BillCam

HB-4926, As Passed Senate, December 20, 2018

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 4926

A billto create the lawful internet gaming act; to impose

requirements for persons to engage in internet gaming; to create

the division of internet gaming; to provide for the powers and

duties of the division of internet gaming and other state

governmental officers and entities; to impose fees; to impose tax

and other payment obligations on the conduct of licensed internet

gaming; to create the internet gaming fund; to prohibit certain

acts in relation to internet gaming and to prescribe penalties for

those violations; to require the promulgation of rules; and to

provide remedies.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. This act shall be known and may be cited as the

"lawful internet gaming act".

Sec. 2. The legislature finds and declares all of the

following:

(a) Operating, conducting, and offering for play internet

games over the internet involves gaming activity that already

occurs throughout this state.

(b) In an opinion dated September 20, 2011, the United States

Department of Justice reversed its previous interpretation of 18

USC 1084, commonly referred to as the federal wire act, allowing

states, subject to certain restrictions, to legalize and regulate

internet gaming and capture the revenue for the benefit of state

governments.

internet gambling enforcement act of 2006, 31 USC 5361 to 5367, and

specifically authorizes use of the internet to place, receive, or

otherwise knowingly transmit a bet or wager if that use complies

with this act and rules promulgated under this act.

(d) This act is consistent and complies with the state

constitution of 1963 by ensuring that the internet may be used to

place wagers only on games of skill or chance that may be lawfully

played in this state and that internet gaming is only conducted by

persons who are lawfully operating casinos in this state.

(e) In order to protect residents of this state who wager on

games of chance or skill through the internet and to capture

revenues generated from internet gaming, it is in the best interest

of this state and its citizens to regulate this activity by

authorizing and establishing a secure, responsible, fair, and legal

system of internet gaming that complies with the United States

Department of Justice's September 2011 opinion concerning 18 USC

1084.

Sec. 3. As used in this act:

(a) "Authorized participant" means an individual who has a

valid internet wagering account with an internet gaming operator

and is at least 21 years of age.

(b) "Board" means the Michigan gaming control board created

under section 4 of the Michigan gaming control and revenue act,

1996 IL 1, MCL 432.204.

lawfully conducted under the Michigan gaming control and revenue

act, 1996 IL 1, MCL 432.201 to 432.226, or in which class III

gaming is lawfully conducted by an Indian tribe under a facility

license issued in accordance with a tribal gaming ordinance

approved by the chair of the National Indian Gaming Commission.

(d) "Class II gaming" means that term as defined in 25 USC

2703.

(e) "Class III gaming" means that term as defined in 25 USC

2703.

(f) "Compact" means a tribal-state compact governing the

conduct of gaming activities that is negotiated under the Indian

gaming regulatory act, Public Law 100-497, 102 Stat 2467.

(g) "Division" means the division of internet gaming

established under section 5.

(h) "Fund" means the internet gaming fund created under

section 16.

(i) "Gross gaming revenue" means the total of all internet

wagers received by an internet gaming operator, less the total of

all winnings paid out to authorized participants by the internet

gaming operator, during the accounting period. For purposes of this

subdivision, internet wagers received by an internet gaming

operator do not include the monetary value of free play used by

authorized participants.

(j) "Indian lands" means that term as defined in 25 USC 2703.

(k) "Indian tribe" means that term as defined in 25 USC 2703

and any instrumentality, political subdivision, or other legal

entity through which an Indian tribe operates its existing casino.

(l) "Institutional investor" means a person that is any of the

following:

(i) A retirement fund administered by a public agency for the

exclusive benefit of federal, state, or local public employees.

(ii) An employee benefit plan or pension fund that is subject

to the employee retirement income security act of 1974, Public Law

93-406.

(iii) An investment company registered under the investment

company act of 1940, 15 USC 80a-1 to 80a-64.

(iv) A collective investment trust organized by a bank under

12 CFR part 9.

(v) A closed end investment trust.

(vi) A chartered or licensed life insurance company or

property and casualty insurance company.

(vii) A chartered or licensed financial institution.

(viii) An investment advisor registered under the investment

advisers act of 1940, 15 USC 80b-1 to 80b-21.

(ix) Any other person that the division determines through

rulemaking should be considered to be an institutional investor for

reasons consistent with this act.

(m) "Internet" means the international computer network of

interoperable packet-switched data networks, inclusive of such

additional technological platforms as mobile, satellite, and other

electronic distribution channels approved by the division.

(n) "Internet game" means a game of skill or chance that is

offered for play through the internet in which an individual wagers

money or something of monetary value for the opportunity to win

money or something of monetary value. For purposes of this

definition, free plays or extended playing time that is won on a

game of skill or chance that is offered through the internet is not

something of monetary value. Internet game includes gaming

tournaments conducted via the internet in which individuals compete

against one another in 1 or more of the games authorized by the

division or in approved variations or composites as authorized by

the division.

(o) "Internet gaming" means operating, conducting, or offering

for play an internet game.

(p) "Internet gaming operator" means a person that is issued

an internet gaming license from the division to operate, conduct,

or offer internet gaming.

(q) "Internet gaming platform" means an integrated system of

hardware, software, and servers through which an internet gaming

operator operates, conducts, or offers internet gaming.

(r) "Internet gaming vendor" means a person that provides to

an internet gaming operator goods, software, or services that

directly affect wagering, play, and results of internet games

offered under this act, including goods, software, or services

necessary to the acceptance, operation, administration, or control

of internet wagers, internet games, internet wagering accounts, or

internet gaming platforms. Internet gaming vendor does not include

a person that provides to an internet gaming operator only such

goods, software, or services that it also provides to others for

purposes not involving internet gaming, including, but not limited

to, a payment processor or a geolocation service provider.

(s) "Internet wager" means money or something of monetary

value risked on an internet game.

(t) "Internet wagering" means risking money or something of

monetary value on an internet game.

(u) "Internet wagering account" means an electronic ledger in

which all of the following types of transactions relative to an

authorized participant are recorded:

(i) Deposits.

(ii) Withdrawals.

(iii) Internet wagers.

(iv) Monetary value of prizes.

(v) Service or other transaction-related charges authorized by

the authorized participant, if any.

(vi) Adjustments to the account.

(v) "Person" means an individual, partnership, corporation,

association, limited liability company, Indian tribe, or other

legal entity.

(w) "Prizes" includes both monetary and nonmonetary prizes

received directly or indirectly by an authorized participant from

an internet gaming operator as a direct or indirect result of

internet wagering. The value of a nonmonetary prize is the actual

cost of the prize.

(x) "Winnings" includes all of the following:

(i) The total monetary value of prizes received by authorized

participants.

(ii) Stakes returned to authorized participants.

(iii) Other amounts credited to authorized participants'

internet wagering accounts, including the monetary value of loyalty

points, and other similar complimentaries and incentives, not

including free play, granted to authorized participants as a result

of participation in internet games.

Sec. 4. (1) Internet gaming may be conducted only to the

extent that it is conducted in accordance with this act.

(2) An internet wager received by an internet gaming operator

is considered to be gambling or gaming that is conducted in the

internet gaming operator's casino located in this state, regardless

of the authorized participant's location at the time the

participant initiates or otherwise places the internet wager.

(3) A law that is inconsistent with this act does not apply to

internet gaming as provided for by this act.

(4) This act does not apply to any of the following:

(a) Lottery games offered by the bureau of lottery under the

McCauley-Traxler-Bowman-McNeely lottery act, 1972 PA 239, MCL 432.1

to 432.47.

(b) Class II and Class III gaming conducted exclusively on

Indian lands by an Indian tribe under a facility license issued in

accordance with a tribal gaming ordinance approved by the chair of

the National Indian Gaming Commission. For purposes of this

subdivision, gaming is conducted exclusively on Indian lands only

if the individual who places the wager is physically present on

Indian lands when the wager is initiated and the wager is received

or otherwise made on equipment that is physically located on those

Indian lands, and the wager is initiated, received, or otherwise

made in conformity with the safe harbor requirements described in

31 USC 5362(10)(C).

consumer protection act.

(5) Unless licensed as an internet gaming operator under this

act, a person shall not aggregate computers or other internet

access devices in a place of public accommodation in this state,

including a club or other association, to enable multiple players

to simultaneously play an internet game.

(6) For purposes of this act, the intermediate routing of

electronic data in connection with internet wagering, including

routing across state lines, does not determine the location or

locations in which the wager is initiated, received, or otherwise

made.

Sec. 5. (1) The division of internet gaming is established in

the board. The division has the powers and duties specified in this

act and all other powers necessary to enable it to fully and

effectively execute this act to administer, regulate, and enforce

the system of internet gaming established by this act.

(2) The division has jurisdiction over every person licensed

by the division and may take enforcement action against a person

that is not licensed by the division that offers internet gaming in

this state.

(3) The division may enter into agreements with other

jurisdictions, including Indian tribes, to facilitate, administer,

and regulate multijurisdictional internet gaming by internet gaming

operators to the extent that entering into the agreement is

consistent with state and federal laws and if the gaming under the

agreement is conducted only in the United States.

(4) The division may permit internet gaming operators licensed

by the division to accept internet wagers under this act on any

amateur or professional sporting event or contest.

Sec. 6. (1) The division may issue an internet gaming license

only to an applicant that is either of the following:

(a) A person that holds a casino license under the Michigan

gaming control and revenue act, 1996 IL 1, MCL 432.201 to 432.226.

(b) An Indian tribe that lawfully conducts class III gaming in

a casino located in this state under a facility license issued in

accordance with a tribal gaming ordinance approved by the chair of

the National Indian Gaming Commission.

(2) The division shall issue an internet gaming license to an

applicant described in subsection (1) after receiving the

application described in subsection (4) or (5), as applicable, and

the application fee, if the division determines that the internet

gaming proposed by the applicant complies with this act and the

applicant is otherwise eligible and suitable. An applicant is

eligible if it meets the requirements set forth in subsection

(1)(a) or (b). It is the burden of the applicant to establish by

clear and convincing evidence its suitability as to character,

reputation, integrity, business probity, and financial ability. The

application or enforcement of this subsection by the division must

not be arbitrary, capricious, or contradictory to the express

provisions of this act. In evaluating the eligibility and

suitability of an applicant under the standards provided in this

act, the division shall establish and apply the standards to each

applicant in a consistent and uniform manner. In determining

whether to grant a license to an applicant, the division may

request and consider any or all of the following information from

the applicant as a factor in the determination:

(a) Whether the applicant has adequate capitalization and the

financial ability and the means to develop, construct, operate, and

maintain the proposed internet gaming platform and to offer and

conduct internet gaming in accordance with this act and the rules

promulgated by the division.

(b) Whether the applicant has the financial ability to

purchase and maintain adequate liability and casualty insurance and

to provide an adequate surety bond.

financial ability to responsibly pay off its secured and unsecured

debts in accordance with its financing agreements and other

contractual obligations.

(d) Whether the applicant has a history of material

noncompliance with casino or casino-related licensing requirements

or compacts with this state or any other jurisdiction, where the

noncompliance resulted in enforcement action by the body having

jurisdiction over the applicant.

(e) Whether the applicant has been indicted for, charged with,

arrested for, or convicted of, pleaded guilty or nolo contendere

to, forfeited bail concerning, or had expunged any criminal offense

under the laws of any jurisdiction, either felony or misdemeanor,

not including traffic violations, regardless of whether the offense

has been expunged, pardoned, or reversed on appeal or otherwise.

The division may consider mitigating factors, and, for an applicant

described in subsection (1)(b), shall give deference to whether the

applicant has otherwise met the requirements of the applicant's

gaming compact for licensure, as applicable.

(f) Whether the applicant has filed, or had filed against it,

a proceeding for bankruptcy or has ever been involved in any formal

process to adjust, defer, suspend, or otherwise work out the

payment of any debt.

(g) Whether the applicant has a history of material

noncompliance with any regulatory requirements in this state or any

other jurisdiction where the noncompliance resulted in an

enforcement action by the regulatory agency having jurisdiction

over the applicant.

(h) Whether at the time of application the applicant is a

defendant in litigation involving the integrity of its casino

business practices.

(3) An internet gaming license issued under this act is valid

for the 5-year period after the date of issuance and, if the

division determines that the licensee continues to meet the

eligibility and suitability standards under this act, is renewable

for additional 5-year periods.

(4) A person described in subsection (1)(a) may apply to the

division for an internet gaming license to offer internet gaming as

provided in this act. The application must be made on forms

provided by the division and include the information required by

the division.

(5) A person described in subsection (1)(b) may apply to the

division for an internet gaming license to offer internet gaming as

provided in this act. The application must be made on forms

provided by the division that require only the following

information:

(a) The name and location of any of the applicant's casinos.

(b) The tribal law, charter, or any other organizational

document of the applicant and other governing documents under which

the applicant operates any of its casinos.

officials of the applicant's casinos who will have management

responsibility for the applicant's internet gaming operations.

(d) The current facility license for the applicant's casinos.

(e) The applicant's current tribal gaming ordinance.

(f) The gaming history and experience of the applicant in the

United States and other jurisdictions.

(g) Financial information, including copies of the last

independent audit and management letter submitted by the applicant

to the National Indian Gaming Commission under 25 USC 2710(b)(2)(C)

and (D) and 25 CFR parts 271.12 and 271.13.

(h) The total number of gaming positions, including, but not

limited to, electronic gaming devices and table games, at each of

the applicant's casinos.

(6) An initial application for an internet gaming license must

be accompanied by an application fee of $100,000.00. The rules

promulgated under section 10 may include provisions for the refund

of an application fee, or the portion of an application fee that

has not been expended by the division in processing the

application, and the circumstances under which the fee will be

refunded.

(7) The division shall keep all information, records,

interviews, reports, statements, memoranda, or other data supplied

to or used by the division in the course of its review or

investigation of an application for an internet gaming license or

renewal of an internet gaming license confidential and shall use

that material only to evaluate the applicant for an internet gaming

license or renewal. The materials described in this subsection are

exempt from disclosure under section 13 of the freedom of

information act, 1976 PA 442, MCL 15.243.

(8) An application under this section must be submitted and

considered in accordance with this act and any rules promulgated

under this act.

(9) An internet gaming operator shall pay a license fee of

$200,000.00 to the division at the time the initial internet gaming

license is issued and $100,000.00 each year after the initial

license is issued.

(10) The division shall deposit all application and license

fees paid under this act into the fund.

(11) An institutional investor that holds for investment

purposes only less than 30% of the equity of an applicant under

this section is exempt from the licensure requirements of this act.

Sec. 7. (1) The division shall condition the issuance,

maintenance, and renewal of an internet gaming license to a person

described in section 6(1)(b) on the person's compliance with all of

the following conditions:

(a) The person complies with this act and rules promulgated by

the division pertaining to all of the following:

(i) The types of and rules for playing internet games that

internet gaming operators may offer under this act.

(ii) Technical standards, procedures, and requirements for the

acceptance, by the person, of internet wagers initiated or

otherwise made by individuals located in this state who are not

physically present on the person's Indian lands in this state at

the time the wager is initiated or otherwise made.

(iii) Procedures and requirements for the acceptance, by the

person, of internet wagers initiated or otherwise made by

individuals located in other jurisdictions, if the division

authorizes multijurisdictional gaming as provided in this act.

(iv) Those requirements set forth in section 11.

(b) The person adopts and maintains technical standards for

internet gaming platforms, systems, and software that are

consistent with the standards adopted by the division under section

10.

gaming platform utilized by the person that are designed to

reasonably verify that an authorized participant is 21 years of age

or older and that internet wagering is limited to transactions that

are initiated and received or otherwise made by an authorized

participant located in this state or, if the division authorizes

multijurisdictional internet gaming as provided in this act,

another jurisdiction in the United States authorized by the

multijurisdictional agreement.

(d) The person adopts and maintains responsible gaming

measures consistent with those described in section 12.

(e) The person continues to maintain and operate in this state

a casino offering class III gaming and the casino contains not less

than 50% of the gaming positions that were in place as of the

effective date of this act.

(f) The person pays to this state 8% of the gross gaming

revenue received by that person from all internet gaming it

conducts under this act as an internet gaming operator, and the

person makes the payments within the time period described in

section 14(2).

(g) The person agrees to and timely provides, on written

request of the division, books and records directly related to its

internet gaming operations for the purpose of permitting the

division to verify the calculation of the payments under

subdivision (f).

(h) The person provides a waiver of sovereign immunity to the

division for the sole and limited purpose of consenting to both of

the following:

(i) The jurisdiction of the division to the extent necessary

and for the limited purpose of providing a mechanism for the

division to do all of the following:

(A) Issue, renew, and revoke the person's internet gaming

license.

(B) Enforce the payment obligations set forth in this section

and section 14.

in sections 10(a), (b), (d) to (g), 11, 12(4) to (5) and 13.

(D) Inspect the person's internet gaming operation and records

to verify that the person is conducting its internet gaming

operation in conformity with the conditions prescribed in this

section.

(E) Assess fines or monetary penalties for violations of the

provisions or rules referred to in sub-subparagraph (C).

(F) Enforce the payment of internet gaming license fees

described in section 6(9).

(ii) The exclusive jurisdiction of the courts of this state,

and expressly waiving the exhaustion of tribal remedies, with venue

in Ingham County, and any courts to which appeals from that venue

may be taken, to permit the state to enforce administrative orders

of the division, the person's obligation to make payments required

under subdivision (f) and section 14, and to enforce collection of

the judgments. Any judgment of monetary damages under this

subparagraph is deemed limited recourse obligations of the person

and does not impair any trust or restricted income or assets of the

person.

(2) This state, acting through the governor, shall, at the

request of any Indian tribe, negotiate any amendments to an Indian

tribe's compact necessary to ensure compliance with this act and

any applicable federal laws. If the governor fails to enter into

negotiations with any Indian tribe, or fails to negotiate in good

faith with respect to any request, the Indian tribe may initiate a

cause of action against the governor in his or her official

capacity in either state court or in federal court and obtain those

remedies as authorized in 25 USC 2710(d)(7).

(3) The division must exercise its limited direct regulatory

and enforcement authority in a manner that is not arbitrary,

capricious, or contradictory to this act. Notwithstanding anything

in this act to the contrary, this act only regulates internet

gaming as provided in this act and does not extend to the division,

or any other agency of this state, any jurisdiction or regulatory

authority over any aspect of any gaming operations of an Indian

tribe described in section 4(4)(b) beyond those rights granted to

this state under the compact with the Indian tribe.

Sec. 8. (1) The division may issue an internet gaming vendor

license to a person to provide goods, software, or services to

internet gaming operators. A person that is not licensed under this

section shall not provide goods, software, or services as an

internet gaming vendor to an internet gaming operator.

(2) On application by an interested person, the division may

issue a provisional internet gaming vendor license to an applicant

for an internet gaming vendor license. A provisional license issued

under this subsection allows the applicant for the internet gaming

vendor license to conduct business with an internet gaming operator

before the internet gaming vendor license is issued to the

applicant. A provisional license issued under this subsection

expires on the date provided in the license by the division.

(3) An internet gaming vendor license issued under subsection

(1) is valid for the 5-year period after the date of issuance. An

internet gaming vendor license is renewable after the initial 5-

year period for additional 5-year periods if the division

determines that the internet gaming vendor continues to meet the

eligibility and suitability standards under this act.

(4) A person may apply to the division for an internet gaming

vendor license as provided in this act and the rules promulgated

under this act.

(5) Except as otherwise provided in this section, an

application under this section must be made on forms provided by

the division and include the information required by the division.

An Indian tribe that submits an application under this section

shall provide only the information described in section 6(5).

(6) An application under this section must be accompanied by a

nonrefundable application fee in an amount to be determined by the

division, not to exceed $5,000.00.

(7) The division shall keep all information, records,

interviews, reports, statements, memoranda, or other data supplied

to or used by the division in the course of its review or

investigation of an application for an internet gaming vendor

license or renewal of an internet gaming vendor license

confidential and shall use that material only to evaluate the

applicant for an internet gaming vendor license or renewal. The

materials described in this subsection are exempt from disclosure

under section 13 of the freedom of information act, 1976 PA 442,

MCL 15.243.

(8) Except as otherwise provided in this subsection, an

internet gaming vendor shall pay a license fee of $5,000.00 to the

division at the time an initial internet gaming vendor license is

issued to the internet gaming vendor and $2,500.00 each year after

the initial license is issued. An internet gaming vendor that

provides to an internet gaming operator all or substantially all of

an internet gaming platform shall pay a license fee of $100,000.00

to the division at the time the initial license is issued to the

vendor and $50,000.00 each year after the initial license is

issued.

(9) The division shall deposit all application and license

fees paid under this act into the fund.

(10) An institutional investor that holds for investment

purposes only less than 30% of the equity of an applicant under

this section is exempt from the licensure requirements of this act.

Sec. 9. (1) The division has jurisdiction over and shall

supervise all internet gaming operations governed by this act. The

division may do anything necessary or desirable to effectuate this

act, including, but not limited to, all of the following:

(a) Develop qualifications, standards, and procedures for

approval and licensure by the division of internet gaming operators

and internet gaming vendors.

(b) Decide promptly and in reasonable order all license

applications and approve, deny, suspend, revoke, restrict, or

refuse to renew internet gaming licenses and internet gaming vendor

licenses. A party aggrieved by an action of the division denying,

suspending, revoking, restricting, or refusing to renew a license

may request a contested case hearing before the division. A request

for hearing under this subdivision must be made to the division in

writing within 21 days after service of notice of the action by the

division.

or rules promulgated under this act.

(d) Provide for the establishment and collection of all

applicable license fees, taxes, and payments imposed by this act

and the rules promulgated under this act and the deposit of the

applicable fees, taxes, and payments into the fund.

(e) Develop and enforce testing and auditing requirements for

internet gaming platforms, internet wagering, and internet wagering

accounts.

(f) Develop and enforce requirements for responsible gaming

and player protection, including privacy and confidentiality

standards and duties.

(g) Develop and enforce requirements for accepting internet

wagers.

(h) Adopt by rule a code of conduct governing division

employees that ensures, to the maximum extent possible, that

persons subject to this act avoid situations, relationships, or

associations that may represent or lead to an actual or perceived

conflict of interest.

(i) Develop and administer civil fines for internet gaming

operators and internet gaming vendors that violate this act or the

rules promulgated under this act. A fine imposed under this

subdivision must not exceed $5,000.00 per violation.

(j) Audit and inspect, on reasonable notice, books and records

relevant to internet gaming operations, internet wagers, internet

wagering accounts, internet games, or internet gaming platforms,

including, but not limited to, the books and records regarding

financing and accounting materials held by or in the custody of an

internet gaming operator or internet gaming vendor.

(k) Acquire by lease or by purchase personal property,

including, but not limited to, any of the following:

(i) Computer hardware.

(ii) Mechanical, electronic, and online equipment and

terminals.

(iii) Intangible property, including, but not limited to,

computer programs, software, and systems.

(2) The division may investigate and may issue cease and

desist orders and obtain injunctive relief against a person that is

not licensed by the division that offers internet gaming in this

state.

(3) The division shall keep all information, records,

interviews, reports, statements, memoranda, and other data supplied

to or used by the division in the course of any investigation of a

person licensed under this act confidential and shall use that

material only for investigative purposes. The materials described

in this subsection are exempt from disclosure under section 13 of

the freedom of information act, 1976 PA 442, MCL 15.243.

Sec. 10. Within 1 year after the effective date of this act,

the division shall promulgate rules governing the licensing,

administration, and conduct of internet gaming under this act. The

division shall promulgate the rules pursuant to the administrative

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. The

rules may include only things expressly authorized by this act,

including all of the following:

(a) The types of internet games to be offered, which must

include, but need not be limited to, poker, blackjack, cards,

slots, and other games typically offered at a casino.

(b) The qualifications, standards, and procedures for approval

and licensure by the division of internet gaming operators and

internet gaming vendors consistent with this act.

(d) Technical and financial standards for internet wagering,

internet wagering accounts, and internet gaming platforms, systems,

and software or other electronic components integral to offering

internet gaming.

(e) Procedures for conducting contested case hearings under

this act.

(f) Requirements for multijurisdictional agreements entered

into by the division with other jurisdictions, including

qualifications, standards, and procedures for approval by the

division of internet gaming vendors providing internet gaming

platforms in connection with the agreements.

(g) Procedures and requirements for the acceptance, by an

internet gaming operator, of internet wagers initiated or otherwise

made by persons located in other jurisdictions, if the division

authorizes multijurisdictional gaming as provided in this act.

Sec. 11. (1) An internet gaming operator shall require the

internet gaming vendor providing its internet gaming platform to

provide 1 or more mechanisms on the internet gaming platform that

the internet gaming operator uses that are designed to reasonably

verify that an authorized participant is 21 years of age or older

and that internet wagering is limited to transactions that are

initiated and received or otherwise made by an authorized

participant located in this state or, if the division authorizes

multijurisdictional internet gaming as provided in this act,

another jurisdiction in the United States authorized by the

multijurisdictional agreement.

(2) An individual who wishes to place an internet wager under

this act must satisfy the verification requirements under

subsection (1) before the individual may establish an internet

wagering account or make an internet wager on an internet game

offered by an internet gaming operator.

(3) An internet gaming operator shall require the internet

gaming vendor providing its internet gaming platform to include

mechanisms on its internet gaming platform that are designed to

detect and prevent the unauthorized use of internet wagering

accounts and to detect and prevent fraud, money laundering, and

collusion.

(4) An internet gaming operator shall not knowingly authorize

any of the following individuals to establish an internet wagering

account or knowingly allow them to wager on internet games offered

by the internet gaming operator, except if required and authorized

by the division for testing purposes or to otherwise fulfill the

purposes of this act:

(a) An individual who is less than 21 years old.

(b) An individual whose name appears in the division's

responsible gaming database.

(5) An internet gaming operator shall require the internet

gaming vendor providing its internet gaming platform to display, on

the internet gaming platform used by the internet gaming operator,

in a clear, conspicuous, and accessible manner evidence of the

internet gaming operator's internet gaming license issued under

this act.

(6) An internet gaming operator shall not conduct internet

gaming until 1 year after the effective date of this act.

Sec. 12. (1) The division may develop responsible gaming

measures, including a statewide responsible gaming database

identifying individuals who are prohibited from establishing an

internet wagering account or participating in internet gaming

offered by an internet gaming operator. The executive director of

the board may place an individual's name in the responsible gaming

database if any of the following apply:

(a) The individual has been convicted in any jurisdiction of a

felony, a crime of moral turpitude, or a crime involving gaming.

(b) The individual has violated this act or another gaming-

related law.

unsavory reputation such that the individual's participation in

internet gaming under this act would adversely affect public

confidence and trust in internet gaming.

(d) The individual's name is on a valid and current exclusion

list maintained by this state or another jurisdiction in the United

States.

(2) The division may promulgate rules for the establishment

and maintenance of the responsible gaming database.

(3) An internet gaming operator, in a format specified by the

division, may provide the division with names of individuals to be

included in the responsible gaming database.

(4) An internet gaming operator shall require the internet

gaming vendor providing its internet gaming platform to display, on

the internet gaming platform used by the internet gaming operator,

in a clear, conspicuous, and accessible manner the number of the

toll-free compulsive gambling hotline maintained by this state and

offer responsible gambling services and technical controls to

authorized participants, consisting of both temporary and permanent

self-exclusion for all internet games offered and the ability for

authorized participants to establish their own periodic deposit and

internet wagering limits and maximum playing times.

(5) An authorized participant may voluntarily prohibit himself

or herself from establishing an internet wagering account with an

internet gaming operator. The division may incorporate the

voluntary self-exclusion list into the responsible gaming database

and maintain both the self-exclusion list and the responsible

gaming database in a confidential manner.

(6) The self-exclusion list and responsible gaming database

established under this section are exempt from disclosure under

section 13 of the freedom of information act, 1976 PA 442, MCL

15.243.

Sec. 13. (1) A person shall not do any of the following:

(a) Offer internet gaming for play in this state if the person

is not an internet gaming operator unless exempt from this act

under section 4(4).

(b) Knowingly make a false statement on an application for a

license to be issued under this act.

authorized representative of the board while under oath.

(2) A person that violates subsection (1)(a) is guilty of a

felony punishable by imprisonment for not more than 10 years or a

fine of not more than $100,000.00, or both.

(3) The division shall not issue a license under this act to a

person that violates subsection (1).

(4) The attorney general or a county prosecuting attorney may

bring an action to prosecute a violation of subsection (1)(a) in

the county in which the violation occurred or in Ingham County.

Sec. 14. (1) Except for an internet gaming operator that is an

Indian tribe, an internet gaming operator is subject to a tax of 8%

on the gross gaming revenue received by the internet gaming

operator. An internet gaming operator that is an Indian tribe is

subject to the payment requirements under section 7(1)(f).

(2) An internet gaming operator shall pay the tax or payment,

House Bill No. 4926 as amended December 20, 2018

as applicable, under subsection (1) on a monthly basis. The payment

for each monthly accounting period is due on the tenth day of the

following month.

(3) No other tax, payment, or fee may be imposed on an

internet gaming operator by this state or a political subdivision

of this state for internet gaming conducted under this act. This

subsection does not impair the contractual rights under an existing

development agreement between a city and an internet gaming

operator that holds a casino license under the Michigan gaming

control and revenue act, 1996 IL 1, MCL 432.201 to 432.226.

(4) In addition to payment of the tax and other fees as

provided in this act, and to any payment required pursuant to an

existing development agreement described in subsection (3), if a

city has imposed a municipal services fee equal to 1.25% on a

casino licensee, the city shall charge a 1.25% fee on the gross

gaming revenues of an internet gaming operator that holds a casino

license under the Michigan gaming control and revenue act, 1996 IL

1, MCL 432.201 to 432.226, whose casino is in that city.

Sec. 15. (1) The tax imposed under section 14 must be

allocated as follows:

(a) Thirty percent to the city in which the internet gaming

licensee's casino is located, for use in connection with the

following:

(i) The hiring, training, and deployment of street patrol

officers in that city.

(ii) Neighborhood <<development programs designed to create jobs

in that city with a focus on blighted neighborhoods.>>

(iii) Public safety programs such as emergency medical

services, fire department programs, and street lighting in that

city.

(iv) Anti-gang and youth development programs in that city.

(v) Other programs that are designed to contribute to the

improvement of the quality of life in that city.

(vi) Relief to the taxpayers of the city from 1 or more taxes

or fees imposed by the city.

(vii) The costs of capital improvements in that city.

(viii) Road repairs and improvements in that city.

(b) Fifty-five percent to the state to be deposited in the

fund.

established under section 11 of article IX of the state

constitution of 1963.

(d) Five percent to be deposited in the Michigan

transportation fund created under section 10 of 1951 PA 51, MCL

247.660, to be disbursed as provided in section 10(1)(l) of 1951 PA

51, MCL 247.660.

(e) Five percent to the Michigan agriculture equine industry

development fund created under section 20 of the horse racing law

of 1995, 1995 PA 279, MCL 431.320. However, if the 5% allocated

under this subdivision to the Michigan agriculture equine industry

development fund created under section 20 of the horse racing law

of 1995, 1995 PA 279, MCL 431.320, exceeds $3,000,000.00 in a

fiscal year, the amount in excess of $3,000,000.00 must be

allocated and deposited in the fund created under section 16.

(2) By December 31, 2020 and each December 31 after that date,

if the combined amount of money received in the preceding fiscal

year by the city in which the internet gaming operator licensee's

casino is located from money allocated under subsection (1)(a) and

from the wagering tax allocated under section 12(3) of the Michigan

gaming control and revenue act, 1996 IL 1, MCL 432.212, is less

than $179,000,000.00, the board shall distribute from the fund to

the city in which the internet gaming operator licensee's casino is

located an amount equal to the difference between $179,000,000.00

and the combined amount of money the city in which the internet

gaming operator licensee's casino is located received in the

preceding fiscal year from money allocated under subsection (1)(a)

and from the wagering tax allocated under section 12(3) of the

Michigan gaming control and revenue act, 1996 IL 1, MCL 432.212.

However, the total amount the city in which the internet gaming

operator licensee's casino is located receives for the preceding

fiscal year under subsection (1)(a) and this subsection must not be

more than 55% of the total tax imposed under section 14 in the

fiscal year.

Sec. 15a. Any payments under section 7(1)(f) must be allocated

as follows:

(a) Seventy-five percent to this state to be deposited in the

fund.

(b) Twenty-five percent to the Michigan strategic fund created

under section 5 of the Michigan strategic fund act, 1984 PA 270,

MCL 125.2005.

Sec. 16. (1) The internet gaming fund is created in the state

treasury.

(2) The state treasurer may receive money or other assets

required to be paid into the fund under this act or from any other

source for deposit into the fund. The state treasurer shall direct

the investment of the fund. The state treasurer shall credit to the

fund interest and earnings from fund investments.

(3) The board is the administrator of the fund for auditing

purposes.

(4) Except as otherwise provided in section 15(2), the board

shall expend money from the fund, on appropriation, for all of the

following:

(a) Each year, $1,000,000.00 to the compulsive gaming

prevention fund created in section 3 of the compulsive gaming

prevention act, 1997 PA 70, MCL 432.253.

(b) The board's costs of regulating and enforcing internet

gaming under this act.

Sec. 17. This act does not authorize the construction or

operation of a casino that was not constructed or operating before

the effective date of this act.

Enacting section 1. This act takes effect 90 days after the

date it is enacted into law.

Enacting section 2. This act does not take effect unless House

Bill No. 6420 of the 99th Legislature is enacted into law.