CONTENT
The bill would add Article 2 to the Bingo Act to regulate the conduct of millionaire parties and provide for the licensure of suppliers to millionaire party licensees. The bill would designate the current Act as Article 1 and remove the regulation of millionaire parties from Article 1. Under Article 2, the bill would do the following:
-- Provide for the issuance of millionaire party license.
-- Specify standards for the conduct of millionaire parties.
-- Establish requirements for the presence and participation of members of a qualified organization at a millionaire party the organization conducted.
-- Limit the amount that a licensee could use to pay expenses to 45% of the gross profit from an event, and otherwise regulate a millionaire party licensee's payment of expenses.
-- Require a millionaire party licensee to maintain an event record and file a financial statement.
-- Provide for the issuance of a license to act as a supplier to millionaire parties, and impose a $300 application fee.
-- Specify requirements of the Executive Director of the Michigan Gaming Control Board relative to millionaire parties.
Under Article 1, the bill would do the following:
-- Require fees and revenue collected by the Executive Director to be deposited in the State Lottery Fund; require expenses of the Director or the Board to be paid from the Fund; and limit those expenses to the amount of revenue from ticket sales and fees collected under the Act.
-- Include a raffle in a provision under which a penalty relating to a bingo game, millionaire party, or charity game does not apply to that conduct if done pursuant to the Act or rules promulgated under it.
The bill also would rescind any rules promulgated by the Executive Director under the Act before the bill's effective date. The Executive Director would have to promulgate rules to implement Article 2.
In addition, the bill would repeal Sections 10a and 10b of the Act, which regulate the conduct of millionaire parties and the issuance of millionaire party licenses, respectively. The bill also would repeal Section 20, which provided for the Act's effective date.
The Act defines "millionaire party" as an event at which wagers are placed on games of chance customarily associated with a gambling casino through the use of imitation money or chips that have a nominal value equal to or greater than the value of the currency for which they can be exchanged.
Application for & Issuance of Millionaire Party License
Article 2 would establish requirements for an applicant for a license to conduct a millionaire party and would set a fee of $50 per day that an applicant proposed to conduct a party. (The Act currently requires a $50 per day fee for a millionaire party license, but the bill would delete that from the fee schedule in Article 1.)
An application under Article 2 would have to include the following:
-- The applicant's name and address.
-- The name and address of each of the applicant's officers.
-- The name of each bona fide member who would be present at the event.
-- The name of each individual who would serve as a dealer at the event and, as to each individual, whether he or she had been convicted of, forfeited bond on a charge of, or pleaded guilty to a felony, a gambling offense, criminal fraud, forgery, larceny, or filing a false report with a governmental agency.
-- The location at which the applicant would conduct the event.
-- A description of the demarcated area (the physical area in which gaming would be conducted) for the event and an explanation of how that area would be marked.
-- The day or dates of the event.
-- Sufficient facts relating to the applicant's incorporation or organization to enable the Executive Director to determine whether the applicant was a qualified organization.
-- A sworn statement attesting to the applicant's nonprofit status, signed by the applicant's principal officer.
-- Other information the Executive Director considered necessary.
Article 2 also would do the following:
-- Allow the Executive Director, under extreme hardship conditions, as he or she determined, to waive one or more requirements for a person to be a qualified organization and issue a millionaire party license to that person if certain conditions were met.
-- Allow a qualified organization to be issued up to four millionaire party licenses in one calendar year, valid for only one location, and allow a license to be issued for up to four days.
-- Prohibit the Executive Director from issuing more than one millionaire party license to a qualified organization for any one day, issuing licenses that would allow more than two events to be conducted at a location on the same date, or issuing licenses that would allow more than four events to be conducted at a location in one week.
-- Require the Executive Director to include in the license the time of the day during which the licensee could conduct gaming, which the Executive Director could determine at his or her discretion.
-- Require a millionaire party licensee to comply with the Act and rules promulgated under Article 2 and with the terms and requirements of the license.
-- Specify that a millionaire party license would not be assignable or transferrable.
(Under Section 10b, which the bill would repeal, a qualified organization may be issued up to four millionaire party licenses in one calendar year; each license may be valid only for one location; a license may be issued for up to four consecutive days; and not more than one millionaire party license may be issued to a qualified organization for any one day.)
The Act defines "qualified organization" as a bona fide religious, educational, service, senior citizens, fraternal, or veterans' organization that operates without profit to its members and that either has been in existence continuously as an organization for at least five years or is exempt from taxation under Section 501(c) of the Internal Revenue Code. The term does not include a candidate committee, political committee, political party committee, ballot question committee, independent committee, or any other committee defined by and organized under the Michigan Campaign Finance Act.
Article 2 would define "bona fide member" as a member who participates in the qualified organization to further its lawful purposes. "Lawful purpose" would mean one or more of the authorized purposes stated in the qualified organization's written bylaws, constitution, charter, or articles of incorporation that are on file with the Executive Director.
"Dealer" would mean an individual who does any of the following in a millionaire party game:
-- Performs the act of dealing.
-- Assists in supervising the dealers.
-- Provides technical advice to the millionaire party chairperson.
Conduct of Millionaire Parties
Article 2 would establish requirements and restrictions for the conduct of a millionaire party event. A licensee could not enter into an agreement with a location owner or lessor unless the agreement was expressed in a written rental agreement approved by the Executive Director. A location owner or lessor, or certain people affiliated with the owner or lessor, would be prohibited from doing any of the following:
-- Being an officer of a qualified organization conducting a millionaire party at the location.
-- Participating as a player in any event being conducted at the location.
-- Participating in any aspect of an event conducted at the location, including providing dealers, equipment, or workers unless certain standards were met, including that the Executive Director granted a waiver for participation.
Article 2 also would do the following:
-- Allow a millionaire party licensee to advertise the event if the advertising complied with rules promulgated under Article 2 and stated the purposes for which the proceeds from the event would be used.
-- Allow a licensee to conduct an event only with equipment that it owned, rented from another qualified organization under a rental agreement approved by the Executive Director, or purchased or rented from a supplier.
-- Allow a licensee to use only a bona fide member or an employee of a supplier as a dealer at an event.
-- Prohibit a person from acting as a dealer at an event if he or she had been convicted of, forfeited bond on a charge of, or pleaded guilty to a felony, a gambling offense, criminal fraud, forgery, larceny, or filing a false report with a governmental agency.
-- Prohibit an individual who was not listed as a dealer on the license application from acting as a dealer at an event conducted under the license.
-- Require a licensee to ensure that an event conducted under the license was conducted in compliance with the Act and rules promulgated under Article 2.
-- Require a licensee to post the license so that it was conspicuously visible at the location where the event was conducted, at all times during the event.
-- Prohibit a licensee from conducting gaming under the license anywhere outside of the demarcated area approved by the Executive Director, require the licensee to ensure that access to the demarcated area was controlled, and require the licensee to prohibit a person under 18 from entering the demarcated area when gaming was being conducted there.
-- Prohibit a licensee from allowing wagering at an event held under the license other than wagering on a game of chance that took place at the location during the event, and prohibit a licensee from allowing a wager to be placed at the event on an athletic event or a game involving personal skill.
-- Limit to $15,000 the amount a licensee could receive in exchange for imitation money or chips on any day under the license.
If alcoholic beverages were served at an event, a person in the demarcated area who was at least 18 but less than 21 would have to be identified by wearing a mark indicating that a member or agent of the licensee had verified the person's age and identification.
A licensee and a location owner or lessee would have to allow an authorized representative of the Executive Director or the State Police or a peace officer of a political subdivision in which the event was conducted to inspect the location, or an intended location, at any time.
(Section 10a, which the bill would repeal, provides that all of the following apply in the conduct of millionaire parties:
-- A person less than 18 years old may not be allowed to wager.
-- A wager may not be placed on a contest other than a game of chance taking place at the location and during the time period approved for the event, and no wager may be placed on an athletic event or a game involving personal skill.
-- A qualified organization may not receive more than $15,000 in exchange for imitation money or chips in one day of a millionaire party.
-- The licensee is responsible for ensuring that these requirements are met.)
Members' Presence & Participation
Article 2 would require at least three bona fide members of the licensee, not including those acting as dealers, to be present at all times during an event. If fewer than three were present at any time, the licensee would have to immediately report it to the Executive Director, who could require the licensee to stop conducting the event.
One of the members listed on the application for the millionaire party license would have to act as the party chairperson. An individual could not serve as chairperson of parties conducted by more than one qualified organization during a calendar year.
A bona fide member of a licensee who was present at an event would have to wear a vest, button, or other distinctive apparel to identify him or her as a member and as not being an employee or agent of the location owner, lessor, or supplier. Unless permitted by the Act, a rule promulgated under Article 2, or written authorization of the Executive Director, only a bona fide member of the licensee could perform any of the following duties at an event conducted under the license:
-- Monitoring a game or verifying that the game was conducted in conformance with the rules of the game.
-- Verifying the age of a player.
Article 2 also would prohibit a bona fide member of a millionaire party licensee from doing any of the following at an event at which he or she was working or assisting:
-- Playing a game.
-- Sharing in a prize awarded at the event.
-- Purchasing, playing, or accepting a charity game ticket or numeral game ticket offered for sale by the licensee at the event.
-- Splitting a prize with a player or accepting a tip of any kind, unless the tip were a cash tip given to the member for serving as a dealer at the event.
Expenses & Compensation
Article 2 would prohibit a millionaire party licensee from paying an expense related to an event unless it was incurred in connection with the conduct of the event, was itemized, was approved by the Executive Director in writing before the event, and was necessary and reasonable and fell into one of the following categories:
-- The purchase or rental of equipment necessary for conducting the event and payment of services reasonably necessary for the repair of equipment.
-- Cash prizes or the purchase of prizes of merchandise.
-- Rental of the location at which the event was conducted.
-- Janitorial services.
-- The fee required for issuance or reissuance of a license to conduct the event.
-- Other reasonable expenses incurred by the licensee, not inconsistent with the Act, as permitted by rule promulgated under Article 2.
A licensee could not spend more than 45% of the gross profit from an event to pay expenses incurred in connection with the event.
A licensee could not accept any compensation in connection with an event unless the compensation were expressly authorized by the Act or a rule promulgated under Article 2.
Event Record & Financial Statement
Article 2 would require a millionaire party licensee to keep a record of each event as required by the Executive Director. The licensee would have to allow an authorized representative of the Executive Director to inspect, during reasonable business hours, the record and all financial accounts into which proceeds from the event were deposited or transferred.
A licensee would have to file with the Executive Director a financial statement, signed by the qualified organization's principal officer, of receipts and expenses related to the conduct of each event as required by rule promulgated under Article 2. If the revenue from a millionaire party were represented to be used or applied by a licensee for a charitable purpose, the licensee would have to file a copy of the financial statement with the Attorney General under the Supervision of Trustees for Charitable Purposes Act.
Suppliers
Article 2 would require a person that applied for a license or renewal of a license to operate as a supplier to millionaire party licensees to submit a written application to the Executive Director, and pay an annual license fee of $300 at the time of application.
An applicant who wished to provide dealers to millionaire party licensees would have to include with the application a list of the names of each individual who would work as a dealer. The list would have to include, for each dealer, whether he or she had been convicted of, forfeited bond on a charge of, or pleaded guilty to a felony, a gambling offense, criminal fraud, forgery, larceny, or filing a false report with a governmental agency. If, after application for or the issuance of a supplier's license, there were any changes in who would work for the supplier as a dealer, the applicant or supplier would have to immediately provide an updated list.
A supplier licensed under Article 2 would have to give the Executive Director reports that he or she required regarding the supplier's activities. A supplier's license would expire at midnight on September 30 of each year.
Executive Director Responsibilities
The Executive Director would have to enforce and supervise the administration of Article 2, and employ personnel necessary to implement the article. He or she could select fraternal organizations that conducted millionaire parties and that were not a branch, lodge, or chapter of a national or State organization to audit to ensure that the organizations were in compliance with the Act.
The Executive Director could deny, suspend, summarily suspend, or revoke any license issued under Article 2 if the licensee or an officer, director, agent, member, or employee of the licensee violated the Act or a rule promulgated under Article 2. The Executive Director could summarily suspend a license for up to 60 days pending prosecution, investigation, or public hearing. A proceeding to suspend or revoke a license would be a contested case under the Administrative Procedures Act.
On petition of the Executive Director, the circuit court after a hearing could issue subpoenas to compel the attendance of witnesses and the production of documents, papers, books, records, and other evidence before it in a matter over which the Executive Director had jurisdiction, control, or supervision under Article 2. If a person failed to obey the subpoena without reasonable cause, or if a person in attendance in any proceeding or hearing refused, without lawful cause, to be examined or to answer a legal or pertinent question or to exhibit a book, account, record, or other document when ordered to do so by the court, he or she could be punished as being in contempt of court.
The Executive Director would have to report annually to the Governor and the Legislature about the operation of events licensed under Article 2, abuses that he or she encountered, and recommendations for changes in the Act.
State Lottery Fund
Under Article 1, the bill would require all fees and revenue collected by the Executive Director under the Act to be paid into the State Lottery Fund. All necessary expenses incurred by the Executive Director or the Michigan Gaming Control Board in the administration and enforcement of any activity authorized by the Act would have to be financed from the State Lottery Fund and could not exceed the amount of revenue received from the sale of charity game tickets and all fees collected under the Act.
Raffles
Under Article 1, if conduct is performed pursuant to the Act or rules promulgated under it, the conduct is not subject to any other law providing a penalty or disability upon a person who conducts or participates in a bingo game, millionaire party, or charity game; who sells or possesses equipment used in conducting a bingo or millionaire party; who permits bingo, a millionaire party, or a charity game to be conducted on his or her premises; or who does other acts in connection with bingo, a millionaire party, or a charity game. The bill would include a raffle in that provision. (This provision states that it does not limit the application of the Michigan Campaign Finance Act, to fund-raising events conducted by or for the benefit of a committee that has filed or is required to file a statement of organization under that Act.)
MCL 432.102 et al. Legislative Analyst: Patrick Affholter
FISCAL IMPACT
The Department of Treasury would experience additional costs in implementing the bill. This would include changing the rules that govern millionaire parties, enforcing the statute,
processing licenses, and conducting audits. These costs would be covered by the license fees that would be collected and deposited in the Lottery Fund. The Department would have to keep these administrative costs under the amount collected from the licensees. If the administrative costs were lower than the amount of revenue deposited in the Lottery Fund, then the additional funds would be transferred to the General Fund at the end of the year, which would result in additional General Fund revenue. At this time, the administrative and enforcement costs are unknown. It is also not known whether the revenue from the licenses would be greater than the costs.
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.