The expansion of gaming in Michigan has paralleled national social trends in gaming acceptance. Parimutuel horse racing was legalized in 1933, followed by the legalization of a state lottery in 1972 and the explosion of gaming activity on Indian reservations in the 1980s. By the end of 1996, seven Indian tribes were operating 17 casinos in Michigan. Gaming has become a thriving industry in Michigan. The Michigan Lottery, which includes lottery ticket sales and charitable gaming, brought in $1.65 billion in fiscal year 1996.

Efforts to initiate legalized casino gaming in Detroit have been occurring since the 1970s. These efforts failed until the Windsor Casino opened its doors across the Detroit River in Canada in 1994. The steady flow of Michigan residents and U.S. dollars into the Windsor Casino, along with the continued expansion of Indian casinos in Michigan, has had a dramatic impact upon voter attitudes toward casino gaming. This attitudinal shift culminated with the passage of Proposal E in the November 1996 general election. Proposal E enacted the Michigan Gaming Control & Revenue Act (the "Act") by public referendum. The Act permits the development and licensing of three privately owned casinos within the Detroit city limits.

The Language of Proposal E
as it appeared on Michigan's November 5, 1996, general election ballot

A Legislative Initiative to Permit Casino Gaming in Qualified Cities.

The proposed law would:

Permit up to three gaming casinos in any city that meets the following qualifications: has a population of 800,000 or more; is located within 100 miles of any other state or country in which gaming is permitted; and has had casino gaming approved by a majority of the voters in the city.

Establish a Gaming Control Board to regulate casino gaming.

Impose an 18% state tax on gross gaming revenues.

Allocate 55% of tax revenue to the host city for crime prevention and economic development; allocate remaining 45% of tax funds to state for public education.

Should the proposed law be adopted?   Yes [__]     No [__]

Results ... 1,878,542 Yes (51.5%) vs. 1,768,156 No (48.5%)

A study performed for Detroit Mayor Dennis Archer's Casino Advisory Committee by Deloitte & Touche LLP estimated that the three Detroit casinos would initially have a $1 billion market. However, according to a January 1999 article in the Detroit Free Press, MGM Grand Inc. now believes the Detroit casino gaming market may be worth as much as $2 billion.

Recognizing that the Act provided only a skeleton framework for the development of privately owned casinos in Detroit, efforts immediately began to amend the Act after it was passed. The Michigan Senate created a new standing committee, the Gaming and Casino Oversight Committee. The Michigan House of Representatives designated the House Oversight and Ethics Committee as its gaming oversight committee. Both committees were assigned the responsibility of reviewing gaming legislation. After statewide public hearings, numerous bills were submitted in the Legislature. Governor Engler signed into law Public Act 69 of 1997 in July 1997.

Michigan Gaming Control Board

The Michigan Gaming Control & Revenue Act, as amended (Public Act 69 of 1997; MCL 432.201), established the Michigan Gaming Control Board as a Type I agency within the Michigan Department of Treasury. The Board consists of five unpaid members, not more than three of whom may be members of the same political party. The Governor is responsible for appointing the Board members, with the advice and consent of the Senate.

On November 22, 1996, Governor Engler appointed Michigan Horse Racing Commissioner Nelson Westrin to serve as interim executive director of Michigan Gaming.

On December 20, 1996, the Governor announced his five appointees to the Board:

Mr. Thomas Denomme, Chairman (term expires December 31, 2000)

Ms. Paula Blanchard (one of five original appointees; term expired December 31, 1999... reappointed by Governor Engler to four-year term expiring December 31, 2003)

Mr. Rich Davis (one of five original appointees; term expired in December 31, 1999... reappointed by Governor Engler to four-year term expiring December 31, 2003)

Mr. Taylor Segue III (term expires December 31, 2000)

In January 1997, Mr. Segue resigned from the Board.

In February 1997, Gov. Engler appointed Ms. Karen Batchelor Farmer. Ms. Farmer resigned from the Board in February 1998.

In May 1998, Gov. Engler appointed Dr. Jim Holley. Dr. Holley resigned from the Board in December 1998.

In March 1999, Gov. Engler appointed Hon. Geraldine Bledsoe Ford (term expires December 31, 2000).

Hon. Michael Stacey (one of five original appointees; term expired in December 1998... reappointed by Governor Engler to four-year term expiring December 31, 2002)

The first major order of business for the Board was the development of a comprehensive set of gaming rules (known as Administrative Rules) which detail licensing and regulatory oversight of the casino licensure process, casino licensees, casino employees and a wide range of casino suppliers. The Board also set about hiring appropriate staff to oversee Michigan's new privately owned casino industry. In August 1997, the draft Rules were approved by the Board, then went through the process for promulgated rulemaking required by Michigan's Administrative Procedures Act (they were adopted by the Board in March 1998, and went into effect in June 1998 after being filed with the Department of State).

A Summary of Public Act 69 of 1997
Gives exclusive authority for licensing, regulation, and control of casino gaming in the state to the Michigan Gaming Control Board

Provides for the licensing, regulation, and control of casino gaming operations, manufacturers and distributors of gaming equipment and supplies, and those who participate in gaming

Establishes licensing standards and procedures

Imposes civil and criminal penalties for violation of the Act

Imposes and authorizes certain taxes and fees on casinos and others involved in casino gaming

Provides for the distribution of casino tax revenue for K-12 public education in Michigan, and for capital improvement, youth programs, and tax relief in the City of Detroit

Creates certain funds for the operation of the Board and compulsive gambling prevention programs

Establishes certain safeguards to prevent compulsive and underage gambling

Restricts certain political contributions by casino gaming interests to state and local political candidates and committees

Establishes a Code of Ethics for members, employees and agents of the Board, license applicants, licensees, and others involved in gaming

City of Detroit

On November 18, 1996, Detroit Mayor Dennis Archer announced the formation of a 16-person Casino Advisory Committee. The Committee was charged with the task of making recommendations to the Mayor on the implementation of the Act. After conducting public hearings in Detroit and site visits in existing casino states, as well as numerous meetings with gaming regulators and gaming industry leaders, the Committee issued its Report on June 12, 1997. The Committee recommended that the City of Detroit:

"Cluster" all three casinos in a 100 acre area in Detroit's Central Business District

Procure project development sites (by eminent domain, if necessary)

Reject the establishment of temporary casinos

Require that at least 30% of casino operations staffs be composed of Detroit residents and

Establish Development Agreement requirements which assure that Detroit residents share in the profits of gaming in Detroit.

On June 23, 1997, Mayor Archer responded to the Committee's Report and issued a Phase One Request for Proposals/Qualifications. He rejected the Committee's "cluster" recommendation and established several areas (including Greektown) where the casinos could be located. (Note: In February 1998, the Mayor announced all three casinos could be located near the east riverfront.) The Mayor left open the issue of temporary casinos. He announced that he wanted at least 50% of casino operations staffs to be composed of Detroit residents. The deadline for submitting proposals was established as August 1, 1997. Eleven casino proposals were submitted, including proposals from several of the major Las Vegas and New Jersey casino companies.

On August 22, 1997, Mayor Archer announced seven semi-finalists in the application process and issued a Phase Two Request for Proposals/Qualifications. In announcing the seven semi-finalists, the Mayor also narrowed the areas where development of casinos could occur and, in addition, rejected the concept of land based temporary casinos, but did state that he would consider temporary river boat casino proposals. Phase Two applications by all seven semi-finalists were filed by the Phase Two filing deadline, October 11, 1997.

On November 20, 1997, the Mayor announced his choice of three proposed casino operators: Atwater/Circus Circus (Detroit Entertainment, LLC); Greektown/Sault Ste. Marie Tribe of Chippewa Indians (Greektown Casino, LLC); and MGM Grand (MGM Grand Detroit Casino, LLC).

After the three casino finalists were selected by the Mayor, he entered into Development Agreement negotiations with the three. The Development Agreements were consistent with the Ordinances adopted by the City Council, as well as the Act. Once the Development Agreements were finalized and approved by both the Mayor (3/12/98) and the Detroit City Council (4/9/98), the three casino licensee finalists were able to apply to the MGCB for casino licenses. The Board makes the final decision on all casino license applications.

The MGCB's license approval process is expected to take from four to 12 months, depending upon a variety of licensing and investigatory factors.

While the Mayor's Advisory Committee was performing its assigned task and the Mayor was implementing the Phase One and Phase Two Request for Proposals/Qualifications process, the Detroit City Council (which has ultimate local approval power of the three casino finalist Development Agreements) proceeded by forming a Casino Gaming Ordinance Subcommittee on November 27, 1996. After extensive work, the City Council adopted a Casino Competitive Development Selection Process Ordinance on June 18, 1997 and a Gaming Enterprise District Ordinance on June 23, 1997. The Mayor's Request for Proposals/Qualifications casino licensee selection process is consistent with these ordinances.

In addition, the City Council is proceeding forward with the development of a comprehensive Casino Regulatory Ordinance.

State of Michigan and City of Detroit Regulatory Guidelines

Campaign Reform

Detroit Mayor Dennis Archer established a policy early in the casino licensing process that he would not accept political donations from groups that receive casino licenses. The Detroit City Council did not adopt a similar policy. However, the Legislature amended the Act to prohibit casino operators and their employees from making political donations to Michigan public officials. Section 7b(4) of the Act provides:

(4) A licensee or person who has an interest in a licensee or casino enterprise, or the spouse, parent, child or spouse of a child of a licensee or person who has an interest in a licensee or casino enterprise, shall not make a contribution to a candidate or a committee during the following periods:

(a) The time period during which a casino licensee or development agreement is being considered by a city or the board.
(b) The term during which the licensee holds a license.
(c) The 3 years following the final expiration or termination of the licensee's license.
(d) During either of the following, whichever is shorter:

(i) The period beginning on or after the effective date of this amendatory act.
(ii) The period beginning 1 year prior to applying for a license.

"No Contact" Period

The City of Detroit adopted a "No Contact" policy during the Request for Proposal process. On June 18, 1997, the City Council adopted a "Casino Competitive Development Selection Process Ordinance." The Ordinance outlines the administration of the casino development competitive selection process and establishes criteria for approval of development agreements with prospective developers. Section 18-13-2 of the Ordinance prohibits "Improper Contacts," defining that term as:

A written or oral communication relating to the merits or outcome of a decision relating to a proposal or development agreement that is directed to the mayor, any mayoral appointee, any member of the City Council, or any city employee or City Council appointee or staff who has the ability to influence decisions relating to the proposal or development agreement. The term does not include a communication that is:

An inquiry or request for information relating solely to the status of a decision on proposals or the status of a development agreement so long as the inquiry or request for information is directed to an individual authorized by either the Mayor or the City Council to respond to such inquiry or request and so long as the inquiry does not address the merits or outcome of a decision;

Testimony or statements by a designated developer at a public hearing convened for the purpose of considering whether to approve a proposed development agreement; or

Made through the public media, such as statements in news interviews and paid advertisements. The "No Contact" period began when Phase One, Request for Proposals/Qualifications applications were issued on June 23, 1997 and continues throughout the licensing and development agreement negotiation process.

The Michigan Legislature

The State Legislature enacts the laws of Michigan; levies taxes and appropriates funds from money collected for the support of public institutions and the administration of the affairs of state government; proposes amendments to the state constitution, which must be approved by a majority vote of the electors; and considers legislation proposed by initiatory petitions. The Legislature also provides oversight of the executive branch of government through the administrative rules and audit processes, committees, and the budget process; advises and consents, through the Senate, on gubernatorial appointments; and considers proposed amendments to the Constitution of the United States. The majority of the Legislature's work, however, entails lawmaking.

During a typical two-year session, the Legislature will introduce about 4,400 bills: 600 to 800 of these will become law. Legislators and legislative committees spend many hours of work on each bill before the bill is sent to the floor of either house for consideration.

Michigan Senate Standing Gaming & Casino Oversight Committee - The Senate created a standing Gaming and Casino Oversight Committee to review casino and gaming legislation in early 1997. The Committee traveled around the state in the beginning of 1997 to hear Michigan residents' comments about casino gaming. The Committee also heard from industry leaders, state officials, gaming officials from states with legalized Class III gaming, and casino operators and suppliers. The Committee worked to amend Proposal E and obtain the necessary votes in both chambers.

Michigan House Oversight & Ethics Committee - The Michigan House of Representatives assigns a majority of the casino and gaming related bills, resolutions, and discussions to the House Oversight and Ethics Committee. This standing committee has created several subcommittees to handle specific gaming legislation.

Note - These committees were later renamed the Senate and House Gaming & Casino Oversight Committees.