designed to create jobs in that city.

 

     (iii) Public safety programs such as emergency medical


House Bill No. 4926 as amended June 19, 2018

services, fire department programs, and street lighting in that

 

city.

 

     (iv) Anti-gang and youth development programs in that city.

 

     (v) Other programs that are designed to contribute to the

 

improvement of the quality of life in that city.

 

     (vi) Relief to the taxpayers of the city from 1 or more taxes

 

or fees imposed by the city.

 

     (vii) The costs of capital improvements in that city.

 

     (viii) Road repairs and improvements in that city.

 

     (b) [Thirty-five] percent to the state to be deposited in the

 

fund.

[(c) Five percent to be deposited in the state school aid fund

 established under section 11 of article IX of the state constitution of 1963.

(d) Five percent to be deposited in the Michigan transportation fund created under section 10 of 1951 PA 51, MCL 247.660, to be disbursed as provided in section 10(1)(l) of 1951 PA 51, MCL 247.660.]

 

     Sec. 15. (1) The internet gaming fund is created in the state

 

treasury.                                                                                                                                                                                                    

 

 (2) The state treasurer may receive money or other assets

 

required to be paid into the fund under this act or from any other

 

source for deposit into the fund. The state treasurer shall direct

 

the investment of the fund. The state treasurer shall credit to the

 

fund interest and earnings from fund investments.

 

     (3) The board is the administrator of the fund for auditing

 

purposes.

 

     (4) The board shall expend money from the fund, on

 

appropriation, for all of the following:

 

     (a) Each year, $1,000,000.00 to the compulsive gaming

 

prevention fund created in section 3 of the compulsive gaming

 

prevention act, 1997 PA 70, MCL 432.253.

 

     (b) The board's costs of regulating and enforcing internet

 

gaming under this act.


     Sec. 16. (1) If a court enters a final judgment or order that

 

has the effect of invalidating or otherwise rendering inoperative

 

section 6(1), or otherwise nullifies the ability of a person that

 

holds a casino license under the Michigan gaming control and

 

revenue act, 1996 IL 1, MCL 432.201 to 432.226, to offer internet

 

gaming under this act, this entire act is inoperable and of no

 

effect.

 

     (2) If a court holds that a provision of this act, or the

 

application of a provision of this act to any person or

 

circumstance, is invalid or inoperative other than as provided in

 

subsection (1), the validity of the remainder of this act and the

 

application of the remainder of this act to other persons and

 

circumstances are not affected, as provided in section 5 of 1846 RS

 

1, MCL 8.5.

 

     Enacting section 1. This act takes effect 90 days after the

 

date it is enacted into law.

 

     Enacting section 2. This act does not take effect unless House

 

Bill No. 4927 of the 99th Legislature is enacted into law.