Earlier this week the American Gaming Association (“AGA”) and the Association of Gaming Equipment Manufacturers (“AGEM”) announced that they are joining forces in a nationwide effort to stop the proliferation of illegal or gray market gambling devices.  See Special Report in the Michigan Gaming Newsletter. As states look to enhance their efforts in this regard, the State of Michigan’s approach can serve as a model of how to effectively accomplish the goal.

Based on information gathered statewide since 2012, the Michigan Gaming Control Board (MGCB) estimates more than 1,000 locations in Michigan have some type of illegal electronic gambling device.

Working with the Michigan Attorney General’s Office and local law enforcement, the Gaming Control Board assists in eliminating these illegal gambling operations around the state. MGCB Executive Director Rick Kalm provided an overview of this effort as follows:

“In total, we have moved to shut down 53 locations statewide over the last several years using civil and criminal penalties and cease and desist letters.”

The results are:

  • 96 locations have been investigated to date
  • 27 locations were closed via search warrants by the Attorney General’s office or local police
  • 41 Cease and Desist letters were served on owners and locations resulting in the closure of another 26 locations
  • 45 additional locations closed for unknown reasons or moved locations to different addresses  

Enforcement actions include:

  • 981 machines seized
  • More than $172,000 in cash forfeited to local law enforcement
  • 36 individuals faced 146 charges
    • 105 Felonies
    • 41 Misdemeanors

Currently, nine more locations are being investigated.

Many of the businesses sent cease and desist letters claimed to operate redemption games, which are legal in Michigan. Investigators determined the locations instead were offering casino-style video slot machines based on chance and rather than skill.

Many locations chose to close rather than face potential criminal charges, according to a press release from the Michigan Gaming Control Board. An unlicensed gambling business operator can face a 10-year felony charge. 

It is very important to note that as many other businesses saw the enforcement actions that the MGCB and Attorney General were taking, they voluntarily closed on their own. Thus, enforcement efforts serve as a true chilling effect to those that might otherwise operate such machines.

The MGCB offers a guide on internet cafes and cyber cafes on its website, www.michigan.gov/mgcb.

Michigan residents can report illegal or suspicious gambling activity anonymously by calling (888) 314-2682.


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