Great article by Melissa Anders first published on mlive.com on October 20, 2013 at 8:00 AM, updated October 21, 2013 at 11:15 AM
LANSING — Men — young and old, some with hoods pulled up over their heads — hunch around their cards to try their luck in a game of Texas Hold ‘em.
Meanwhile several women sit behind a high-top counter, sipping on pop and chatting over the click-clack of plastic poker chips. They count cash that will eventually end up paying for scholarships, youth football equipment and charitable causes.
It’s a weekday afternoon at Tripper’s, a Lansing sports bar with an 11-table permanent poker room.
Similar scenes play out each day and night at about 40 locations throughout Michigan, where millions of dollars are raised for schools, churches, Lions Clubs, and other nonprofits.
Michigan’s charity gaming industry grew from less than $8 million in chip sales in fiscal year 2004 to more than $197 million in fiscal year 2011. Chip sales dipped to $184 million in fiscal 2012. The games have raised $103 million for charities in the past nine years, while poker rooms raked in $86 million and players won more than $680 million.
But much of that could come to a halt early next year if the Michigan Gaming Control Board goes through with proposed rule changes that would effectively eliminate permanent charity poker rooms. Officials say the rule changes address problems with gaming violations and crimes at some poker rooms while making sure charities’ best interests are protected.
Charities, poker room operators, dealers and players all oppose the proposed rules, arguing that it will hurt nonprofit fundraising and result in lost jobs for dealers and other poker room employees. The Michigan Charitable Gaming Association supports legislation that would keep poker rooms open while outlining penalties for violations and ensuring accountability and transparency.
“I don’t know how we’re going to find another opportunity that’s going to match the money we’re able to bring in from charity poker,” said Jessica Stank, fundraising chair ofLakewood Youth Football Board.
The Lake Odessa-based team raised about $3,200 through games at Tripper’s this month. Charity poker is its main source of fundraising to pay for equipment and other team expenses.
Much of the criticism has focused on gaming control Executive Director Rick Kalm, who opponents say is caving to pressure from Michigan’s casinos, which compete for poker players’ dollars.
Kalm said the casinos have not asked him to take action, noting that they make most of their income from slots, not poker. Still, casino representatives have spoken in favorof further regulation of charity poker rooms.
Kalm said he’s trying to gain control over what has become a multi-million dollar industry that’s faced problems with fraud, illegal gambling beyond state limits and liquor law violations. 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 ongoing investigations.
“We’re trying to put rules in place that protect the charities’ ability to make money, keep this thing alive, but recognize that the law was never designed for poker room casinos,” he said.
The state Bingo Act allows for “millionaire parties,” which allow nonprofit groups to raise funds by hosting casino-style games such as Texas Hold ‘em and blackjack. In the past, these parties were smaller events held at church festivals and the like.
There are now about 40 permanent poker rooms that partner with charities to host multiple games each day. They often offer food and alcoholic beverages. There were 65 poker rooms at one point, Kalm said. The state has suspended charities from conducting games at 14 venues, and several others closed on their own accord.
Unsure how to handle the exploding industry, the Bureau of State Lottery issued amoratorium on new poker rooms in January 2011. Then in April 2012 Gov. Rick Snyder gave regulatory authority to the gaming control board.
This summer Kalm issued stricter interpretations of the rules governing the parties. He limited rooms to hosting three charities per day with maximum chip sales of $45,000. Some poker rooms had been running six charities with chips sales of up to $90,000.
He attempted to require they close at midnight instead of 2 a.m., but a circuit court judge ruled that could not be enforced.
Last month Kalm issued 19 pages of proposed rule changes including the midnight close time. They also would require charities to have at least five members on site for each event and prove that they’ve raised at least $2,000 in the prior year through other means of fundraising. That’s meant to weed out groups that organize to take advantage of charity poker, Kalm said.
The biggest change would limit poker rooms to hosting just 30 days of millionaire party events each year, effectively ending the use of permanent poker rooms.
Kalm said Michigan law doesn’t allow for the regulation of poker rooms like casinos, so there’s no way to ensure they have proper security, surveillance and mechanisms for patron disputes. Unless the state passes a law to allow for that, he said he doesn’t want to see large-scale poker rooms again.
“It’s a difficult pill for people to swallow, and I’m sorry about that, but I only have this law to work with,” he said.
Kalm said some charities would initially suffer if the rules go into effect, but that they could continue raising funds by hosting the events at other locations.
State Rep. Jeff Farrington, a Republican from Utica, last month introduced House Bill 4960 to allow for and regulate charity poker rooms. He said they offer an important revenue stream for Michigan nonprofits, which can no longer benefit from a charitable tax credit for individual donations.
Farrington’s district and surrounding area is home to multiple poker rooms, including Snooker’s Poker Room, which was the state’s largest before it had to close due to Bingo Act violations.
“I don’t understand why we need to shut them down,” Farrington said. “Do we need to improve the framework around them? Absolutely. But we don’t need to shut them down.”
Closing them will be “devastating” to most charities that rely on the experienced dealers, staff and equipment provided by permanent poker rooms, said Heather Schuchaskie, a licensed supplier who hosts events at Tripper’s in Lansing and at Northville Downs in Northville. It’ll also hurt the poker room businesses and their employees. Schuchaskie employs about 60 people between the two rooms.
If and when the gaming control board holds meetings to gather public comment on its proposed rules, Schuchaskie said there should be “a line out the door and around the corner of groups that are pretty upset about this.”
“We’re more than interested in compromise,” she said. “We want to be regulated. I think that’s doable.”
Email Melissa Anders at firstname.lastname@example.org. Follow her on Google+ and Twitter: @MelissaDAnders. Download the MLive app for iPhone and Android.
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