Michigan Office of Administrative Hearings and Rules

Administrative Rules Division (ARD)

MOAHR-Rules@michigan.gov

REGULATORY IMPACT STATEMENT

and COST-BENEFIT ANALYSIS (RIS)

Agency Information:

Department name:

Treasury

Bureau name:

Michigan Gaming Control Board

Name of person filling out RIS:

John McKeown

Phone number of person filling out RIS:

517-335-5600

E-mail of person filling out RIS:

McKeownJ4@michigan.gov

Rule Set Information:

ARD assigned rule set number:

2025-25 TY

Title of proposed rule set:

Casino Gaming

Comparison of Rule(s) to Federal/State/Association Standard

1. Compare the proposed rules to parallel federal rules or standards set by a state or national licensing agency or

accreditation association, if any exist.

There are no parallel federal rules or standards set by a state or national licensing agency or accreditation association.

A. Are these rules required by state law or federal mandate?

These rules are required under § 4(14)(d) of Michigan Gaming Control and Revenue Act, as amended, which states

that the Board’s duties include: “Promulgating the rules necessary to implement, administer, and enforce this act.”

MCL 432.204(14)(d).

B. If these rules exceed a federal standard, please identify the federal standard or citation, describe why it is

necessary that the proposed rules exceed the federal standard or law, and specify the costs and benefits arising out

of the deviation.

There are no federal standards.

2. Compare the proposed rules to standards in similarly situated states, based on geographic location, topography,

natural resources, commonalities, or economic similarities.

Each state establishes its own requirements for licensing and regulating casino gaming. These rules provide a

regulatory framework for the licensing and operation of the three commercial casinos whereby the public’s interest in

fair and honest gaming is protected.

We compared certain areas of the proposed rules to standards in similarly situated states. Ohio and Pennsylvania were

selected as similarly situated states (sources listed below) due to their comparability across several factors, including

authorization of commercial casinos, geographic location, regulatory structure, and demographics. New Jersey was

selected as a similarly situated state because it is one of the original states that authorized commercial casinos, its

gaming regulations are considered well established, and it shares various regulatory and operational characteristics

with Michigan.

Comparisons were conducted in the following areas: (a) contract reporting requirements; (b) supplier licensing

MCL 24.245(3)

RIS-Page 2

requirements; (c) multijurisdictional progressive system requirements; and (d) requirements for the confiscation of

winnings from excluded persons.

Contract Reporting:

The proposed rules require a contract or transaction that is more than $100,000 to be in the form of or subject to a

written contract. A casino licensee or applicant must file an annual summary of all contracts and non-wagering

transactions involving more than $250,000 in a 12-month period. Additionally, a casino licensee or applicant must

notify the Board on a quarterly basis of all contracts, transactions, or series of transactions involving more than $2

million in a 12-month period.

We reviewed the laws and regulations of similarly situated states for corresponding requirements. Where they exist,

we noted that contract maintenance and reporting obligations are dictated by contents or subject matter rather than

dollar amount. Specifically, we noted the following:

•We were unable to locate contract reporting requirements in Ohio’s statute and regulations.

•In Pennsylvania, casino licensees must maintain copies of all contracts and records related to all oral agreements with

suppliers, gaming service providers, and certain other persons. Only agreements related to gaming devices and

equipment must be in writing. Certain agreements, based on their contents, must be filed with and/or approved by the

Pennsylvania Gaming Control Board (PGCB). Any contract or records related to an oral agreement must be submitted

to the PGCB on request.

•New Jersey requires each casino licensee or applicant to maintain a record of each written or unwritten agreement

regarding the realty, construction, maintenance, or business of a casino or related facility. Certain agreements, based

on their contents, must be filed with and/or approved by the New Jersey Division of Gaming Enforcement (NJDGE).

Any written or unwritten agreement must be submitted to the NJDGE on request. Additionally, each casino licensee or

applicant must submit a monthly report of all purchases and disbursements to the NJDGE.

Supplier Licensing:

The proposed rules require a person who provides $500,000 or more in nongaming-related goods or services to a

casino licensee in any rolling 12-month period to obtain a supplier license. An institutional investor who holds less

than 25% interest in a supplier licensee or applicant may apply for a waiver of the relevant eligibility and suitability

requirements.

We reviewed nongaming-related supplier licensing requirements in similarly situated states and noted the following:

•Ohio licenses gaming-related suppliers only.

•Pennsylvania requires the following: (a) A casino licensee or applicant must notify the PGCB before compensating a

non-gaming supplier more than $15,000 but less than $100,000 in a consecutive 12-month period; (b) A non-gaming

supplier must register with the PGCB before providing goods or services to one or more casino licensees or applicants

valued between $100,000 and $500,000 in a consecutive 12-month period; and (c) A non-gaming supplier must obtain

certification from the PGCB before providing goods or services to one or more casino licensees or applicants valued

at more than $500,000 in a consecutive 12-month period. In addition, a non-gaming supplier must be registered or

certified if its employees will be working on the gaming floor or in a restricted area, and a casino licensee or applicant

must notify the PGCB of certain other non-gaming suppliers.

•New Jersey licenses gaming-related suppliers only. Nongaming-related suppliers must be registered with the NJDGE

(certain nongaming-related suppliers providing less than $25,000 in goods or services to a casino licensee may be

exempt from registration).

Institutional investor requirements and the way they apply to suppliers vary by state. Ohio, Pennsylvania, and New

Jersey impose maximum ownership percentages for supplier-related institutional investors of 25%, 20%, and 25%,

MCL 24.245(3)

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respectively.

Multijurisdictional Progressive System Requirements:

Subject to Board approval, the proposed rules allow a casino licensee to link a wide area progressive system to

another jurisdiction.

While Ohio’s law and regulations do not address multijurisdictional progressives, Pennsylvania and New Jersey both

allow multijurisdictional progressive systems and require regulatory approval (both also require a multijurisdictional

agreement between regulators in the linked jurisdictions).

Confiscation of Winnings from Excluded Persons:

The proposed rules provide that winnings of an excluded person must be confiscated and deposited into the

compulsive gaming prevention fund.

Ohio requires ejection of an involuntarily excluded person but does not expressly require confiscation of the person’s

winnings (although the state requires money and things of value of a self-excluded individual to be seized and

deposited in the state’s problem gambling and addictions fund).

In Pennsylvania, winnings of an excluded person must be confiscated, remitted to the PGCB, and used to support

compulsive and problem gambling programs.

New Jersey requires a casino licensee to confiscate winnings or things of value of an excluded person. The winnings

or things of value are subject to forfeiture to the NJDGE unless they are released to the excluded person following a

hearing. A portion of any funds forfeited to the NJDGE will be appropriated to the state’s department of human

services to fund compulsive gambling treatment and prevention programs (with the remainder deposited in the casino

revenue fund).

•New Jersey Casino Control Act (Title 5, Chapter 12): https://lis.njleg.state.nj.us/nxt/gateway.dll?

f=templates&fn=default.htm&vid=Publish:10.1048/Enu.

•New Jersey Division of Gaming Enforcement Regulations (Title 13, Chapters 69-69Q):

https://advance.lexis.com/container/?pdmfid=1000516&crid=2a31edaf-8d16-4119-a47d-

b329330e79c5&config=00JAA5OTY5MTdjZi1lMzYxLTQxNTEtOWFkNi0xMmU5ZTViODQ2M2MKAFBvZENh

dGFsb2coFSYEAfv22IKqMT9DIHrf&ecomp=6s85k&prid=96d154ff-e09b-456b-b9ad-05abd9c4893e.

•Ohio Casino Control Act: https://codes.ohio.gov/ohio-revised-code/chapter-3772.

•Ohio Casino Control Commission Rules: https://codes.ohio.gov/ohio-administrative-code/3772.

•Pennsylvania Gaming Act: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=04.

•Pennsylvania Gaming Control Board Regulations: https://www.pacodeandbulletin.gov/Display/pacode?

file=/secure/pacode/data/058/partVIItoc.html.

A. If the rules exceed standards in those states, please explain why and specify the costs and benefits arising out of

the deviation.

MCL 24.245(3)

RIS-Page 4

Overall, the Board believes the proposed rules are necessary for the proper licensing and regulation of commercial

casinos and to protect the public’s interest in ensuring fair and honest gaming. Where the proposed rules exceed

standards in similarly situated states, the Board does not expect the deviations to result in substantially higher

regulatory costs for licensees.

Contract Reporting:

Whether the proposed rules exceed the standards imposed by the similarly situated states will vary based on the nature

and amounts of a casino licensee’s contracts. To the extent the proposed rules exceed standards in similarly situated

states, the Board anticipates minimal cost to casino licensees and believes the proposed rules are necessary to ensure

compliance with the Michigan Gaming Control and Revenue Act and related administrative rules, verify that casino

operations are conducted in an appropriate and financially sound manner, and protect the financial interests of the

State of Michigan. Further, relative to the existing rules, the proposed rules will reduce the regulatory burden imposed

on casino licensees by increasing certain monetary thresholds and decreasing the frequency of certain required

reports.

Supplier Licensing:

The proposed rules are like those of Pennsylvania but exceed nongaming-related supplier licensing standards in Ohio

and New Jersey. The Board believes that licensing of certain nongaming-related suppliers is necessary to keep

unsuitable entities out of the state’s casinos, prevent criminal enterprises from benefiting financially through

participation in regulated gaming operations, and protect the integrity of casino gaming and the safety and interests of

Michigan citizens. The Board believes that the cost of licensure is minimal relative to the value licensed entities

derive from conducting business with the commercial casinos. Additionally, in comparison to the existing rules, the

proposed rules will reduce the regulatory burden imposed on supplier licensees by increasing the monetary threshold

applied to providers of nongaming-related goods or services (thereby requiring fewer entities to obtain licensure).

Regarding institutional investor requirements, the proposed rules generally do not exceed those of similarly situated

states. Ohio, Pennsylvania, and New Jersey impose maximum ownership percentages for supplier-related institutional

investors equal to or below the threshold established in the proposed rules.

Multijurisdictional Progressive System Requirements:

The proposed rules are consistent with and do not exceed standards in Pennsylvania and New Jersey (Ohio law and

regulations do not address multijurisdictional progressives). The proposed rules will expand the progressive options

available to casino licensees and their customers and may lead to a minor increase in gaming activity and revenue.

Confiscation of Winnings from Excluded Persons:

The proposed rules are largely consistent with and do not exceed those of Pennsylvania and New Jersey. To the extent

the proposed rules exceed standards imposed in Ohio, the Board expects their implementation will result in little or no

added cost for casino licensees. Additionally, the Board believes the proposed rules will provide needed clarity and

reflect sound public policy (discouraging excluded persons from visiting a casino, profiting from activity from which

they are banned, and negatively impacting the integrity of casino gaming). Confiscated winnings will provide

additional revenue to the state and support critical problem gambling prevention programs.

3. Identify any laws, rules, and other legal requirements that may duplicate, overlap, or conflict with the proposed

rules.

There are no other laws, rules, or other legal requirements that duplicate, overlap, or conflict with the proposed rules.

A. Explain how the rules have been coordinated, to the extent practicable, with other federal, state, and local laws

applicable to the same activity or subject matter. This section should include a discussion of the efforts undertaken

by the agency to avoid or minimize duplication.

To the extent that another law may apply, such as carrying a weapon in the casino, the rules defer to the state or

federal requirement; thus, the Board has avoided duplication.

Purpose and Objectives of the Rule(s)

MCL 24.245(3)

RIS-Page 5

4. Identify the behavior and frequency of behavior that the proposed rules are designed to alter.

The behavior and frequency of behavior that the proposed rules are designed to alter are as follows:

•R 432.1101 eliminates definition of “attributed interest” and “board.”

•R 432.1103 changes definition of “interim compliance period” by the Board issuing an order denying a casino license

instead of issuing a notice of denial.

•R 432.1104 eliminates definition of “junket” and “junket representative.” Changes definitions of “key person” and

“live gaming device.”

•R 432.1106 changes term “publicly held company’ and “publicly traded corporation” to “publicly traded

corporation.” It also adds definition of ‘qualifying business;” changes definition of “related party” and “related party

transactions;” and eliminates definition of “relative.”

•R 432.1107 eliminates definition of “Supplier” and “Surety Bond.” It also changes “Sole proprietor” to “Sole

proprietorship.”

•R 432.1108 changes “wide-area progressive system” to “wide area progressive system.” Also adds definition for

“wide area progressive central system.”

•R 432.1212 incorporates waiver of weapons in any area of the casino instead of just secured areas related to armored

car personnel picking up or delivering currency.

•R 432.1214 deletes executive director’s authority to renew temporary licenses because temporary licenses do not get

renewed.

•R 432.1216, R 432.1217, R 432.1220, and R 432.1221 are being amended to increase monetary thresholds related to

contracts and change reporting of such contracts to the Board.

•R 432.1218 deletes contracts from related party contracts and transactions. It also provides internal control

procedures for the payment of dividends or distributions to members or shareholders.

•R 432.1223 allows a rule waiver for any of the listed reasons instead of having to meet all of reasons.

•R 432.1232, R 432.1304, and R 432.1501 are changed to reflect amended statutory definition of applicant.

•R 432.1301 was changed to include language indicating that a licensee has the burden to demonstrate continued

eligibility and suitability for a license. This allowed recission of R 432.1313. Language was also added from

rescinded R 432.1206 regarding the requirement to disclose promptly material change to information previously

supplied to the Board.

•R 432.1303 to remove the word “direct” as it related to investigative costs the Board can recoup.

•R 432.1308 and R 432.1309 to remove reference to casino license bond because it was removed from MCL 432.206

(5)(c) in the 2019 amendment.

•R 432.1321 amended to remove the requirement that a person who supplies regulation services does not have to be

licensed.

•R 432.1322 removes holder of a certificate of suitability, junket enterprises, and junket representatives. It also

changes $400,000 to $500,000 when determining if a person is providing goods or services on a regular and

continuing basis.

•R 432.1504 allows an institutional investor who holds 15% interest in a casino for investment purposes only or 25%

interest for investment purposes only in a supplier to apply for waiver of the licensing requirements in the manner and

form prescribed by the Board.

•R 432.1601 adds confiscation of winnings of an excluded person.

•R 432.1702 removes notice of denial and notice of nonrenewal and instead refers to them as a notice. This also adds

order clarifying when the 21-day period starts to request a hearing.

•R 432.1811 is amended to show the minimum requirements of a live gaming device to include an emergency drop

box form.

•R 432.1839 is amended to incorporate the waiver of persistent state games.

•R 432.1840 is amended to state that rules of tournament players be provided to all tournament players and members

of the public who request a copy.

•R 432.1841 is amended to anticipate multi-jurisdictional wide area progressives as permitted by the amendment to

the Act in 2019. MCL 432.204a(1)(u).

•R 432.11008 increases from $100,000 to $200,000 the requirement that there be a dedicated camera in the

surveillance system to continuously record any EGD that has a possible jackpot payout of that amount in a single line.

•R 432.11201 removes reference to attributed interest when referring to the records of a casino licensee that a

MCL 24.245(3)

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corporation must provide the Board upon request.

•R 432.11203: because audits are annual, the proposed change removes the term “quarterly” from the rule as it relates

to adjustments.

•R 432.11204 removes the term “quarterly” to be consistent with amendment of section 14 of the Act requiring annual

and not quarterly audits.

•R 432.11602 includes removing the DPL designation in the casino system when a disassociated person is removed

from the list. Also, the casino licensee must identify a disassociated person as ineligible to receive promotional

materials by including an email address if provided by the Board, as well as name, address, and date of birth on all

mailing, marketing, and promotion lists maintained by the casino licensee.

A. Estimate the change in the frequency of the targeted behavior expected from the proposed rules.

MCL 24.245(3)

RIS-Page 7

There is no estimated change in frequency of targeted behavior expected from the proposed rule changes: R 432.1101,

R 432.1103, R 432.1104, R 432.1106, R 432.1107, R 432.1108, R 432.1212, R 432.1214, R 432.1218, R 432.1223, R

432.1301, R 432.1303, R 432.1307, R 432.1308, R 432.1309, R 432.1321, R 432.1327, R 432.1338, R 432.1341, R

432.1501, R 432.1505, R 432.1507, R 432.1702, R 432.1811, R 432.1839, R 432.1840, R 432.1841, and R 432.11201

For the remaining rules, the estimated change in frequency of the targeted behavior expected from the proposed rule

changes are as follows:

•R 432.1216: instead of having to put a contract in writing when it is more than $50,000, contracts will have to be in

writing if they are more than $100,000. This will result in fewer contracts being put in writing.

•R 432.1217: internal controls procedures for purchasing transaction(s) will have to be amended to include approval

of contracts or transactions of more than $100,000 instead of more than $50,000. While amending the internal

controls for purchasing transactions is a one-time event, the requirement that contracts of more than $100,000 instead

of $50,000 will result in fewer contracts being put in writing.

•R 432.1220 changes reporting a summary of all contracts and nonwagering transactions from quarterly to annually

and establishes the calendar year as January 1 to December 31. The proposed change also requires certification by the

senior financial officer or person of equivalent position instead of just the general manager. Finally, instead of

reporting quarterly on oral contracts or transactions that involve an amount of more than $25,000 in a 12-month

period, it will be annually for oral contracts or transactions that are more than $50,000.

•R 432.1221: instead of a casino licensee being required to notify the Board in writing as soon as practicable of

contracts of more than $50,000, the casino licensee will be required to notify the Board in writing on a quarterly basis

of contracts of more than $2,000,000.

•R 432.1232, R 432.1304, and R 432.1501: the frequency of a person having to submit to investigation for licensure

will decrease, because instead of having to identify a person who holds more than 1% direct or indirect interest in an

applicant, it will be 5%, which is consistent with the Act.

•R 432.1322: junket enterprises and junket representatives will no longer be required to apply for a license. Further,

by changing $400,000 to $500,000 when determining if a person is providing goods or services on a regular and

continuing basis, fewer entities will have to submit applications for licensure.

•R 432.1504: instead of only providing that an institutional investor who holds 15% in a casino licensee or supplier

licensee needs to file an application for a waiver, the proposed changes clarifies that if an institutional investor

acquires or holds less than 15% for investment purposes only in a casino licensee or 25% interest for investment

purposes only in a supplier licensee, they may apply for waiver of the licensing requirements in the manner and form

prescribed by the Board. With this proposed change, fewer institutional investors who hold 25% interest for

investment purposes only in a person that holds a supplier license will apply for a waiver.

•R 432.1601: currently, an excluded person does not have his or her winnings confiscated if found in a casino, but

with the proposed rule change, an excluded person will have his or her winnings confiscated when found in a casino.

•R 432.11008: with the increase from $100,000 to $200,000, the requirement that there be a dedicated camera in the

surveillance system to continuously record any EGD that has a possible jackpot payout of that amount in a single line

will require fewer dedicated cameras in the surveillance system.

•R 432.11203: with audits being conducted annually, the proposed change removes quarterly audits from the rule as it

relates to adjustments. Quarterly reporting will no longer be required.

•R 432.11204 removes the term “quarterly” to be consistent with amendment of section 14 of the Act requiring annual

and not quarterly audits.

•R 432.11602: the casino licensee will be required to include an email address to further identify a disassociated

person as ineligible to receive promotional materials. Further, when a person is removed from the DPL, the casino

licensee will be required to remove the DPL designation in the casino system.

B. Describe the difference between current behavior/practice and desired behavior/practice.

There is no difference in current behavior/practice and desired behavior/practice with the following proposed rule

amendments: R 432.1101, R 432.1103, R 432.1104, R 432.1106, R 432.1107, and R 432.1108. These proposed

amendments are only to definitions.

The difference between current behavior/practice and desired behavior/practice for the proposed rule amendments are

as follows:

MCL 24.245(3)

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•R 432.1212 will permit armored car personnel picking up or delivering currency in any area of the casino to carry a

weapon. Currently, a weapon can only be carried in secured areas.

•R 432.1214: because temporary occupational and supplier licenses are not renewed, the proposed amendment

removes the executive director’s authority to renew temporary occupational or supplier licenses.

•R 432.1216 requires contracts of $100,000 or more to be in writing. Currently, contracts of more than $50,000 must

be in writing.

•R 432.1217 requires internal control procedures for purchasing transactions to include approval of contracts or

transactions of more than $100,000. Currently, the procedures are for contracts more than $50,000.

•R 432.1218 deletes contracts from related party contracts and transactions. It also provides for internal control

procedures for the payment of dividends or distributions to members or shareholders. Currently, it only provides for

internal control procedures for payment of dividends or distributions to shareholders.

•R 432.1220 changes reporting a summary of all contracts and non-wagering transactions from quarterly to annually,

and establishes the calendar year as January 1 to December 31. The proposed change also requires certification by the

senior financial officer or person of equivalent position instead of just the general manager. Finally, instead of

reporting quarterly on oral contracts or transactions that involve an amount of more than $25,000 in a 12-month

period, it is now annually for oral contracts or transactions that are more than $50,000.

•R 432.1221 requires a casino licensee to notify the board in writing on a quarterly basis after entering a contract

which is more than $2,000,000. Currently, the notification is as soon as practicable and is required at $500,000.

•R 432.1223 requires the Board to determine three different criteria before it waives a rule. The proposed rule change

will require that only one of the three criterion be identified before a rule can be waived.

•R 432.1232, R 432.1304, and R 432.1501 identify a person who holds more than 1% direct or indirect interest in an

applicant as someone the Board can require information from. The proposed change to 5% makes it consistent with

the Act.

•R 432.1301 will require both an applicant and a licensee to demonstrate and maintain continued eligibility,

qualification, and suitability for licensure. Currently, in this rule, only the applicant has the responsibility to maintain

eligibility, qualification, and suitability for licensure. Also, an applicant and licensee will be required to disclose

promptly to the Board any material change in information contained in an application, renewal report, or renewal

form. Currently, this rule only requires notification to the Board of a material change in information contained in an

application. The proposed change also requires all required release information to be current with the Board.

•R 432.1303 currently allows the Board to assess direct investigative costs related to a background investigation and

the proposed amendment will change this to all investigative costs, direct or otherwise.

•R 432.1307 requires the executive director to issue a notice of denial when the board finds an applicant not suitable

for a license. The proposed change allows the Board to enter an order instead of the executive director issuing a

notice of denial. See also R 432.1327, R 432.1338, R 432.1341, and R 432.1505.

•R 432.1308 eliminates a bond during the interim compliance period while the certificate of suitability is in effect.

Section 8a of the Act, MCL 432.208a was amended in 2019 to eliminate the bond. See also R 432.1309.

•R 432.1321 removes the requirement that a person who supplies regulation services must be licensed.

•R 432.1322 currently requires a junket enterprise and junket representative to be licensed as a supplier. Prior to

amendment in 2019, the Act required a junket enterprise and junket representative to be licensed as a supplier.

•R 432.1504 allows an institutional investor who holds 15% interest in a casino for investment purposes only or 25%

interest for investment purposes only in a supplier to apply for a waiver of the licensing requirements in the manner

and form prescribed by the Board. Currently this only applies to institutional investors that hold 15% interest in a

casino or supplier licensee, and this rule sets forth what information must be included in the application for the

waiver.

•R 432.1601 adds confiscation of winnings of an excluded person. Currently, if an excluded person is found in a

casino, their winnings are not confiscated.

•R 432.1702 removes notice of denial and notice of nonrenewal and instead refers to them as a notice. This also adds

an order clarifying when the 21-day period starts to request a hearing. Currently, the 21-day period starts with the

issuance of a notice of denial or notice of nonrenewal.

•R 432.1811 is amended to show the minimum requirements of a live gaming device to include an emergency drop

box form instead of requiring the word “EMERGENCY” clearly printed on the boxes.

•R 432.1839 is amended to incorporate the rule waiver approved by the executive director of persistent state games.

•R 432.1840 is amended to state that rules of tournament play be provided to all tournament players and members of

MCL 24.245(3)

RIS-Page 9

the public who request a copy, instead of requiring the casino to submit the rules for a tournament not less than 30

days in advance of the tournament and receive Board approval of the same before conducting the tournament.

•R 432.1841 is amended to anticipate multi-jurisdictional wide area progressives as permitted by the amendment to

the Act in 2019. MCL 432.204a(1)(u). It also clarifies wide area progressive system from just system and includes

reference to the term EGD instead of machine. EGD is a defined term, machine is not. Further, it anticipates a wide

area progressive central system for processing multi-jurisdictional transactions.

•R 432.11008 increases from $100,000 to $200,000 the requirement that there be a dedicated camera in the

surveillance system to continuously record any EGD that has a possible jackpot payout of that amount in a single line.

•R 432.11201 removes reference to attributed interest.

•R 432.11203 removes the term “quarterly” from the part of the rule that requires reporting of adjustments to audits.

•R 432.11204 removes the term “quarterly” to be consistent with amendment of section 14 of the Act requiring annual

audits and not quarterly.

•R 432.11602 includes removing DPL designation in casino systems when a disassociated person is removed from

list.

•R 432.11203: because audits are annual, the proposed change removes the term “quarterly” from the rule as it relates

to adjustments. Currently, an adjustment that results from a quarterly audit must be recorded in accounting records.

•R 432.11204 removes the term “quarterly” to be consistent with the amendment of section 14 of the Act requiring

annual audits and not quarterly.

•R 432.11602 includes removing the DPL designation in the casino system when a disassociated person is removed

from the list. Also, the casino licensee must identify a disassociated person as ineligible to receive promotional

materials by including an email address if provided by the Board, as well as name, address, and date of birth on all

mailing, marketing, and promotion lists maintained by the casino licensee.

C. What is the desired outcome?

The desired outcome of the following rule changes are as follows:

Changes to R 432.1101, R 432.1103, R 432.1104, R 432.1106, R 432.1107, and R 432.1108 are to clarify terms used in

the rules and eliminate terms that are no longer applicable.

•R 432.1212 will permit armored car personnel picking up or delivering currency in any area of the casino to carry a

weapon. Currently, the weapon can only be carried in secured areas.

•R 432.1214 establishes that the executive director will not have the authority to renew temporary licenses because

temporary licenses do not get renewed.

•R 432.1216, R 432.1217, R 432.1220, and R 432.1221 is increasing the monetary thresholds related to contracts and

changing the reporting of such contracts to the Board.

•R 432.1218 is clarification that contracts will be deleted from related party contracts and transactions, and internal

control procedures for the payment of dividends or distributions will include members or shareholders, not just

shareholders.

•R 432.1223 grants additional authority to waive or alter a rule that is impractical or burdensome, in the best interest of

the public or gaming industry, or that is not outside the technical requirements necessary to service the purpose of the

requirement or procedure.

•R 432.1232, R 432.1304, and R 432.1501 is to reflect the amended statutory definition of applicant to include only

persons with 5% direct or indirect interest.

•R 432.1301 is to have a licensee have the burden to demonstrate continued eligibility and suitability for a license.

This allowed recission of R 432.1313 language was also added from rescinded R 432.1206 regarding the requirement

to disclose promptly material changes to information previously supplied to the Board.

•R 432.1303 is to remove the word “direct” as it relates to investigative costs the Board can recoup. The desired

outcome is to ensure all investigative costs are paid for by the licensee.

•R 432.1307 is to allow the Board’s order to be final without requiring the executive director to issue a notice of denial.

This will streamline the process of denying applications by not having the duplicative notice of denial issued by the

executive director. See also R 432.1327, R 432.1338, R 432.1341, and R 432.1505.

•R 432.1308 and R 432.1309 is to remove reference to the phrase “casino license bond” because it was removed from

MCL 432.206(5)(c) in the 2019 amendment.

MCL 24.245(3)

RIS-Page 10

•R 432.1321 is to remove the consideration of whether a person who supplies services related to regulation should be

required to be licensed as a gaming related supplier.

•R 432.1322 is to remove the holder of a certificate of suitability, junket enterprises, and junket representatives from

mandatory licensure as a non-gaming related supplier. It also changes $400,000 to $500,000 when determining if a

person is providing goods or services on a regular and continuing basis.

•R 432.1504 is to allow an institutional investor who holds 15% interest in a casino for investment purposes only or

25% interest for investment purposes only in a supplier to apply for waiver of the licensing requirements in the manner

and form prescribed by the Board.

•R 432.1601 is to confiscate winnings of an excluded person to deter them from entering the casino and gambling.

•R 432.1702 is to change the phrases “notice of denial” and “notice of nonrenewal” to just “notice”. Further, “order” is

added to clarify when the 21-day period to request a hearing starts.

•R 432.1811 is to show the minimum requirements of a live gaming device to include an emergency drop box form.

•R 432.1839 is to incorporate the waiver of persistent state games.

•R 432.1840 is to state that rules of tournament players be provided to all tournament players and members of the

public who request a copy.

•R 432.1841 is to anticipate multi-jurisdictional wide area progressives as permitted by the amendment to the Act in

2019. MCL 432.204a(1)(u). The intended outcome is to also clarify a wide area progressive system from just a system

and includes reference to “EGD” which is a defined term as opposed to using “machine”. Further, it anticipates a wide

area progressive central system for processing multi-jurisdictional transactions.

•R 432.11008 is to have dedicated cameras in the surveillance system that continuously record any EGD that has a

possible jackpot payout of $200,000 in a single line.

•R 432.11201 is to remove reference to attributed interest when referring to the records a casino licensee that is a

corporation must provide the Board upon request.

•R 432.11203 is to remove quarterly as it relates to audits because audits are annual.

•R 432.11204 is to remove the term “quarterly” to be consistent with amendment of section 14 of the Act requiring

annual and not quarterly audits.

•R 432.11602 is to remove DPL designation in the casino system when a disassociated person is removed from the list.

Also, to identify a disassociated person as ineligible to receive promotional materials by including an email address, if

provided by the Board, as well as name, address, and date of birth on all mailing, marketing, and promotion lists

maintained by the casino licensee.

5. Identify the harm resulting from the behavior that the proposed rules are designed to alter and the likelihood

that the harm will occur in the absence of the rule.

The behavior that the proposed rules are designed to alter includes consistency with amendments made to the Act in

2019. They also update rules to increase monetary thresholds for reporting and streamline the process for denying

application for a license. If the rules are not changed, operational efficiencies for licensees and the Board cannot be

implemented and enforcement activities are not prioritized.

A. What is the rationale for changing the rules instead of leaving them as currently written?

The rationale for changing the rules is to lessen the burden on the licensees without jeopardizing regulatory

enforcement activity or the integrity of casino gaming. The changes also allow for clarification of processes and

procedures.

6. 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.

MCL 24.245(3)

RIS-Page 11

The proposed rules provide a regulatory framework for the licensing and operation of the three commercial casinos.

The proposed rules protect the public’s health, safety, and welfare while providing a regulatory environment that is the

least burdensome possible given the highly regulated nature of casino gaming. See R 432.1216, R 432.1217, R

432.1220, and R 432.1221 which are being amended to increase monetary thresholds related to contracts and change

reporting of such contracts to the Board. This ensures casinos operate in a compliant and financially sound manner,

thereby protecting the public’s interest in fair and honest gaming and tax revenue. Although increasing the monetary

threshold from $400,000 to $500,000, the rules still require investigation and licensure of certain non-gaming related

suppliers to ensure suitability and to protect safety and financial interests of Michigan citizens. See R 432.1322.

Proposed changes to R 432.1841 will lessen the burden on casino licensees because they will have a framework in

which to conduct the multijurisdictional wide area progressives that have been authorized by law. Supplier licensees

with institutional investors who hold less than 25% interest for investment purposes will not have to file a request for a

waiver which will be less burdensome. See R 432.1504

7. Describe any rules in the affected rule set that are obsolete or unnecessary and can be rescinded.

R 432.1206—This rule is obsolete and unnecessary because it is already covered in Rule 432.1301(6)(a).

R 432.1222—This rule is obsolete and unnecessary because of the 2019 amendment to MCL 432.204a(1)(a).

R 432.1310—This rule is obsolete and unnecessary because of the 2019 amendment to the MCL 432.206(5)(c).

R 432.1313-- This rule is obsolete and unnecessary because it is already covered in Rule 432.1301(2)&(6)(b)

Fiscal Impact on the Agency

Fiscal impact is an increase or decrease in expenditures from the current level of expenditures, i.e. hiring additional staff,

higher contract costs, programming costs, changes in reimbursements rates, etc. over and above what is currently

expended for that function. It does not include more intangible costs for benefits, such as opportunity costs, the value of

time saved or lost, etc., unless those issues result in a measurable impact on expenditures.

8. 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).

Other than the costs to promulgate the proposed rules, the Board does not anticipate any additional costs or savings.

9. Describe whether or not an agency appropriation has been made or a funding source provided for any

expenditures associated with the proposed rules.

The funding source for any expenditures associated with the proposed rules will be paid for as prescribed in §12a of

the Michigan Gaming Control and Revenue Act, MCL 432.212a

10. 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

acts.

An excluded person is prohibited from entering any of the three casinos in Detroit because they have been found by

the Board to meet certain criteria for exclusion which includes but is not limited to (1) having been convicted of a

felony or misdemeanor involving gambling theft, dishonest, or fraud (2) violated the Act or rules; or (3) performed

any act, or has a reputation, that would adversely affect public confidence and trust in the integrity of gaming. See

Rule 432.1603.

To further discourage an excluded person from entering a casino and gambling, R 432.1601 proposes to allow an

excluded person’s winnings to be confiscated. This is a financial burden to the excluded person.

A. Despite the identified burden(s), identify how the requirements in the rules are still needed and reasonable

compared to the burdens.

The burden placed on excluded persons of having their winnings confiscated is needed and reasonable given the

individuals are prohibited from entering and gambling in the casinos. Allowing an excluded person to benefit

financially from gaming would undermine the purpose of the exclusion and potentially negatively impact the

integrity and perception of gaming. Further, by confiscating winnings, excluded persons may be deterred from

entering any of the three casinos in Detroit which will help protect the integrity of gaming and protect the safety and

security of casino visitors.

This is similar to the requirement set forth in the Act where a person on the disassociated persons list when found in a

casino has their winnings confiscated. MCL 432.225(15).

MCL 24.245(3)

RIS-Page 12

Impact on Other State or Local Governmental Units

11. Estimate any increase or decrease in revenues to other state or local governmental units (i.e. cities, counties,

school districts) as a result of the rule. Estimate the cost increases or reductions for other state or local

governmental units (i.e. cities, counties, school districts) as a result of the rule. Include the cost of equipment,

supplies, labor, and increased administrative costs in both the initial imposition of the rule and any ongoing

monitoring.

While generally, the proposed rules do not increase or decrease revenue to other state or local governmental units,

there could be a slight increase in revenue to the compulsive gaming prevention fund due to confiscated winnings of

excluded persons. There may also be a slight increase in tax revenue to the City of Detroit and School Aid Fund with

multijurisdictional wide area progressives. There are no cost increases or reductions to other state or local

governmental units because of the proposed rules. Further, neither at the initial imposition of the proposed rules nor

on an ongoing basis will other state or local governmental units have costs for equipment, supplies, labor, or

administrative costs as a result of these proposed rules.

12. Discuss any program, service, duty, or responsibility imposed upon any city, county, town, village, or school

district by the rules.

There is no program, service, duty, or responsibility imposed upon any city, county, town, village, or school district

by the proposed rules.

A. Describe any actions that governmental units must take to be in compliance with the rules. This section should

include items such as record keeping and reporting requirements or changing operational practices.

There is nothing a governmental unit must do to be in compliance with the proposed rules.

13. Describe whether or not an appropriation to state or local governmental units has been made or a funding

source provided for any additional expenditures associated with the proposed rules.

There is no expenditure to a state or local governmental unit associated with the proposed rules, thus, no additional

appropriations or funding source has been provided.

Rural Impact

14. In general, what impact will the rules have on rural areas?

The proposed rules have no impact on rural areas.

A. Describe the types of public or private interests in rural areas that will be affected by the rules.

The proposed rules have no impact on public or private interests in rural areas.

Environmental Impact

15. Do the proposed rules have any impact on the environment? If yes, please explain.

The proposed rules have no impact on the environment.

Small Business Impact Statement

16. Describe whether and how the agency considered exempting small businesses from the proposed rules.

Under the Michigan Gaming Control and Revenue Act, a business must be licensed to supply gaming related goods

and services to a casino licensee, MCL 432.207a; thus, regardless of the business size, the Board cannot exempt

small businesses from the proposed rules. However, the proposed rules increase the monetary threshold at which a

non-gaming related business must become licensed, which may mean that certain businesses do not have to become

licensed. The rules do not have a disproportionate impact on small businesses because of their size. See MCL

24.240(1).

17. If small businesses are not exempt, describe (a) the manner in which the agency reduced the economic impact

of the proposed rules on small businesses, including a detailed recitation of the efforts of the agency to comply

with the mandate to reduce the disproportionate impact of the rules upon small businesses as described below (in

accordance with MCL 24.240(1)(a-d)), or (b) the reasons such a reduction was not lawful or feasible.

MCL 24.245(3)

RIS-Page 13

The strict regulation of casino gaming is necessary. Therefore, it was not possible to specifically exempt small

businesses from the supplier-licensing requirements. However, by increasing the monetary threshold at which a

business must become licensed, the Board has potentially reduced the economic impact of the proposed rules on all

qualifying businesses.

A. Identify and estimate the number of small businesses affected by the proposed rules and the probable effect on

small businesses.

Potentially hundreds of businesses will be affected positively with the increased monetary threshold for licensing.

Not having to be licensed reduces the economic impact on these businesses.

B. Describe how the agency established differing compliance or reporting requirements or timetables for small

businesses under the rules after projecting the required reporting, record-keeping, and other administrative costs.

Once the Board determines a business must be licensed, there are no differences in compliance, reporting

requirements, or timetables for the business.

C. Describe how the agency consolidated or simplified the compliance and reporting requirements for small

businesses and identify the skills necessary to comply with the reporting requirements.

The Board did not consolidate or simplify compliance or reporting requirements for businesses that must be licensed.

D. Describe how the agency established performance standards to replace design or operation standards required

by the proposed rules.

The Board did not establish performance standards to replace design or operation standards for businesses that must

be licensed.

18. Identify any disproportionate impact the proposed rules may have on small businesses because of their size or

geographic location.

The proposed rules do not have an impact on a business based on its size or geographic location. The licensing

requirements are not based on a size or geographic location requirement.

19. Identify the nature of any report and the estimated cost of its preparation by small businesses required to

comply with the proposed rules.

The proposed rules do not add additional reporting requirements; thus, there is no estimated cost for the preparation

of a report by a business.

20. Analyze the costs of compliance for all small businesses affected by the proposed rules, including costs of

equipment, supplies, labor, and increased administrative costs.

The proposed rules do not increase costs for businesses. Potentially businesses will be affected positively with the

increased monetary threshold for licensing.

21. Identify the nature and estimated cost of any legal, consulting, or accounting services that small businesses

would incur in complying with the proposed rules.

Businesses will not likely incur any costs for legal, consulting, or accounting services because of the proposed rules.

22. Estimate the ability of small businesses to absorb the costs without suffering economic harm and without

adversely affecting competition in the marketplace.

Because the proposed rules do not increase costs for businesses, there will be no costs to absorb and will not

adversely affect competition in the marketplace.

23. Estimate the cost, if any, to the agency of administering or enforcing a rule that exempts or sets lesser

standards for compliance by small businesses.

MCL 24.245(3)

RIS-Page 14

Potentially, if the MGCB were to completely exempt nongaming-related suppliers that are small businesses who

provide goods or services to casino licensees which are not small businesses, the MGCB would save on investigative

costs. Further, if the MGCB were to set a lesser standard for obtaining a license for small businesses that provide

nongaming-related goods and services to casino licensees, the MGCB could also save on investigative costs.

However, if small businesses that are nongaming-related suppliers were exempt from licensure, the MGCB would

have a decrease in revenue as each nongaming-related supplier pays a $2,500 application fee and a $5,000 license

fee.

The MGCB could set a higher threshold for small business institutional investors of nongaming-related supplier

licensees thereby reducing the number of applications received by the MGCB that have to be investigated to ensure

the institutional investor holds the interest for investment purposes only.

Besides the decrease in revenue from nongaming-related supplier license application fees and license fees, the

MGCB could also face increased costs to establish a new classification for small businesses and increased

investigative costs to determine the exempt small businesses are complying with the Act and rules.

24. Identify the impact on the public interest of exempting or setting lesser standards of compliance for small

businesses.

If small businesses didn’t have to follow the rules or the rules were made easier for small businesses, the public

interest could be affected. Casino gaming is a strictly regulated industry, and the regulatory structure is made to

protect the public’s interest in safe and fair gaming and ensure that Michigan citizens are not at risk of physical or

financial risks. Setting a lesser standard for licensing small businesses or exempting them completely from the

licensing process may result in allowing unsuitable or criminal entities providing good and services to the licensed

casinos which could impact the public’s interest and jeopardize tax revenue that funds public services.

25. Describe whether and how the agency has involved small businesses in the development of the proposed rules.

No small businesses were directly involved in the development of the proposed rules. The Board solicited and

considered feedback from casino licensees, which will be impacted most by the proposed rules but are not small

businesses. In processing applications for supplier licenses, the Board has heard numerous and varied concerns from

applicants – some of which are small businesses – regarding supplier licensing requirements. It is expected that the

proposed rules will address some of these concerns by increasing certain monetary and investment thresholds

relevant to suppliers. The proposed rules are intended to weigh the concerns of supplier license applicants against the

mission of the agency to establish reasonable thresholds.

A. If small businesses were involved in the development of the rules, please identify the business(es).

No small businesses were directly involved in the development of the proposed rules. However, the concerns of

supplier license applicants were considered in developing the proposed rules.

Cost-Benefit Analysis of Rules (independent of statutory impact)

26. Estimate the actual statewide compliance costs of the rule amendments on businesses or groups.

We do not anticipate increased compliance costs with these proposed rule changes.

A. Identify the businesses or groups who will be directly affected by, bear the cost of, or directly benefit from the

proposed rules.

A casino licensee will directly benefit from these proposed rules because of the increased efficiencies in reporting

requirements.

B. What additional costs will be imposed on businesses and other groups as a result of these proposed rules (i.e.

new equipment, supplies, labor, accounting, or recordkeeping)? Please identify the types and number of businesses

and groups. Be sure to quantify how each entity will be affected.

There should be no additional costs related to equipment, supplies, labor, accounting, or recordkeeping because of

the proposed rules.

27. Estimate the actual statewide compliance costs of the proposed rules on individuals (regulated individuals or

the public). Include the costs of education, training, application fees, examination fees, license fees, new

equipment, supplies, labor, accounting, or recordkeeping.

MCL 24.245(3)

RIS-Page 15

The only estimated cost to the public relates to the proposed amendment of Rule 432.1601 which adds the

confiscation of winnings of an excluded person. As for the public or other individuals, there should be no new costs

to individuals.

A. How many and what category of individuals will be affected by the rules?

Individuals who are excluded persons that enter the casino, gamble, and then are detected will have their winnings

confiscated.

B. What qualitative and quantitative impact do the proposed changes in rules have on these individuals?

Except for excluded persons who are prohibited from being in the licensed casino and from gambling in the licensed

casino, no other individuals will be impacted by the proposed rules changes. The qualitative effect of confiscating

winnings from an excluded person may include damage to an individual’s reputation, family status, or community

standing. It could however also deter the excluded person from visiting the casinos and gambling, which could have

a financial benefit as well as a boost in self-esteem, reputation, family status, and community standing.

Confiscating winnings from an excluded person results in a financial loss which can be quantified on an individual

basis based on the amount confiscated.

Confiscating winnings is likely to affect only a small number of individuals and is not expected to have a broad

societal impact.

Imposing this additional deterrent to keep excluded persons out of the casinos and from gambling will positively

impact the public’s interest in protecting the integrity of gaming, the fairness of games, and the safety and security of

casino visitors.

28. Quantify any cost reductions to businesses, individuals, groups of individuals, or governmental units as a result

of the proposed rules.

By increasing the monetary threshold under which a person must apply for a supplier license when providing non-

gaming related goods and services to a casino licensee, there will be a cost reduction to those businesses that do not

have to apply for a license.

The casino licensee will potentially have a cost reduction in the following situations: a. when the value of a contract

that must be in writing is increased from $50,000 to $100,000 [R 432.1207]; b. when only having to report annually

on oral contracts of $50,000 or more and reporting quarterly on transactions that are more than $2,000,000 [R

432.1220 and R432.1221]; c. when a person having to submit to investigation for licensure will decrease because

instead of having to identify a person who holds more than 1% direct or indirect interest in an applicant/licensee, it

will be 5% [R 432.1232, R 432.1304, and R 432.1501]; d. by no longer requiring a live gaming device to have

“EMERGENCY” printed on the box, but instead using a form [R 432.1181]; and, e. by no longer having a dedicated

camera in the surveillance system to continuously record any EGD that has a possible jackpot payout in a single line

that is $100,000 [R 432.11008].

29. Estimate the primary and direct benefits and any secondary or indirect benefits of the proposed rules. Please

provide both quantitative and qualitative information, as well as your assumptions.

MCL 24.245(3)

RIS-Page 16

Applicants and licensees will be the primary and direct beneficiary of the proposed rule changes. Casino licensees

will now have the regulatory framework to implement multi-jurisdictional wide area progressives [R 432.1841].

Amending R 432.1839 codifies prior rule waivers related to persistent state games. Casino licensees will save time

and money in the following ways: a. having to put in writing contracts of $100,000 or more [R 432.1207]; b. having

to report annually on oral contracts of $50,000 or more and reporting quarterly on transactions that are more than

$2,000,000 [R 432.1220 and R432.1221]; c. having persons submit to investigation for licensure when holding 5%

direct or indirect interest in an applicant/licensee [R 432.1232, R 432.1304, and R 432.1501]. A casino licensee and

the public will be directly benefited by allowing armored car personnel to carry a weapon when picking up or

delivering currency in any area of the casino [R 432.1212].

The Board and executive director will also have direct benefit from the proposed rule changes especially as it relates

to the issuance of an order by the Board to deny an application without the executive director also having to issue a

notice of denial [R 432.1307, R 432.1327, R 432.1338, R 432.1341, and R 432.1505]. Amending R 432.1223 allows

for rule waivers or alterations by the executive director when one of the following is found instead of requiring all of

the following gives the executive director the authority and flexibility necessary for effective regulation: a rule when

it is impractical or burdensome, in the best interest of the public or gaming industry, or not outside the technical

requirements necessary to serve the purpose of the requirement or procedure.

30. Explain how the proposed rules will impact business growth and job creation (or elimination) in Michigan.

The Board does not expect job creation or elimination because of the proposed rule changes. The proposed rule

increasing the monetary threshold for supplier licensing could create business growth for those supplying non-

gaming related goods and services to casino licensees.

31. Identify any individuals or businesses who will be disproportionately affected by the rules as a result of their

industrial sector, segment of the public, business size, or geographic location.

There will be no disproportionate effect on individuals or businesses because of the proposed rules.

32. Identify the sources the agency relied upon in compiling the regulatory impact statement, including the

methodology utilized in determining the existence and extent of the impact of the proposed rules and a cost-

benefit analysis of the proposed rules.

The Board relied upon its regulatory experience to determine the impact of the proposed rules. Furthermore, the

Board referenced the following casino gaming laws and regulations of New Jersey, Ohio, and Pennsylvania when

comparing the proposed rules to standards in similarly situated states.

•New Jersey Casino Control Act (Title 5, Chapter 12): https://lis.njleg.state.nj.us/nxt/gateway.dll?

f=templates&fn=default.htm&vid=Publish:10.1048/Enu.

•New Jersey Division of Gaming Enforcement Regulations (Title 13, Chapters 69-69Q):

https://advance.lexis.com/container/?pdmfid=1000516&crid=2a31edaf-8d16-4119-a47d-

b329330e79c5&config=00JAA5OTY5MTdjZi1lMzYxLTQxNTEtOWFkNi0xMmU5ZTViODQ2M2MKAFBvZENh

dGFsb2coFSYEAfv22IKqMT9DIHrf&ecomp=6s85k&prid=96d154ff-e09b-456b-b9ad-05abd9c4893e.

•Ohio Casino Control Act: https://codes.ohio.gov/ohio-revised-code/chapter-3772.

•Ohio Casino Control Commission Rules: https://codes.ohio.gov/ohio-administrative-code/3772.

•Pennsylvania Gaming Act: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=04.

•Pennsylvania Gaming Control Board Regulations: https://www.pacodeandbulletin.gov/Display/pacode?

file=/secure/pacode/data/058/partVIItoc.html.

While the Board relied primarily on its existing knowledge and regulatory experience in evaluating private market-

based systems, the laws and regulations listed above provide examples of other states that employ public,

governmental systems for the licensure, regulation, and enforcement of casino gaming.

MCL 24.245(3)

RIS-Page 17

A. How were estimates made, and what were your assumptions? Include internal and external sources, published

reports, information provided by associations or organizations, etc., that demonstrate a need for the proposed

rules.

Estimates were made based on Board regulatory experience and knowledge of casino operations. It is assumed that

by increasing the monetary threshold under which a person must apply for a supplier license when providing non-

gaming related goods and services to a casino licensee, there will be a cost reduction to those businesses that do not

have to apply for a license.

Further, it is assumed that a casino licensee will have a cost reduction when: a. contracts does not have to be in

writing unless $100,000 or more [R 432.1207]; b. only having to report annually on oral contracts of $50,000 or

more and reporting quarterly on transactions that are more than $2,000,000 [R 432.1220 and R432.1221]; c. only

having to identify persons who holds more than 5% direct or indirect interest in an applicant/licensee [R 432.1232, R

432.1304, and R 432.1501]; d. a live gaming device no longer must have “EMERGENCY” printed on the box, but

instead can use a form [R 432.1181]; and, e. a dedicated camera in the surveillance system that continuously records

any EGD that has a possible jackpot payout in a single line that is $100,000 is no longer needed [R 432.11008].

Alternative to Regulation

33. Identify any reasonable alternatives to the proposed rules that would achieve the same or similar goals.

No reasonable alternatives exist to achieve the desired result of continued strict regulation of casino gaming.

A. Please include any statutory amendments that may be necessary to achieve such alternatives.

Some of the proposed rules are a result of statutory amendments that have already taken place. See: R 1232,

432.1304, R 432.1501, which reflect the amended statutory definition of applicant to include only persons with 5%

direct or indirect interest. R 432.1308 and 432.1309 remove reference to casino license bond because MCL 432.206

(5)(c) was removed in 2019. R 432.1841 is being amended to anticipate multi-jurisdictional wide area progressives as

permitted by MCL 432.204a(1)(u) as amended in 2019. R 432.11204 removes the term “quarterly” because MCL

432.214 was amended to require annual audits. See also R 432.11203.

There are no other statutory amendments necessary to achieve similar goals.

34. Discuss the feasibility of establishing a regulatory program similar to that proposed in the rules that would

operate through private market-based mechanisms. Please include a discussion of private market-based systems

utilized by other states.

Legislature has granted the Board the sole authority and responsibility for the licensing, regulation, and enforcement

of casino gaming. There is no feasibility of establishing a regulatory program that includes licensing, regulation, and

enforcement through a private market-based mechanism. The lack of feasibility is evidenced by the fact that there are

no private market-based systems utilized in the licensure, regulation, or enforcement of casino gaming laws.

35. Discuss all significant alternatives the agency considered during rule development and why they were not

incorporated into the rules. This section should include ideas considered both during internal discussions and

discussions with stakeholders, affected parties, or advisory groups.

Because casino gaming must be strictly regulated, no alternatives to strict regulation were considered. In developing

the rules, casinos were given the opportunity to provide their suggested changes and alternatives. Some alternatives

proposed by the casinos were incorporated into the proposed rules.

Additional Information

36. As required by MCL 24.245b(1)(c), please describe any instructions regarding the method of complying with

the rules, if applicable.

There are no instructions regarding the method of complying with the proposed rules.

MCL 24.245(3)