state of michigan
100th Legislature
Regular session of 2020
Introduced by Senators
Hertel, Irwin, Geiss, Polehanki, Wojno, Ananich and Hollier
ENROLLED SENATE BILL No. 991
AN ACT to amend 2019 PA 152, entitled “An act to create the lawful internet gaming act; to require licensure for persons to offer internet gaming; to impose requirements for internet gaming; to provide for the powers and duties of the Michigan gaming control board and other state and local officers and entities; to impose fees; to impose tax and other payment obligations 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,” by amending sections 3, 5, 7, and 11 (MCL 432.303, 432.305, 432.307, and 432.311).
The People of the State of Michigan enact:
Sec. 3. As used
in this act:
(a) “Adjusted
gross receipts” means gross receipts less a deduction equal to the amount of
free play provided and wagered by authorized participants as an incentive to
place or as a result of placing internet wagers under this act. The deduction
under this subdivision is limited as follows:
(i) For years 1-3, a deduction not to exceed 10% of gross
receipts.
(ii) For year 4, a
deduction not to exceed 6% of gross receipts.
(iii) For year 5, a
deduction not to exceed 4% of gross receipts.
(iv) For year 6 and each
year thereafter, no deduction of free play is allowed. The January 1 following
the year in which the internet gaming operator begins internet gaming
operations is considered the beginning of the first year
of internet gaming for the purposes of this subdivision. An internet gaming
operator may deduct up to 10% of gross receipts during any period of internet
gaming operations before January 1 of the first year of internet gaming
operations.
(b) “Affiliate” means a person that, directly or indirectly,
through 1 or more intermediaries, controls or is controlled by an internet
gaming operator.
(c) “Applicant” means a person that applies for a license or
for registration under this act. As used in section 8, applicant includes
an affiliate, director, or managerial employee of the applicant that performs
the function of principal executive officer, principal operations officer, or
principal accounting officer, or a person who holds more than 5% ownership
interest in the applicant. As used in this subdivision, affiliate does not
include a partnership, a joint venture, a co-shareholder of a corporation, a
co-member of a limited liability company, or a co-partner in a limited
liability partnership that has 5% or less ownership interest in the applicant
and is not involved in the internet gaming operation.
(d) “Authorized participant” means an individual who has a
valid internet wagering account with an internet gaming operator and is 21
years of age or older.
(e) “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.
(f) “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 in this state under a facility license issued in accordance
with a tribal gaming ordinance approved by the chair of the National Indian
Gaming Commission.
(g) “Class II gaming” means that term as defined in 25 USC
2703.
(h) “Class III gaming” means that term as defined in 25 USC
2703.
(i) “Compact” means a tribal-state compact governing the
conduct of gaming activities that is negotiated under the Indian gaming
regulatory act, Public Law 100-497, 102 Stat 2467.
(j) “Fantasy contest” means that term as defined in section 2 of the fantasy contests consumer protection act, 2019 PA 157, MCL 432.502.
(k) “Fund” means the internet gaming fund created under
section 16.
(l) “Gross receipts” means
the total of all sums, including, but not limited to, valid or invalid checks,
valid or invalid credit or debit card deposits, valid or invalid ACH deposits,
currency, coupons, free play or promotional credits, redeemable credits,
vouchers, entry fees assessed for tournaments or other contests, or instruments
of monetary value whether collected or uncollected, in each case actually
wagered by an authorized participant at or with an internet gaming operator on
an internet game, less all of the following:
(i) Winnings.
(ii) Amounts returned to an
authorized participant due to a game, platform, or system malfunction or
because the internet wager must be voided due to concerns regarding integrity
of the wager or game.
(iii) Uncollectible markers
or successfully disputed credit or debit card charges that were previously
included in the computation of gross receipts.
(m) “Indian lands” means that term as defined in 25 USC 2703.
(n) “Indian tribe” means that term as defined in 25 USC 2703
and any instrumentality, political subdivision, or other legal entity through
which an Indian tribe operates its casino in this state.
(o) “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 board determines through rulemaking should be considered to be an
institutional investor for reasons consistent with this act.
(p) “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.
(q) “Internet game” means a game of skill or chance that is
offered for play through the internet in which an individual wagers money or
something of monetary value for the opportunity to win money or something of
monetary value. Internet game includes gaming tournaments conducted via the
internet in which individuals compete against one another in 1 or more of the
games authorized by the board or in approved variations or composites as
authorized by the board. Internet game does not include a social media internet
game as that term is defined in section 310c of the Michigan penal code, 1931
PA 328, MCL 750.310c.
(r) “Internet gaming” means operating, conducting, or
offering for play an internet game.
(s) “Internet gaming operator” means a person that is issued
an internet gaming operator license from the board.
(t) “Internet gaming operator license” means a license issued
by the board to a person to operate, conduct, or offer internet gaming.
(u) “Internet gaming platform” means an integrated system of
hardware, software, applications, including mobile applications, and servers
through which an internet gaming operator operates, conducts, or offers
internet gaming.
(v) “Internet gaming platform provider” means an internet
gaming supplier that contracts with an internet gaming operator to provide an
internet gaming platform.
(w) “Internet gaming supplier” means a person that the board
has identified under the rules promulgated by the board as requiring a license
to provide internet gaming operators goods or services that directly affect
wagering, play, and results of internet games offered under this act. Internet
gaming supplier includes, but is not limited to, internet gaming platform
providers.
(x) “Internet gaming supplier license” means a license issued
by the board to an internet gaming supplier.
(y) “Internet wager” means money or something of monetary
value risked on an internet game.
(z) “Internet wagering” means risking money or something of
monetary value on an internet game.
(aa) “Internet wagering account” means an electronic ledger
in which all of the following types of transactions relative to an authorized
participant are recorded:
(i) Deposits and credits.
(ii) Withdrawals.
(iii) Internet wagers.
(iv) Monetary value of
winnings.
(v) Service or other
transaction-related charges authorized by the authorized participant, if any.
(vi) Adjustments to the
account.
(bb) “Mobile application” means an application on a mobile
phone or other device through which an individual is able to place an internet
wager.
(cc) “Occupational license” means a license issued by the
board to a person to perform an occupation that directly impacts the integrity
of internet gaming and that the board has identified as requiring a license to
perform the occupation.
(dd) “Person” means an individual, partnership, corporation,
association, limited liability company, federally recognized Indian tribe, or
other legal entity.
(ee) “Poker” means the traditional game of poker, and any derivative of the game of poker as approved by the board, in which 2 or more authorized participants play against each other and wager on the value of the cards in the authorized participants’ hands.
(ff)
“Vendor” means a person that is not licensed under this act
that supplies any goods or services to an internet gaming operator or internet
gaming supplier.
(gg)
“Winnings” means the total cash value of all property or sums
including currency or instruments of monetary value paid to an authorized
participant by an internet gaming operator as a direct result of a winning
internet wager.
Sec. 5. (1) The board 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 under this act.
(2) The board has
jurisdiction over every person licensed by the board and may take enforcement
action against a person that is not licensed by the board that offers internet
gaming in this state.
(3) The board may enter into agreements with other jurisdictions, including Indian tribes, to facilitate, administer, and regulate multijurisdictional internet gaming for poker by internet gaming operators to the extent that entering into the agreement is consistent with state and federal laws and if the internet gaming under the agreement is conducted only in the United States.
Sec. 7. (1) The board shall condition the
issuance, maintenance, and renewal of an internet gaming operator license to a
person described in section 6(1)(b) on the person’s compliance with all of the
following conditions:
(a) The person
complies with this act, rules promulgated by the board, and minimum internal
controls pertaining to all of the following:
(i) The types of and rules for playing internet games that
internet gaming operators may offer under this act.
(ii) Technical standards,
procedures, and requirements for the acceptance, by the person, of internet
wagers initiated or otherwise made by individuals located in this state who are
not physically present on the person’s Indian lands in this state at the time
the internet wager is initiated or otherwise made.
(iii)
Procedures and requirements for the acceptance of internet wagers for poker
initiated or otherwise made by individuals located in other jurisdictions, if
the board authorizes multijurisdictional internet gaming for poker as provided
in this act.
(iv)
The requirements set forth in section 11.
(b) The person adopts and maintains technical standards for
internet gaming platforms, systems, and software that are consistent with the
standards adopted by the board under section 10.
(c) The person maintains 1 or more mechanisms on the internet
gaming platform 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, if the board authorizes
multijurisdictional internet gaming for poker as provided in this act, another
jurisdiction in the United States authorized by the multijurisdictional
agreement.
(d) The person adopts and maintains responsible gaming
measures consistent with those described in section 12.
(e) The person continues to maintain and operate in this
state a casino offering class III gaming and the casino contains not less than
50% of the gaming positions that were in place on December 20, 2019.
(f) The person, within the time period described in section
14(3), makes payments, to be allocated as outlined in section 15a, based on a
graduated percentage schedule on the adjusted gross receipts received each
calendar year by the person from all internet gaming it conducts under this act
as an internet gaming operator, as set forth below:
(i) For adjusted gross
receipts less than $4,000,000.00, 20%.
(ii) For adjusted gross
receipts of $4,000,000.00 or more but less than $8,000,000.00, 22%.
(iii) For adjusted gross
receipts of $8,000,000.00 or more but less than $10,000,000.00, 24%.
(iv) For adjusted gross
receipts of $10,000,000.00 or more but less than $12,000,000.00, 26%.
(v) For adjusted gross
receipts of $12,000,000.00 or more, 28%.
(g) The person agrees to provide and timely provides, on
written request of the board, books and records directly related to its
internet gaming operations for the purpose of permitting the board to verify
the calculation of the payments under subdivision (f).
(h) The person provides a waiver of sovereign immunity to the
board for the sole and limited purpose of consenting to both of the following:
(i) The jurisdiction of
the board to the extent necessary and for the limited purpose of providing a
mechanism for the board to do all of the following:
(A) Issue, renew, and revoke the person’s internet gaming
license.
(B) Enforce the payment obligations set forth in this section
and section 14.
(C) Regulate the person under and enforce sections 10(a),
(b), (d) to (g), 11, 12(4) and (5), 13, 19, and 21.
(D) Inspect the person’s internet gaming operation and
records to verify that the person is conducting its internet gaming operation
in conformity with this act.
(E) Assess fines or monetary penalties for violations
referred to in sub-subparagraph (C).
(F) Enforce the payment of internet gaming license fees
described in section 6(9).
(ii) The jurisdiction of
the courts of this state, and expressly waiving the exhaustion of tribal
remedies, with the circuit court for Ingham County having exclusive
jurisdiction, and any courts to which appeals from that court may be taken, to
permit this state to enforce administrative orders of the board, the person’s
obligation to make payments required under subdivision (f), and collection of
any judgment. Any monetary award under this subparagraph is deemed limited
recourse obligations of the person and does not impair any trust or restricted
income or assets of the person.
(2) This state, acting through the governor, at the request
of any Indian tribe, is authorized to negotiate and conclude and execute any
amendments to an Indian tribe’s compact necessary to effectuate internet gaming
by the Indian tribe under this act and to ensure internet gaming conducted by
the Indian tribe is in compliance with this act and any applicable federal
laws. If the governor fails to enter into negotiations with the Indian tribe,
or fails to negotiate in good faith with respect to the request, this state
waives its sovereign immunity to permit the Indian tribe to initiate an action
against the governor in his or her official capacity in either state court or
in federal court and obtain those remedies as authorized in 25 USC 2710(d)(7).
(3) Notwithstanding anything in this act to the contrary,
this act only regulates internet gaming as provided in this act and does not
extend to the board, or any other agency of this state, any jurisdiction or
regulatory authority over any aspect of any gaming operations of an Indian
tribe described in section 4(4)(b) beyond those rights granted to this state
under the compact with the Indian tribe.
Sec. 11. (1) An internet gaming operator shall
provide, or shall require its internet gaming platform provider to provide, 1
or more mechanisms on the internet gaming platform that the internet gaming
operator 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, if the board authorizes
multijurisdictional internet gaming for poker as provided in this act, another
jurisdiction in the United States authorized by the multijurisdictional
agreement.
(2) An individual
who wishes to place an internet wager under this act must satisfy the
verification requirements under subsection (1) before the individual may
establish an internet wagering account or make an internet wager on an internet
game offered by the internet gaming operator.
(3) An internet
gaming operator shall include, or shall require its internet gaming platform
provider to include, mechanisms on its internet gaming platform 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 operator, or its internet gaming platform provider, shall not knowingly
authorize any of the following individuals to establish an internet wagering
account or knowingly allow them to wager on internet games offered by the
internet gaming operator, except if required and authorized by the board 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 board’s responsible gaming database.
Secretary of the Senate
Clerk of the House of Representatives
Approved___________________________________________
____________________________________________________
Governor