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Beware of Restrictions on Political Contributions Gaming Industry

2 May 2001

With Mayor Archer's recent announcement that he will not seek re-election, there is now a wide-open race for the position of Mayor. Undoubtedly, fund raising efforts are already under way by all of the various candidates. With a September primary, and a November election this is sure to be a fast and furious race.

In this climate, it is critically important for everyone involved in the gaming industry to keep in mind the very strict State of Michigan prohibitions on political contributions that are in place for all of the operators, suppliers, and certain employees of the Detroit casinos. Very importantly, these restrictions (which I will detail below) apply not only to contributions for State office, but also to political contributions to a local (e.g., Mayor or City Council) candidate.

The penalties for violating the political contribution restrictions are severe. A violation of this prohibition is a felony, punishable by 10 years in prison and/or a fine of up to $100,000. Additionally, violations of the provision could lead to revocation of a gaming operator's or supplier's license.

The Michigan Gaming Control and Revenue Act prohibits the following persons from making contributions to a state or local elective office holder, candidate, candidate committee, political party committee, independent committee (as defined by the Michigan Campaign Finance Act), or committee organized by a state legislative caucus: 1) a person who holds a Casino License issued by the Michigan Gaming Control Board ; 2) a person who holds a supplier license issued by the Michigan Gaming Control Board; 3) a person who holds one percent interest in either a supplier or operators license; 4) a person who holds a one percent interest in the buildings, facilities or rooms connected to a casino, or a one percent interest in any other facility in the city that is under the control of a casino licensee or affiliated company ("casino enterprise"); 5) an officer or managerial employee of a licensee or casino enterprise; 6) an officer of any entity that holds a one percent interest in a licensee or casino enterprise; or 7) an independent committee of a licensee or casino enterprise. A person subject to this prohibition is also prohibited from making contributions through a legal entity established, directed or controlled by that person.

For casino licensees, political contributions may not be made for one year prior to applying to the Michigan Gaming Control Board for a Casino License, and continuing until three years after the license expires. The prohibited period includes all time in between these dates, including the period when the Board is still considering a license application.

For suppliers, political contributions may not be made from the date an application is submitted to the Michigan Gaming Control Board for a Supplier License, and continuing until three years after the license expires.

The Michigan Campaign Finance Act similarly prohibits a committee from knowingly maintaining receipt of a contribution that is prohibited under the Michigan Gaming Control and Revenue Act, as amended. A committee knowingly maintains the receipt of a contribution only if it fails to return the contribution within 30 business days after receiving notice from the Department of State that the committee has received a prohibited contribution.

Notably and importantly, the Michigan Gaming Control and Revenue Act does not prohibit a Casino Licensee or Supplier Licensee from volunteering time to work on any committee for any local, state or federal office. Thus, members of the gaming industry at least have some ability to exercise their first amendment rights on behalf of their candidates.

To protect your job, business relationship or agreement with one of the Detroit casinos, you must always follow the letter of the law. As it relates to the political contributions restriction, that may well mean saying no to long-time friends and supporters of your interests. To learn all of the Rules of the Political Contribution Game, consult the Michigan Gaming Control and Revenue Act and the Michigan Gaming Control Board Administrative Rules. These documents are available at www.state.mi.us/mgcb/.

David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com
David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com