Bill Text: MI HB4311 | 2019-2020 | 100th Legislature | Introduced


Bill Title: Gaming; other; lawful internet gaming act; create. Creates new act. TIE BAR WITH: HB 4308'19

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2019-03-19 - Referred To Committee On Ways And Means [HB4311 Detail]

Download: Michigan-2019-HB4311-Introduced.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 4311

 

 

March 7, 2019, Introduced by Rep. Iden and referred to the Committee on Regulatory Reform.

 

     A bill to create the lawful internet gaming act; to impose

 

requirements for persons to engage in internet gaming; to create

 

the division of internet gaming; to provide for the powers and

 

duties of the division of internet gaming and other state

 

governmental 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.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"lawful internet gaming act".


     Sec. 2. The legislature finds and declares all of the

 

following:

 

     (a) Operating, conducting, and offering for play internet

 

games over the internet involves gaming activity that already

 

occurs throughout this state.

 

     (b) This act is consistent and complies with the unlawful

 

internet gambling enforcement act of 2006, 31 USC 5361 to 5367, and

 

specifically authorizes use of the internet to place, receive, or

 

otherwise knowingly transmit a bet or wager if that use complies

 

with this act and rules promulgated under this act.

 

     (c) This act is consistent and complies with the state

 

constitution of 1963 by ensuring that the internet may be used to

 

place wagers only on games of skill or chance that may be lawfully

 

played in this state and that internet gaming is only conducted by

 

persons who are lawfully operating casinos in this state.

 

     (d) In order to protect residents of this state who wager on

 

games of chance or skill through the internet and to capture

 

revenues generated from internet gaming, it is in the best interest

 

of this state and its citizens to regulate this activity by

 

authorizing and establishing a secure, responsible, fair, and legal

 

system of internet gaming.

 

     Sec. 3. As used in this act:

 

     (a) "Authorized participant" means an individual who has a

 

valid internet wagering account with an internet gaming operator

 

and is at least 21 years of age.

 

     (b) "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.

 

     (c) "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 under a facility

 

license issued in accordance with a tribal gaming ordinance

 

approved by the chair of the National Indian Gaming Commission.

 

     (d) "Class II gaming" means that term as defined in 25 USC

 

2703.

 

     (e) "Class III gaming" means that term as defined in 25 USC

 

2703.

 

     (f) "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.

 

     (g) "Division" means the division of internet gaming

 

established under section 5.

 

     (h) "Fund" means the internet gaming fund created under

 

section 16.

 

     (i) "Gross gaming revenue" means the total of all internet

 

wagers received by an internet gaming operator, less the total of

 

all winnings paid out to authorized participants by the internet

 

gaming operator, during the accounting period. For purposes of this

 

subdivision, internet wagers received by an internet gaming

 

operator do not include the monetary value of free play used by

 

authorized participants.

 

     (j) "Indian lands" means that term as defined in 25 USC 2703.

 

     (k) "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 existing casino.

 

     (l) "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 division determines through

 

rulemaking should be considered to be an institutional investor for

 

reasons consistent with this act.

 

     (m) "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 approved by the division.

 

     (n) "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. For purposes of this

 

definition, free plays or extended playing time that is won on a

 

game of skill or chance that is offered through the internet is not

 

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

 

division or in approved variations or composites as authorized by

 

the division.

 

     (o) "Internet gaming" means operating, conducting, or offering

 

for play an internet game.

 

     (p) "Internet gaming operator" means a person that is issued

 

an internet gaming license from the division to operate, conduct,

 

or offer internet gaming.

 

     (q) "Internet gaming platform" means an integrated system of

 

hardware, software, and servers through which an internet gaming

 

operator operates, conducts, or offers internet gaming.

 

     (r) "Internet gaming vendor" means a person that provides to

 

an internet gaming operator goods, software, or services that

 

directly affect wagering, play, and results of internet games

 

offered under this act, including goods, software, or services

 

necessary to the acceptance, operation, administration, or control

 

of internet wagers, internet games, internet wagering accounts, or

 

internet gaming platforms. Internet gaming vendor does not include

 

a person that provides to an internet gaming operator only such

 

goods, software, or services that it also provides to others for


purposes not involving internet gaming, including, but not limited

 

to, a payment processor or a geolocation service provider.

 

     (s) "Internet wager" means money or something of monetary

 

value risked on an internet game.

 

     (t) "Internet wagering" means risking money or something of

 

monetary value on an internet game.

 

     (u) "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.

 

     (ii) Withdrawals.

 

     (iii) Internet wagers.

 

     (iv) Monetary value of prizes.

 

     (v) Service or other transaction-related charges authorized by

 

the authorized participant, if any.

 

     (vi) Adjustments to the account.

 

     (v) "Person" means an individual, partnership, corporation,

 

association, limited liability company, Indian tribe, or other

 

legal entity.

 

     (w) "Prizes" includes both monetary and nonmonetary prizes

 

received directly or indirectly by an authorized participant from

 

an internet gaming operator as a direct or indirect result of

 

internet wagering. The value of a nonmonetary prize is the actual

 

cost of the prize.

 

     (x) "Winnings" includes all of the following:

 

     (i) The total monetary value of prizes received by authorized

 

participants.


     (ii) Stakes returned to authorized participants.

 

     (iii) Other amounts credited to authorized participants'

 

internet wagering accounts, including the monetary value of loyalty

 

points, and other similar complimentaries and incentives, not

 

including free play, granted to authorized participants as a result

 

of participation in internet games.

 

     Sec. 4. (1) Internet gaming may be conducted only to the

 

extent that it is conducted in accordance with this act.

 

     (2) An internet wager received by an internet gaming operator

 

is considered to be gambling or gaming that is conducted in the

 

internet gaming operator's casino located in this state, regardless

 

of the authorized participant's location at the time the

 

participant initiates or otherwise places the internet wager.

 

     (3) A law that is inconsistent with this act does not apply to

 

internet gaming as provided for by this act.

 

     (4) This act does not apply to any of the following:

 

     (a) Lottery games offered by the bureau of lottery under the

 

McCauley-Traxler-Bowman-McNeely lottery act, 1972 PA 239, MCL 432.1

 

to 432.47.

 

     (b) Class II and Class III gaming conducted exclusively on

 

Indian lands by an Indian tribe under a facility license issued in

 

accordance with a tribal gaming ordinance approved by the chair of

 

the National Indian Gaming Commission. For purposes of this

 

subdivision, gaming is conducted exclusively on Indian lands only

 

if the individual who places the wager is physically present on

 

Indian lands when the wager is initiated and the wager is received

 

or otherwise made on equipment that is physically located on those


Indian lands, and the wager is initiated, received, or otherwise

 

made in conformity with the safe harbor requirements described in

 

31 USC 5362(10)(C).

 

     (c) A fantasy contest conducted under the fantasy contests

 

consumer protection act.

 

     (5) Unless licensed as an internet gaming operator under this

 

act, a person shall not aggregate computers or other internet

 

access devices in a place of public accommodation in this state,

 

including a club or other association, to enable multiple players

 

to simultaneously play an internet game.

 

     (6) For purposes of this act, the intermediate routing of

 

electronic data in connection with internet wagering, including

 

routing across state lines, does not determine the location or

 

locations in which the wager is initiated, received, or otherwise

 

made.

 

     Sec. 5. (1) The division of internet gaming is established in

 

the board. The division 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 by this act.

 

     (2) The division has jurisdiction over every person licensed

 

by the division and may take enforcement action against a person

 

that is not licensed by the division that offers internet gaming in

 

this state.

 

     (3) The division may enter into agreements with other

 

jurisdictions, including Indian tribes, to facilitate, administer,

 

and regulate multijurisdictional internet gaming by internet gaming


operators to the extent that entering into the agreement is

 

consistent with state and federal laws and if the gaming under the

 

agreement is conducted only in the United States.

 

     (4) The division may permit internet gaming operators licensed

 

by the division to accept internet wagers under this act on any

 

amateur or professional sporting event or contest.

 

     Sec. 6. (1) The division may issue an internet gaming license

 

only to an applicant that is either of the following:

 

     (a) A person that holds a casino license under the Michigan

 

gaming control and revenue act, 1996 IL 1, MCL 432.201 to 432.226.

 

     (b) An Indian tribe that lawfully conducts class III gaming in

 

a casino located 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.

 

     (2) The division shall issue an internet gaming license to an

 

applicant described in subsection (1) after receiving the

 

application described in subsection (4) or (5), as applicable, and

 

the application fee, if the division determines that the internet

 

gaming proposed by the applicant complies with this act and the

 

applicant is otherwise eligible and suitable. An applicant is

 

eligible if it meets the requirements set forth in subsection

 

(1)(a) or (b). It is the burden of the applicant to establish by

 

clear and convincing evidence its suitability as to character,

 

reputation, integrity, business probity, and financial ability. The

 

application or enforcement of this subsection by the division must

 

not be arbitrary, capricious, or contradictory to the express

 

provisions of this act. In evaluating the eligibility and


suitability of an applicant under the standards provided in this

 

act, the division shall establish and apply the standards to each

 

applicant in a consistent and uniform manner. In determining

 

whether to grant a license to an applicant, the division may

 

request and consider any or all of the following information from

 

the applicant as a factor in the determination:

 

     (a) Whether the applicant has adequate capitalization and the

 

financial ability and the means to develop, construct, operate, and

 

maintain the proposed internet gaming platform and to offer and

 

conduct internet gaming in accordance with this act and the rules

 

promulgated by the division.

 

     (b) Whether the applicant has the financial ability to

 

purchase and maintain adequate liability and casualty insurance and

 

to provide an adequate surety bond.

 

     (c) Whether the applicant has adequate capitalization and the

 

financial ability to responsibly pay off its secured and unsecured

 

debts in accordance with its financing agreements and other

 

contractual obligations.

 

     (d) Whether the applicant has a history of material

 

noncompliance with casino or casino-related licensing requirements

 

or compacts with this state or any other jurisdiction, where the

 

noncompliance resulted in enforcement action by the body having

 

jurisdiction over the applicant.

 

     (e) Whether the applicant has been indicted for, charged with,

 

arrested for, or convicted of, pleaded guilty or nolo contendere

 

to, forfeited bail concerning, or had expunged any criminal offense

 

under the laws of any jurisdiction, either felony or misdemeanor,


not including traffic violations, regardless of whether the offense

 

has been expunged, pardoned, or reversed on appeal or otherwise.

 

The division may consider mitigating factors, and, for an applicant

 

described in subsection (1)(b), shall give deference to whether the

 

applicant has otherwise met the requirements of the applicant's

 

gaming compact for licensure, as applicable.

 

     (f) Whether the applicant has filed, or had filed against it,

 

a proceeding for bankruptcy or has ever been involved in any formal

 

process to adjust, defer, suspend, or otherwise work out the

 

payment of any debt.

 

     (g) Whether the applicant has a history of material

 

noncompliance with any regulatory requirements in this state or any

 

other jurisdiction where the noncompliance resulted in an

 

enforcement action by the regulatory agency having jurisdiction

 

over the applicant.

 

     (h) Whether at the time of application the applicant is a

 

defendant in litigation involving the integrity of its casino

 

business practices.

 

     (3) An internet gaming license issued under this act is valid

 

for the 5-year period after the date of issuance and, if the

 

division determines that the licensee continues to meet the

 

eligibility and suitability standards under this act, is renewable

 

for additional 5-year periods.

 

     (4) A person described in subsection (1)(a) may apply to the

 

division for an internet gaming license to offer internet gaming as

 

provided in this act. The application must be made on forms

 

provided by the division and include the information required by


the division.

 

     (5) A person described in subsection (1)(b) may apply to the

 

division for an internet gaming license to offer internet gaming as

 

provided in this act. The application must be made on forms

 

provided by the division that require only the following

 

information:

 

     (a) The name and location of any of the applicant's casinos.

 

     (b) The tribal law, charter, or any other organizational

 

document of the applicant and other governing documents under which

 

the applicant operates any of its casinos.

 

     (c) Detailed information about the primary management

 

officials of the applicant's casinos who will have management

 

responsibility for the applicant's internet gaming operations.

 

     (d) The current facility license for the applicant's casinos.

 

     (e) The applicant's current tribal gaming ordinance.

 

     (f) The gaming history and experience of the applicant in the

 

United States and other jurisdictions.

 

     (g) Financial information, including copies of the last

 

independent audit and management letter submitted by the applicant

 

to the National Indian Gaming Commission under 25 USC 2710(b)(2)(C)

 

and (D) and 25 CFR parts 271.12 and 271.13.

 

     (h) The total number of gaming positions, including, but not

 

limited to, electronic gaming devices and table games, at each of

 

the applicant's casinos.

 

     (6) An initial application for an internet gaming license must

 

be accompanied by an application fee of $100,000.00. The rules

 

promulgated under section 10 may include provisions for the refund


of an application fee, or the portion of an application fee that

 

has not been expended by the division in processing the

 

application, and the circumstances under which the fee will be

 

refunded.

 

     (7) The division shall keep all information, records,

 

interviews, reports, statements, memoranda, or other data supplied

 

to or used by the division in the course of its review or

 

investigation of an application for an internet gaming license or

 

renewal of an internet gaming license confidential and shall use

 

that material only to evaluate the applicant for an internet gaming

 

license or renewal. The materials described in this subsection are

 

exempt from disclosure under section 13 of the freedom of

 

information act, 1976 PA 442, MCL 15.243.

 

     (8) An application under this section must be submitted and

 

considered in accordance with this act and any rules promulgated

 

under this act.

 

     (9) An internet gaming operator shall pay a license fee of

 

$200,000.00 to the division at the time the initial internet gaming

 

license is issued and $100,000.00 each year after the initial

 

license is issued.

 

     (10) The division shall deposit all application and license

 

fees paid under this act into the fund.

 

     (11) An institutional investor that holds for investment

 

purposes only less than 30% of the equity of an applicant under

 

this section is exempt from the licensure requirements of this act.

 

     Sec. 7. (1) The division shall condition the issuance,

 

maintenance, and renewal of an internet gaming 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 and rules promulgated by

 

the division 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 wager is initiated or otherwise made.

 

     (iii) Procedures and requirements for the acceptance, by the

 

person, of internet wagers initiated or otherwise made by

 

individuals located in other jurisdictions, if the division

 

authorizes multijurisdictional gaming as provided in this act.

 

     (iv) Those 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 division under section

 

10.

 

     (c) The person maintains 1 or more mechanisms on the internet

 

gaming platform utilized by the person 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 division authorizes

 

multijurisdictional internet gaming 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 as of the

 

effective date of this act.

 

     (f) The person pays to this state 8% of the gross gaming

 

revenue received by that person from all internet gaming it

 

conducts under this act as an internet gaming operator, and the

 

person makes the payments within the time period described in

 

section 14(2).

 

     (g) The person agrees to and timely provides, on written

 

request of the division, books and records directly related to its

 

internet gaming operations for the purpose of permitting the

 

division to verify the calculation of the payments under

 

subdivision (f).

 

     (h) The person provides a waiver of sovereign immunity to the

 

division for the sole and limited purpose of consenting to both of

 

the following:

 

     (i) The jurisdiction of the division to the extent necessary

 

and for the limited purpose of providing a mechanism for the

 

division 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 and enforce the provisions of this act described

 

in sections 10(a), (b), (d) to (g), 11, 12(4) and (5), and 13.

 

     (D) Inspect the person's internet gaming operation and records

 

to verify that the person is conducting its internet gaming

 

operation in conformity with the conditions prescribed in this

 

section.

 

     (E) Assess fines or monetary penalties for violations of the

 

provisions or rules referred to in sub-subparagraph (C).

 

     (F) Enforce the payment of internet gaming license fees

 

described in section 6(9).

 

     (ii) The exclusive jurisdiction of the courts of this state,

 

and expressly waiving the exhaustion of tribal remedies, with venue

 

in Ingham County, and any courts to which appeals from that venue

 

may be taken, to permit the state to enforce administrative orders

 

of the division, the person's obligation to make payments required

 

under subdivision (f) and section 14, and to enforce collection of

 

the judgments. Any judgment of monetary damages 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, shall, at the

 

request of any Indian tribe, negotiate any amendments to an Indian

 

tribe's compact necessary to ensure compliance with this act and

 

any applicable federal laws. If the governor fails to enter into

 

negotiations with any Indian tribe, or fails to negotiate in good

 

faith with respect to any request, the Indian tribe may initiate a


cause of 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) The division must exercise its limited direct regulatory

 

and enforcement authority in a manner that is not arbitrary,

 

capricious, or contradictory to this act. 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 division,

 

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. 8. (1) The division may issue an internet gaming vendor

 

license to a person to provide goods, software, or services to

 

internet gaming operators. A person that is not licensed under this

 

section shall not provide goods, software, or services as an

 

internet gaming vendor to an internet gaming operator.

 

     (2) On application by an interested person, the division may

 

issue a provisional internet gaming vendor license to an applicant

 

for an internet gaming vendor license. A provisional license issued

 

under this subsection allows the applicant for the internet gaming

 

vendor license to conduct business with an internet gaming operator

 

before the internet gaming vendor license is issued to the

 

applicant. A provisional license issued under this subsection

 

expires on the date provided in the license by the division.

 

     (3) An internet gaming vendor license issued under subsection

 

(1) is valid for the 5-year period after the date of issuance. An


internet gaming vendor license is renewable after the initial 5-

 

year period for additional 5-year periods if the division

 

determines that the internet gaming vendor continues to meet the

 

eligibility and suitability standards under this act.

 

     (4) A person may apply to the division for an internet gaming

 

vendor license as provided in this act and the rules promulgated

 

under this act.

 

     (5) Except as otherwise provided in this section, an

 

application under this section must be made on forms provided by

 

the division and include the information required by the division.

 

An Indian tribe that submits an application under this section

 

shall provide only the information described in section 6(5).

 

     (6) An application under this section must be accompanied by a

 

nonrefundable application fee in an amount to be determined by the

 

division, not to exceed $5,000.00.

 

     (7) The division shall keep all information, records,

 

interviews, reports, statements, memoranda, or other data supplied

 

to or used by the division in the course of its review or

 

investigation of an application for an internet gaming vendor

 

license or renewal of an internet gaming vendor license

 

confidential and shall use that material only to evaluate the

 

applicant for an internet gaming vendor license or renewal. The

 

materials described in this subsection are exempt from disclosure

 

under section 13 of the freedom of information act, 1976 PA 442,

 

MCL 15.243.

 

     (8) Except as otherwise provided in this subsection, an

 

internet gaming vendor shall pay a license fee of $5,000.00 to the


division at the time an initial internet gaming vendor license is

 

issued to the internet gaming vendor and $2,500.00 each year after

 

the initial license is issued. An internet gaming vendor that

 

provides to an internet gaming operator all or substantially all of

 

an internet gaming platform shall pay a license fee of $100,000.00

 

to the division at the time the initial license is issued to the

 

vendor and $50,000.00 each year after the initial license is

 

issued.

 

     (9) The division shall deposit all application and license

 

fees paid under this act into the fund.

 

     (10) An institutional investor that holds for investment

 

purposes only less than 30% of the equity of an applicant under

 

this section is exempt from the licensure requirements of this act.

 

     Sec. 9. (1) The division has jurisdiction over and shall

 

supervise all internet gaming operations governed by this act. The

 

division may do anything necessary or desirable to effectuate this

 

act, including, but not limited to, all of the following:

 

     (a) Develop qualifications, standards, and procedures for

 

approval and licensure by the division of internet gaming operators

 

and internet gaming vendors.

 

     (b) Decide promptly and in reasonable order all license

 

applications and approve, deny, suspend, revoke, restrict, or

 

refuse to renew internet gaming licenses and internet gaming vendor

 

licenses. A party aggrieved by an action of the division denying,

 

suspending, revoking, restricting, or refusing to renew a license

 

may request a contested case hearing before the division. A request

 

for hearing under this subdivision must be made to the division in


writing within 21 days after service of notice of the action by the

 

division.

 

     (c) Conduct all hearings pertaining to violations of this act

 

or rules promulgated under this act.

 

     (d) Provide for the establishment and collection of all

 

applicable license fees, taxes, and payments imposed by this act

 

and the rules promulgated under this act and the deposit of the

 

applicable fees, taxes, and payments into the fund.

 

     (e) Develop and enforce testing and auditing requirements for

 

internet gaming platforms, internet wagering, and internet wagering

 

accounts.

 

     (f) Develop and enforce requirements for responsible gaming

 

and player protection, including privacy and confidentiality

 

standards and duties.

 

     (g) Develop and enforce requirements for accepting internet

 

wagers.

 

     (h) Adopt by rule a code of conduct governing division

 

employees that ensures, to the maximum extent possible, that

 

persons subject to this act avoid situations, relationships, or

 

associations that may represent or lead to an actual or perceived

 

conflict of interest.

 

     (i) Develop and administer civil fines for internet gaming

 

operators and internet gaming vendors that violate this act or the

 

rules promulgated under this act. A fine imposed under this

 

subdivision must not exceed $5,000.00 per violation.

 

     (j) Audit and inspect, on reasonable notice, books and records

 

relevant to internet gaming operations, internet wagers, internet


wagering accounts, internet games, or internet gaming platforms,

 

including, but not limited to, the books and records regarding

 

financing and accounting materials held by or in the custody of an

 

internet gaming operator or internet gaming vendor.

 

     (k) Acquire by lease or by purchase personal property,

 

including, but not limited to, any of the following:

 

     (i) Computer hardware.

 

     (ii) Mechanical, electronic, and online equipment and

 

terminals.

 

     (iii) Intangible property, including, but not limited to,

 

computer programs, software, and systems.

 

     (2) The division may investigate and may issue cease and

 

desist orders and obtain injunctive relief against a person that is

 

not licensed by the division that offers internet gaming in this

 

state.

 

     (3) The division shall keep all information, records,

 

interviews, reports, statements, memoranda, and other data supplied

 

to or used by the division in the course of any investigation of a

 

person licensed under this act confidential and shall use that

 

material only for investigative purposes. The materials described

 

in this subsection are exempt from disclosure under section 13 of

 

the freedom of information act, 1976 PA 442, MCL 15.243.

 

     Sec. 10. Within 1 year after the effective date of this act,

 

the division shall promulgate rules governing the licensing,

 

administration, and conduct of internet gaming under this act. The

 

division shall promulgate the rules pursuant to the administrative

 

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. The


rules may include only things expressly authorized by this act,

 

including all of the following:

 

     (a) The types of internet games to be offered, which must

 

include, but need not be limited to, poker, blackjack, cards,

 

slots, and other games typically offered at a casino.

 

     (b) The qualifications, standards, and procedures for approval

 

and licensure by the division of internet gaming operators and

 

internet gaming vendors consistent with this act.

 

     (c) Requirements to ensure responsible gaming.

 

     (d) Technical and financial standards for internet wagering,

 

internet wagering accounts, and internet gaming platforms, systems,

 

and software or other electronic components integral to offering

 

internet gaming.

 

     (e) Procedures for conducting contested case hearings under

 

this act.

 

     (f) Requirements for multijurisdictional agreements entered

 

into by the division with other jurisdictions, including

 

qualifications, standards, and procedures for approval by the

 

division of internet gaming vendors providing internet gaming

 

platforms in connection with the agreements.

 

     (g) Procedures and requirements for the acceptance, by an

 

internet gaming operator, of internet wagers initiated or otherwise

 

made by persons located in other jurisdictions, if the division

 

authorizes multijurisdictional gaming as provided in this act.

 

     Sec. 11. (1) An internet gaming operator shall require the

 

internet gaming vendor providing its internet gaming platform 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 division authorizes

 

multijurisdictional internet gaming 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 an internet gaming operator.

 

     (3) An internet gaming operator shall require the internet

 

gaming vendor providing its internet gaming platform 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 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 division 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 division's


responsible gaming database.

 

     (5) An internet gaming operator shall require the internet

 

gaming vendor providing its internet gaming platform to display, on

 

the internet gaming platform used by the internet gaming operator,

 

in a clear, conspicuous, and accessible manner evidence of the

 

internet gaming operator's internet gaming license issued under

 

this act.

 

     (6) An internet gaming operator shall not conduct internet

 

gaming until 1 year after the effective date of this act.

 

     Sec. 12. (1) The division may develop responsible gaming

 

measures, including a statewide responsible gaming database

 

identifying individuals who are prohibited from establishing an

 

internet wagering account or participating in internet gaming

 

offered by an internet gaming operator. The executive director of

 

the board may place an individual's name in the responsible gaming

 

database if any of the following apply:

 

     (a) The individual has been convicted in any jurisdiction of a

 

felony, a crime of moral turpitude, or a crime involving gaming.

 

     (b) The individual has violated this act or another gaming-

 

related law.

 

     (c) The individual has performed an act or has a notorious or

 

unsavory reputation such that the individual's participation in

 

internet gaming under this act would adversely affect public

 

confidence and trust in internet gaming.

 

     (d) The individual's name is on a valid and current exclusion

 

list maintained by this state or another jurisdiction in the United

 

States.


     (2) The division may promulgate rules for the establishment

 

and maintenance of the responsible gaming database.

 

     (3) An internet gaming operator, in a format specified by the

 

division, may provide the division with names of individuals to be

 

included in the responsible gaming database.

 

     (4) An internet gaming operator shall require the internet

 

gaming vendor providing its internet gaming platform to display, on

 

the internet gaming platform used by the internet gaming operator,

 

in a clear, conspicuous, and accessible manner the number of the

 

toll-free compulsive gambling hotline maintained by this state and

 

offer responsible gambling services and technical controls to

 

authorized participants, consisting of both temporary and permanent

 

self-exclusion for all internet games offered and the ability for

 

authorized participants to establish their own periodic deposit and

 

internet wagering limits and maximum playing times.

 

     (5) An authorized participant may voluntarily prohibit himself

 

or herself from establishing an internet wagering account with an

 

internet gaming operator. The division may incorporate the

 

voluntary self-exclusion list into the responsible gaming database

 

and maintain both the self-exclusion list and the responsible

 

gaming database in a confidential manner.

 

     (6) The self-exclusion list and responsible gaming database

 

established under this section are exempt from disclosure under

 

section 13 of the freedom of information act, 1976 PA 442, MCL

 

15.243.

 

     Sec. 13. (1) A person shall not do any of the following:

 

     (a) Offer internet gaming for play in this state if the person


is not an internet gaming operator unless exempt from this act

 

under section 4(4).

 

     (b) Knowingly make a false statement on an application for a

 

license to be issued under this act.

 

     (c) Knowingly provide false testimony to the board or an

 

authorized representative of the board while under oath.

 

     (2) A person that violates subsection (1)(a) is guilty of a

 

felony punishable by imprisonment for not more than 10 years or a

 

fine of not more than $100,000.00, or both.

 

     (3) The division shall not issue a license under this act to a

 

person that violates subsection (1).

 

     (4) The attorney general or a county prosecuting attorney may

 

bring an action to prosecute a violation of subsection (1)(a) in

 

the county in which the violation occurred or in Ingham County.

 

     Sec. 14. (1) Except for an internet gaming operator that is an

 

Indian tribe, an internet gaming operator is subject to a tax of 8%

 

on the gross gaming revenue received by the internet gaming

 

operator. An internet gaming operator that is an Indian tribe is

 

subject to the payment requirements under section 7(1)(f).

 

     (2) An internet gaming operator shall pay the tax or payment,

 

as applicable, under subsection (1) on a monthly basis. The payment

 

for each monthly accounting period is due on the tenth day of the

 

following month.

 

     (3) No other tax, payment, or fee may be imposed on an

 

internet gaming operator by this state or a political subdivision

 

of this state for internet gaming conducted under this act. This

 

subsection does not impair the contractual rights under an existing


development agreement between a city and an internet gaming

 

operator that holds a casino license under the Michigan gaming

 

control and revenue act, 1996 IL 1, MCL 432.201 to 432.226.

 

     (4) In addition to payment of the tax and other fees as

 

provided in this act, and to any payment required pursuant to an

 

existing development agreement described in subsection (3), if a

 

city has imposed a municipal services fee equal to 1.25% on a

 

casino licensee, the city shall charge a 1.25% fee on the gross

 

gaming revenues of an internet gaming operator that holds a casino

 

license under the Michigan gaming control and revenue act, 1996 IL

 

1, MCL 432.201 to 432.226, whose casino is in that city.

 

     Sec. 15. (1) The tax imposed under section 14 must be

 

allocated as follows:

 

     (a) Thirty percent to the city in which the internet gaming

 

licensee's casino is located, for use in connection with the

 

following:

 

     (i) The hiring, training, and deployment of street patrol

 

officers in that city.

 

     (ii) Neighborhood development programs designed to create jobs

 

in that city with a focus on blighted neighborhoods.

 

     (iii) Public safety programs such as emergency medical

 

services, fire department programs, and street lighting in that

 

city.

 

     (iv) Anti-gang and youth development programs in that city.

 

     (v) Other programs that are designed to contribute to the

 

improvement of the quality of life in that city.

 

     (vi) Relief to the taxpayers of the city from 1 or more taxes


or fees imposed by the city.

 

     (vii) The costs of capital improvements in that city.

 

     (viii) Road repairs and improvements in that city.

 

     (b) Fifty-five percent to the state to be deposited in the

 

fund.

 

     (c) Five percent to be deposited in the state school aid fund

 

established under section 11 of article IX of the state

 

constitution of 1963.

 

     (d) Five percent to be deposited in the Michigan

 

transportation fund created under section 10 of 1951 PA 51, MCL

 

247.660, to be disbursed as provided in section 10(1)(l) of 1951 PA

 

51, MCL 247.660.

 

     (e) Five percent to the Michigan agriculture equine industry

 

development fund created under section 20 of the horse racing law

 

of 1995, 1995 PA 279, MCL 431.320. However, if the 5% allocated

 

under this subdivision to the Michigan agriculture equine industry

 

development fund created under section 20 of the horse racing law

 

of 1995, 1995 PA 279, MCL 431.320, exceeds $3,000,000.00 in a

 

fiscal year, the amount in excess of $3,000,000.00 must be

 

allocated and deposited in the fund created under section 16.

 

     (2) By December 31, 2020 and each December 31 after that date,

 

if the combined amount of money received in the preceding fiscal

 

year by the city in which the internet gaming operator licensee's

 

casino is located from money allocated under subsection (1)(a) and

 

from the wagering tax allocated under section 12(3) of the Michigan

 

gaming control and revenue act, 1996 IL 1, MCL 432.212, is less

 

than $179,000,000.00, the board shall distribute from the fund to


the city in which the internet gaming operator licensee's casino is

 

located an amount equal to the difference between $179,000,000.00

 

and the combined amount of money the city in which the internet

 

gaming operator licensee's casino is located received in the

 

preceding fiscal year from money allocated under subsection (1)(a)

 

and from the wagering tax allocated under section 12(3) of the

 

Michigan gaming control and revenue act, 1996 IL 1, MCL 432.212.

 

However, the total amount the city in which the internet gaming

 

operator licensee's casino is located receives for the preceding

 

fiscal year under subsection (1)(a) and this subsection must not be

 

more than 55% of the total tax imposed under section 14 in the

 

fiscal year.

 

     Sec. 15a. Any payments under section 7(1)(f) must be allocated

 

as follows:

 

     (a) Seventy-five percent to this state to be deposited in the

 

fund.

 

     (b) Twenty-five percent to the Michigan strategic fund created

 

under section 5 of the Michigan strategic fund act, 1984 PA 270,

 

MCL 125.2005.

 

     Sec. 16. (1) The internet gaming fund is created in the state

 

treasury.

 

     (2) The state treasurer may receive money or other assets

 

required to be paid into the fund under this act or from any other

 

source for deposit into the fund. The state treasurer shall direct

 

the investment of the fund. The state treasurer shall credit to the

 

fund interest and earnings from fund investments.

 

     (3) The board is the administrator of the fund for auditing


purposes.

 

     (4) Except as otherwise provided in section 15(2), the board

 

shall expend money from the fund, on appropriation, for all of the

 

following:

 

     (a) Each year, $1,000,000.00 to the compulsive gaming

 

prevention fund created in section 3 of the compulsive gaming

 

prevention act, 1997 PA 70, MCL 432.253.

 

     (b) The board's costs of regulating and enforcing internet

 

gaming under this act.

 

     Sec. 17. This act does not authorize the construction or

 

operation of a casino that was not constructed or operating before

 

the effective date of this act.

 

     Enacting section 1. This act takes effect 90 days after the

 

date it is enacted into law.

 

     Enacting section 2. This act does not take effect unless

 

Senate Bill No. ____ or House Bill No. 4308 (request no. 01480'19)

 

of the 100th Legislature is enacted into law.

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