Michigan Stamp

Michigan Charity Poker Games Receive Scrutiny as New Rules Proposed

michigan-stampOne of the gray-market forms of live poker has been in the news in recent days, with mainstream reports from Michigan indicating that state officials are reinterpreting the state’s Bingo Act to rein in the proliferation of charity-based poker rooms that currently pepper the state.

The move seems partly a reaction to a surge in operator violations and the impression — fueled by a handful of violent robberies in recent years — that the hundreds of such games spread across Michigan offer loose security and present undue risk to patrons and employees alike.

There’s also the question of whether the state’s major casinos want to see the games curtailed.  That issue was examined in a recent detailed report at MLive, a followup to an earlier story in how the Michigan Gaming Control Board (MGCB) has issued a “stricter interpretation” of the applicable rules (to go into effect next month), limiting the financial scope of such events.

Among the proposed changes: A 50% cut in the number of charities that can serve as sponsors for any single event, from six to three.  Each charity can sell up to $15,000 worth of chips.  Currently the daily cap is set at $90,000 in chip sales for a given venue operating under the Michigan Bingo Act, and that goes to $45,000 September 1st.

$90,000 and $45,000 might not sound like big numbers, but they really add up, and the proliferation of these poker games throughout Michigan in one of the main reasons you don’t really here Michigan being mentioned among the states considering online poker.

Charity-poker operations such as those found in Michigan are actually a staple of several Upper Midwest and Great Lakes states, and overall, they represent a smallish — but not insignificant — total of the “official” poker play taking place in the state.  Michigan itself outstrips some of its neighboring states in this regard, including Illinois and Indiana, which also allow similar charity-poker operations.

In all of these states and several of their neighbors, these tend to become semi-permanent or floating, long-running poker rooms, and — particularly from the casinos’ point of view — that’s part of the problem.  In Michigan alone, the reported 2012 poker revenue from these charity operations was $184 million, down just slightly from higher numbers in both 2011 and 2010.

Now it’s time to look at some of the issues which the excellent MLive series either misses or looks at from a single viewpoint.  As expected, the charity room’s operators are decrying the 50% cut, arguing that this is going to put a severe crimp in the room and adversely effect the fundraising efforts of hundreds of deserving charities.

The flip side to that is how little the charities themselves are actually receiving from these operations.  Here’s a quote from one of the 2,500-plus charities in Michigan, as reported in the MLive piece on the new regulations:

Principal Linden Moore isn’t too concerned that the rules will hurt fundraising efforts for Montrose Alternative Education Center in Genesee County. The school can raise about $500 to $600 on a good night, and use the money to treat students to ice cream socials and help low-income students pay for caps and gowns.

That’s actually low.  Given that the chips sold from the cashier are cycled through the games over and over again, multiple times each day, the actual wagering amount is several multiples of the amount of chips being sold.  So the charity is getting $600 for letting their name be used on somewhere between $50,000 and $100,000 of cash-game and tournament action, with all the rake that sort of action would indicate.

The operators of these games are doing real well, and you can take it to the bank that a lot of unofficial sales of chips are taking place away from the cashier’s area.  That’ll only increase under the new rules; one possibility is that established venues will be instituting “floaters” to bring chips to players seated at the tables, and actually do the cash-for-chips exchanges away from where the official tallies are kept.

It’s also worthwhile to note how it works in neighboring states.  In Illinois, by comparison, the charities receive at least 50% of the net revenue, and even there, I’ve seen and heard other reports of ways to skirt the state’s rather more strict reporting requirements.

Then there’s the perceived violence taking place at all these low-visibility venues, most often in the form of armed robberies.  Dan Michalski at Pokerati, a longtime Texan, used to do an occasional report on all the robberies taking place at underground Texas poker games, by way of illustrating the need for that state to consider fully licensing poker rooms.

Texas, however, may not be ahead of Michigan in violent incidents at poker games.  From the same MLive piece as the above:

Kalm noted that from January 2010 through March 2013, there were at least four armed robberies, 47 assaults, three weapons offenses, 72 disorderly persons and 11 fraud cases at permanent poker rooms, not including several ongoing investigations. In 2009 a shotgun-wielding man was shot dead while attempting to rob a poker room in Burton.

As an example, I’ve spent a few days in August each of the past five years with some friends at a place a bit north of Muskegon, on Michigan’s western shore.  I’ve thought about visiting one of the closer semi-regular games there on my visit, but the place has been hit by armed robberies not once, but twice, since late 2010.  Let’s just say I’m not that desperate to play.

And then there’s the state’s growing casino lobby.  Michigan’s casinos are tribal-licensed, and they’re big and beautiful, growing every day.  I’m not a huge fan of tribal casinos in general, but just on appearance and size alone, the FireKeepers Casino is a giant, stylish wonder, better than most of what Las Vegas has to offer.  It’s not as opulent as the Venetian or quite as decked out as the renovated Peppermill in Reno, to cite two upscale Nevada operations, but FireKeepers is damned nice.

There’s also no question that they are more safe for consumers than a place like ye olde Bob-Hi Lanes outside Muskegon, in a rundown part of the state that’s seen better decades.  (Though I do recommend the submarine tour down by the lake.)

So, charity poker or tribal-based rooms?  That’s the current Michigan debate; online hasn’t really registered with the fighting factions to date.  And yet, given the state’s overall budget woes, one can expect they’ll be looking at it soon.

And then, the state’s poker debate will really heat up.

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