Michigan Charity Poker Rooms under Attack by State Regulators Again

In what has been an ongoing battle in the Wolverine State over the industry, Michigan’s charity poker rooms are once again under fire from state regulators. If new regulations that are currently on the table are put into effect, it would essentially close those rooms due to their severity.

On Sunday, Michigan Live’s Melissa Anders detailed out these new regulations that would have a severe impact on the Michigan charity poker room industry. After pushing through new regulations earlier this year that halved what the rooms could do, the Michigan Gaming Control Board is now pursuing even more draconian rules that would virtually eliminate permanent poker rooms in the state and severely impact the money-making opportunities for charitable causes.

Last month, the MGCB’s director, Rick Kalm, introduced 19 pages of new regulations that he would like to implement. One, a closing time of midnight, was suggested earlier but was shut down by a Circuit Court ruling against the MGCB (current regulations state the rooms must close at 2AM). The other laws would require a minimum of five members of the charitable cause on the floor for each “millionaire party” being performed and that the charity must demonstrate that they have raised more than $2000 in the prior year through other means than the charitable poker games.

The most difficult new proposal for the Michigan charitable poker rooms would require that said rooms could only host 30 days of “millionaire parties” in a calendar year. This would essentially close the permanent rooms in Michigan (of which there are 40, according to Anders, down from 65 just a couple of years ago) and force some charities out of the game also. Citing Michigan laws that do not allow for the regulation of the charitable poker rooms as they do casinos, Kalm says that his new regulations are suggested to ensure proper security, surveillance and methods to handle player disputes. “It’s a difficult pill for people to swallow (his suggested regulations) and I’m sorry about that, but I only have this law to work with,” Anders quotes Kalm as stating.

In an attempt to thwart Kalm’s drastic stance, State Representative Jeff Farrington, a Republican from Utica, has introduced a bill that would provide stability for the Michigan charitable poker industry. House Bill 4960 would allow for the charity rooms to operate under its own set of regulations and roll back Kalm’s efforts to curtail the industry, which Farrington believes is critical. Farrington cited to Anders the need to continue to provide the revenue stream for non-profit organizations in the state as certain charitable donations do not qualify for tax-exempt status as the major reason for his legislation.

The current regulations, introduced earlier this year, cut in half what the Michigan charitable poker rooms were doing prior to their introduction. At this point, charitable poker rooms can host three charities per day with a maximum chip sale of $45,000. In the past, the charity rooms had hosted up to six charities per day with a max sale of $90,000. In these charity tournaments – usually playing Texas Hold’em – the charitable cause gets a part of the chip sales and the players receive the remainder of the money as the prize pool. The poker rooms, meanwhile, make their money through sale of food and beverages during the tournaments.

Kalm states that the current regulations were implemented to counter widespread fraud in the charitable poker rooms. Illegal gambling, payment of dealers (by players) under the table, liquor law violations and violence were the reasons for the new regulations, Kahn said. He cited over three years of records on charity poker rooms, which included four armed robberies, 47 assaults, three weapons offenses, 72 disorderly person complaints and 11 fraud cases as the reason for the crackdown.

The charitable rooms, however, believe that Kalm is “in the pocket” of the Michigan casino industry that is looking to curtail their popularity. If the new regulations were put into effect, jobs would be sacrificed and charities would lose a popular method of raising much needed funds for their causes, they note.

A hearing is scheduled for November 7 at the Michigan Historical Library & Museum in Lansing, MI, to discuss Kalm’s proposed regulations and it is expected that those who patronize the Michigan charitable poker rooms and said rooms themselves will be in attendance to fight. Poker News Daily will continue to monitor the situation and report on the results of that meeting in a couple of weeks.