Charities and bars claim poker crackdown is a bad deal

Neither side appears to be bluffing as the battle between the administration of Governor Rick Snyder and charity poker rooms continues to intensify.

The state Gaming Control Board, which Mr. Snyder put in charge of charity poker room oversight two years ago, released a new set of regulations in July that upset operators of the charity poker rooms, which have countered with a bill in the Michigan House that the Snyder administration sees as too soft.

Based on the Gaming Control Board’s actions since becoming the regulating agency instead of the Lottery Bureau, the Michigan Charitable Gaming Association fears it will be “regulated to death,” association spokesperson Stephanie Van Koevering said.

Richard Kalm, gaming director, said the control board released regulations in late July, but they were merely rules included in the law and not enforced properly in the past.

But Van Koevering said although it was helpful those July rules were released in writing – some regulations in the past were enforced, but not communicated in writing, she said – they were still harsh. The rules include prohibiting the poker rooms from operating after midnight although a judge halted that regulation.

Kalm said there are charities complaining that volunteers have to stay out so late, and he said, “Not a lot of good comes from a place that has gambling going on after midnight.”

Snyder shifted the oversight of charity poker rooms, or “millionaire parties” to the Gaming Control Board from the Bureau of the Lottery in 2012. Snyder spokesperson Dave Murray said the games expanded rapidly since 2004 when Texas hold ’em was permitted under the state’s Bingo Act.

Murray said the administration wants gaming officials to take a comprehensive look at how the games are operated, and how to fix the current under-regulated charity poker rooms.

Van Koevering said the gaming officials conduct oversight differently than the lottery. Fundamentally, Gaming Control Board officials do not understand the charity poker rooms, which she said operate to raise funds for various community charities to help needy people.

Van Koevering said the regulations the gaming officials have begun enforcing vary in seriousness, but still end in the same penalties. She said they include simple violations like not wearing a nametag or having drawers less than $5 off. The state has also stopped the previous common casino practice of letting charity dealers accept tips in poker chips – generally one dollar – from winners of each individual poker hand. Instead, players must now pay tips in cash. Dealers complain the change has seriously reduced tipping and crimped their ability to make a living.

“(The gaming officials) are coming down with a heavy hand, and not putting a lot in writing,” she said.

Kalm said some other items addressed in the rules include the self-reporting of cash revenue by the charities. He said between 2010 and 2012 there was more than $500 million in self-reported revenues, and he believes that is an under-reported number.

“When you’ve got that amount of cash in a basically unregulated environment, you’re going to have problems,” he said.

Kalm said charities are licensed to have the “millionaire parties” not the bars that host them. So, he said, the charities need to take responsibility for the games so they can continue, and he hopes to put rules in place that will allow them to do that.

Next month, the Gaming Control Board will have at least one public hearing to begin the rule making process for charity poker. Kalm acknowledged the charity poker games happening now would not be the games of the future under new rules.

“The bars that can currently conduct charity gaming, the poker room casinos, call them what they are, won’t exist in this format, this law cannot afford it,” he said.

As the Gaming Control Board prepares to move on the new rules, the Legislature might get involved. Rep. Jeff Farrington (R-Utica) has sponsored House bill 4960, which sets up new oversight for charity poker rooms that would catch bad actors, but not be so onerous as to force them to close, Farrington said. The Charitable Gaming Association backs the bill.

Farrington said the charities shouldn’t be affected by the new oversight. He said the poker rooms “need to be reined in,” but the charities in various communities still need the same amount of funds they now raise.

He said it seems now the Gaming Control Board isn’t interested in fixing a broken model, but shutting it down.

The bill’s prospects are unclear. Farrington said the chair of the House Regulatory Reform Committee, Rep. Hugh Crawford (R-Novi), has given him no commitment on whether he will take up the bill.

Crawford said he likely will hold a hearing on Farrington’s bill after the Gaming Control Board holds a public hearing on the rules.

“I think something needs to be done, but the rules might go too far,” he said, indicating the legislation might be a better alternative to the gaming officials’ regulations.

And the Snyder administration is “strongly opposed” to the legislation, Murray said. Kalm said the legislation does not address background checks on dealers, surveillance and security or other issues with oversight on the actual poker rooms.

Van Koevering said she suspects the state’s casinos do not like the small amount of competition they get from the poker rooms, and that may be another reason for regulations she said would cause the poker rooms to cease to exist.

But Kalm said he is not working for casinos, and they most likely dislike him just as much as the poker rooms.

“If we don’t get control of this and we can’t have some type of integrity, then we may not be able to issue more licenses,” he said.