Appeals court upholds strict charity poker rules

Detroit News staff and wire

The Michigan Court of Appeals has overturned a judge’s ruling that barred Michigan from enforcing rules that significantly restrict charitable poker events.

The decision doesn’t end the legal sparring over the mushrooming charity poker industry, whose revenues from Millionaire Party licenses increased 24-fold from $7.9 million in 2004 to $197 million in 2011.

The 2-1 decision was released Friday. Judges Jane Beckering and Kathleen Jansen ruled that the Michigan Gaming Control Board can change its rules on Millionaire Parties under certain guidelines.

The board said it sought to ensure that gambling operators known as charity poker lounges don’t exploit charities for their own profit. The operators had included amenities like back rubs and professional card shufflers for charity poker events.

“What really spurred it was when Texas Hold ’em became popular,” said Rick Kalm, director of the Michigan Gaming Control Board. “Some ingenious operators and licensed suppliers thought it would be good to expand these games.”

The Michigan Charitable Gaming Association and several charities sued, arguing the rules would cost them millions of dollars in revenue and called the move overzealous.

“We’re not saying we don't want to be regulated,” said Dane Nickols, who works with the Laingsburg Wolfpack Sports Boosters and the Laingsburg Lions, charities operating in the small town outside Lansing. “But we’re at a point where they are over-regulating and shutting these poker rooms down. The poker rooms are good for the charities.”

The legal issue turns on a technical interpretation of state law about how to make rule changes. In this case, the two judges said a Michigan Court of Claims judge made an “over-literal” interpretation of the word “it” in state law.

“...We do not see fit to hamstring the agency’s authority to make changes upon resubmission when such a limitation is not apparent from the plain language of the statute,” the judges wrote in their opinion.

“This language does not foreclose changes by the agency,” according to the majority opinion.

Court of Claims Judge Pat Donofrio had issued an injunction against enforcing the May 14, 2014, order by the Gaming Control Board. Donofrio argued the agency hadn’t followed the exact letter of the law on the withdrawal and resubmission of rules, a finding backed by dissenting Appeals Court Judge Patrick Meek.

The appeals court decision doesn’t end the case because the Charitable Gaming Association challenged the rules on another issue that wasn’t considered. The case returns to the Court of Claims, where Donofrio may mull the issue.