8. Describe how the proposed rules protect the health, safety, and welfare of Michigan citizens while promoting a
regulatory environment in Michigan that is the least burdensome alternative for those required to comply.
The proposed internet gaming rules provide protections for the public in the following ways: (a) setting forth
responsible gaming measures; (b) providing for integrity monitoring; (c) providing the Board with oversight
capabilities; (d) providing protections for authorized participants when setting up an account or placing an internet
wager; (e) setting qualifications, standards, and procedures for approval and licensure of internet gaming operators,
internet gaming suppliers, and occupational licensees; (f) setting technical and security standards for internet gaming
platforms and internet games; and (g) setting internal control standards for internet gaming operators and internet
gaming platform providers. These measures are designed to protect the public interest in secure, responsible, fair, and
legal system of internet gaming while at the same time promoting a regulatory environment that is the least
burdensome alternative for those required to comply.
9. Describe any rules in the affected rule set that are obsolete or unnecessary and can be rescinded.
As internet gaming is new to Michigan, there are currently no rules.
10. Please provide the fiscal impact on the agency (an estimate of the cost of rule imposition or potential savings
for the agency promulgating the rule).
The Board has submitted a request for ongoing appropriation for $2,575,000 starting in fiscal year 2021. This
appropriation will cover the general administration of the Lawful Internet Gaming Act, MCL 432.301 to 432.322.
The Board will need to hire staff to properly license internet gaming operators, suppliers, and employees. This
includes hiring departmental technicians, financial analysts, and regulation officers to process applications including
review for suitability. The Board will also hire auditors, analysts, and specialists to interpret and enforce the law,
administrative rules, and internal control standards. With the addition of staff, the Board will incur additional costs
related to telecommunications, travel, office supplies, building occupancy, SWCAP, Civil Service annual assessment,
and other administrative fees. The appropriation also includes support for IT applications required for the new
program, additional user license renewals, document storage, and IT equipment. Additionally, the Board may need to
contract with a consultant for assistance with more complex investigations related to suitability of applicants, sale of
ownership, international conversion/translation, or any other potential situation that could require additional
The Lawful Internet Gaming Act imposes taxes/payments on adjusted gross receipts and requires application and
license fees to be paid by operators and suppliers. MCL 432.314, MCL 432.307(1)(f), MCL 432.306, MCL 432.308.
It is projected ongoing revenue generated by internet gaming will exceed $18 million.
11. Describe whether or not an agency appropriation has been made or a funding source provided for any
expenditures associated with the proposed rules.
Section 16(1) of the Lawful Internet Gaming Act creates the internet gaming fund in the state treasury. MCL 432.316
(1). Application fees, license fees, taxes, and payments provided for in the act are to be deposited into the fund. The
Board is the administrator of the fund for auditing purposes. MCL 432.316(3). Upon appropriations, the Board can
expend money from the fund to cover the costs of regulating and enforcing the act. MCL 432.316(4)(a). A request
for ongoing appropriation from the internet gaming fund for $2,575,000 has been made for fiscal year 2021 that is
pending approval by the Legislature.
12. Describe how the proposed rules are necessary and suitable to accomplish their purpose, in relationship to the
burden(s) the rules place on individuals. Burdens may include fiscal or administrative burdens, or duplicative
The proposed rules are necessary to create a regulatory structure for lawful internet gaming. Industry best practices
were referenced in developing the proposed rules, including the technical requirements of the internet gaming
platform and internet games; the internal control procedures; the internet wagering account requirements; and the
accounting and audit procedures. The licensing procedures and vendor registration are no more of a burden than in
any other gaming jurisdiction where protecting the public interest in secure, responsible, fair, and legal system of
internet gaming is a priority. To the extent licensing is provided for under other Michigan laws such as the Michigan
Gaming Control and Revenue Act, MCL 432.201 to MCL 432.226, and the Lawful Sports Betting Act, MCL 432.401
to MCL 432.419, the Board may waive certain requirements to lessen the burden on an applicant.
A. Despite the identified burden(s), identify how the requirements in the rules are still needed and reasonable
compared to the burdens.
Any burden on an applicant or licensee is necessary to regulate internet gaming.