Resolution No. 2009-01 (Adopted 09/08/2009)-A Board Resolution Regarding Vendor Exemptions and Waivers From Supplier-Licensing Requirements Pursuant to Rule 432.1322(4) and Rule 432.1223 and Delegation of Authority to the Executive DirectorSTATE OF MICHIGAN
THE MICHIGAN GAMING CONTROL BOARD
RESOLUTION NO. 2009-01
A Board Resolution Regarding Vendor Exemptions and Waivers From Supplier-Licensing Requirements Pursuant to Rule 432.1322(4) and Rule 432.1223 and Delegation of Authority to the Executive Director to Grant Vendor Exemptions and Waivers
The Michigan Gaming Control Board ("Board") is empowered by the Michigan Gaming Control and Revenue Act, MCL 432.201 et seq., ("Act") to promulgate rules as may be necessary to implement, administer, and enforce the Act. The Board has adopted and promulgated administrative rules ("Rules") with respect to the licensing of persons providing goods and services to casinos licensed under the Act and Rules.
Rule 432.1322(1) prohibits a person from supplying goods or services to a casino licensee on a regular and continuing basis unless that person holds a supplier license. Rule 432.1322(3) provides that a person shall be deemed to be providing goods or services to a casino licensee on a "regular and continuing basis" whenever the total dollar amount of the nongaming-related business transactions with 1 licensee will be equal to or greater than $200,000 or equal to or greater than $400,000 with 2 or more licensees, in a twelve-month period.
Rule 432.1322(4) provides that the Board may exempt any person or field of commerce from the supplier-licensing requirements of its administrative rules if the Board determines that specific criteria are met. Prospective providers of goods and services have asked for or inquired about exemption from the supplier-licensing requirements under Rule 432.1322(4), and
it is necessary to articulate certain circumstances under which a provision of Rule 432.1322(4) generally applies to a person requesting exemption from the supplier-licensing requirements
MCL 432.204(8) provides for the Executive Director to perform any and all duties that the Board shall assign to him or her. Rule 432.1214 delegates to the Executive Director all power and authority to act in the name of the Board with respect to all reasonable, necessary, and appropriate actions to administer and carry out the administrative and executive functions of the Board. Additionally, Rule 432.1214(j) provides that the Executive Director has the power to "grant requests and waivers, answer inquiries, issue interpretations, and otherwise take any action that is reasonably requested by applicants, licensees, and holders of certificates of suitability in furtherance of, and consistent with, the efficient administration and enforcement of the provisions of the act and these rules, as determined to be necessary or appropriate by the executive director."
It is necessary and appropriate for purposes of administrative efficiency for the Board to expressly delegate its power and authority to the Executive Director to waive the supplier-licensing requirements in certain circumstances described herein and to exempt persons providing goods or services to a casino licensee from the supplier-licensing requirements where the persons meet the criteria for exemption set forth in Rule 432.1322(4) and this resolution.
IT IS RESOLVED that the provisions of R 432.1322(4) generally apply to people described below and that the Executive Director may grant exemptions from the supplier-licensing requirements to nongaming-related suppliers described in each of the following sections.
I. Rule 432.1322(4)(a): The person or field is an agency of state, local, or federal government.
The Board automatically grants an exemption to governmental agencies and the United States Postal Service to the extent that the entity provides services related to its governmental agency function to a casino licensee.
II. Rule 432.1322(4)(b): The person or field is regulated by another regulatory agency inMichigan.
The Board automatically grants an exemption to (a) public utilities regulated by the Michigan Public Service Commission to the extent that they provide regulated utility-related services to a casino licensee and (b) Michigan public institutions of higher education to the extent that they provide education-related services to a casino licensee.
The Executive Director may grant an exemption on this basis if the applicant is:
1. A medical corporation, partnership, sole proprietorship, or other business entity authorized to transact business in Michigan, to the extent that the applicant provides medical-related services to a casino licensee.
2. An insurance company licensed or authorized to transact business in Michigan by the Michigan Office of Financial and Insurance Services to the extent that it provides insurance-related services to a casino licensee.
III. Rule 432.1322(4)(c): The person or field will provide goods or services of insubstantial or insignificant amounts or quantities.
1. The Board automatically grants an exemption on this basis to a person providing no more than $5,000 worth of nongaming-related goods or services to casino licensees in any rolling twelve-month period. This automatic exemption will remain effective if the person submits an application for another exemption or for supplier licensing within 7 days of reaching the $5,000 limit.
2. The Executive Director may grant an exemption on this basis if, in any rolling twelve-month period:
(a) the applicant is providing more than $5,000 worth of nongaming-related goods or services to casino licensees; and
(b) the applicant provides less than:
(i) $300,000 of nongaming-related goods and services to one casino licensee; or
(ii) $600,000 of nongaming-related goods and services to two or more casino licensees, but does not provide more than $300,000 of nongaming-related goods and services to any one casino licensee.
The applicant must certify in its application that, in the reasonable exercise of commercial business judgment, the person will not be reaching the $300,000/$600,000 limits described in this section.
An exemption granted on this basis exists until it appears that, in the reasonable exercise of commercial business judgment, the person will provide casino licensees nongaming-related goods or services in excess of the applicable thresholds in the rolling twelve-month period. At that point, the person must cease providing goods or services to casino licensees until it obtains a different exemption from the supplier-licensing requirements, a temporary supplier's license, or a supplier's license.
3. A person providing goods or services to a casino licensee as part of the distribution of complimentaries to casino patrons by that person, a person associated with the casino, or the casino itself. For purposes of this resolution, "complimentaries" are considered to be amenities provided to casino patrons to reward their patronage or to provide goodwill, and the process for the distribution of these amenities will be known as the casino's "Comp Program." An exemption granted on this basis is subject to the following conditions:
a. the person must not accept comp cards or coupons, or their equivalent, as payment for alcohol or convert comp cards or coupons, or their equivalent, to cash or its equivalent;
b. the person must not charge a casino licensee for any portion of a comp card or coupon, or their equivalent, that is unused by the casino patron to whom it was distributed;
c. the person must permit Board inspection of its accounting records and business premises;
d. the person must properly account for all transactions in which it provides goods or services for a casino licensee's Comp Program and must retain itemized records documenting each good or service provided to casino patrons in exchange for comp cards or coupons, or their equivalent;
e. the person must not exceed the $300,000/$600,000 thresholds described in paragraph (III)(2) above. An exemption on this basis is available only to providers that make their services available to all licensed casinos on a non-exclusive basis under similar or reasonably comparable terms and conditions. A person must have a temporary supplier's license, a supplier's license, or an exemption in a different category before exceeding the thresholds described in paragraph (III)(2).
IV. Rule 432.1322(4)(d): Licensing of the person or field is not deemed necessary to protect the public interest or accomplish the policies and purposes of the Act.
The Executive Director may grant an exemption on this basis if the applicant is:
1. A publicly-traded United States corporation under the regulation of the United States Securities and Exchange Commission, or a wholly-owned subsidiary of such a corporation, that also meets all of the following criteria:
a. The corporation's annual overall gross revenues from doing business with casino licensees constitutes less than 5% of the publicly-traded corporation's annual gross revenues; and
b. The corporation agrees to provide the Executive Director with documentation of overall gross revenues and the gross revenues derived from doing business with casino licensees on a semi-annual basis in the manner and form directed by the Executive Director as part of the ongoing, confidential background investigation to determine the corporation's continuing eligibility for an exemption on this basis.
2. A person who is engaging in a one-time transaction with a single casino and is not supplying goods or services on a regular and continuing basis, regardless of the amount of the transaction. An exemption in this category will be effective for only the transaction for which it is requested. It is not available to persons supplying goods or services for the construction of the permanent casinos.
3. A professional entertainer, sports figure, or other celebrity engaged by a licensed casino to appear at a casino-sponsored special entertainment or promotional event, or an agent of a professional entertainer, sports figure, or celebrity who does not otherwise provide services to casino licensees on a regular and continuing basis. This exemption is not available to promoters or agents who provide their services to a casino licensee on a regular and continuing basis.
4. A person who provides facilities, promotion, or advertising to a casino licensee and is one of the following:
a. A media outlet (defined as a newspaper, a magazine, an outdoor advertising business, or a radio or television outlet) that:
i. derives less than 5% of the person's annual overall gross revenues from advertising by casino licensees; and,
ii. agrees to provide the Executive Director with documentation of overall gross revenues and the gross revenues derived from advertising purchased by casino licensees on a semi-annual basis in the manner and form directed by the Executive Director.
b. A provider of a facility or a host or sponsor of an event that presents advertising on behalf of or promotes a casino licensee, including but not limited to theaters, ballrooms, halls, arenas, parks, stadiums, golf courses, and other entertainment, recreational, and sports facilities located in the State of Michigan.
c. A provider of a facility that provides entertainment, recreational, or hospitality services to a casino licensee and is a theater, ballroom, hall, arena, park, stadium, golf course, or special-event venue located in the State of Michigan.
5. A person who is a party to any contract or subcontract related to the construction of one or more of the permanent casino complexes who does not have a direct contract with a casino licensee or any of its affiliates related to construction of a permanent casino complex and whose contract for work to be performed on any single permanent casino complex is worth less than $8 million over the life of the contract. An exemption granted on this basis does not authorize a person to perform work at a permanent casino complex that has started operating, as determined by the Board. An exemption on this basis is not available to:
a. A person providing gaming-related goods or services for the construction, maintenance or operation of a casino or casino enterprise;
b. A person who will be involved in the installation, operation, testing, or maintenance of any of the following work areas or systems after the rough construction is completed:
i. The main cage and all secondary cages;
ii. The vault and vault annex;
iii. Security systems;
iv. Surveillance systems;
v. On-Line gaming systems;
vi. Gaming monitoring systems;
vii. Hard and soft count rooms.
c. All other persons providing goods or services for the construction or operation of a permanent casino complex or casino enterprise when the Executive Director believes that licensing is necessary to protect the public interest and to carry out the purposes of the Act and Rules.
6. A Michigan or federally chartered depository financial institution to the extent that it provides financial-related services to a casino licensee. The Executive Director may not grant an exemption to a financial institution on this basis if the financial institution provides financing to a casino licensee.
7. A person or entity that provides professional legal services to a casino licensee.
IT IS FURTHER RESOLVED:
1. A person is ineligible for an exemption from the supplier-licensing requirements if that person owes fees to the Board or Board-related fees to the Michigan Department of Treasury.
2. Persons who request or obtain an exemption from the supplier-licensing requirements under this resolution must submit any application that the Board requires and provide whatever additional information may be requested by the Board or the Executive Director to assure compliance with the purposes of the Act and Rules.
3. All persons receiving exemptions from the supplier-licensing requirements under this resolution, except those who are automatically exempt will be issued a vendor number. A casino licensee cannot obtain goods or services from anyone who is subject to the supplier-licensing requirements unless (1) the person is automatically exempt, (2) the person has an exemption, or (3) the person has a temporary supplier's license or supplier's license. It is the duty of the licensed casinos to verify that they are obtaining goods or services only from persons who have complied with the Act, Rules, and this resolution.
4. A casino licensee that obtains goods or services from a person exempt under Category III (insubstantial or insignificant amounts or quantities) may not obtain goods or services costing more than the dollar limit applicable to the exemption until the person obtains a different exemption, a temporary supplier's license, or a supplier's license.
5. An exemption that is based on the type of good or service provided permits the exempt person to provide only the goods or services encompassed by that exemption.
6. The Executive Director may grant an exemption from the supplier-licensing requirements on a basis other than that relied upon in a person's exemption application if the Executive Director determines that another basis for granting exemption applies and is more specifically tailored to the type of goods or services the person intends to provide to casino licensees, based on the circumstances described in the person's application and other information that the Executive Director receives from the applicant.
7. Each casino licensee must submit a report each month that lists the date and amount of each payment made to each person with an exemption from the supplier-licensing requirements and a yearly report that summarizes the total paid to each exempt person that calendar year. A casino licensee must submit its monthly report before the 15th day of the following month; it must submit its yearly report before January 31 of the following year. Each report must be in a format prescribed by the Board.
8. All persons who currently have an exemption from the supplier-licensing requirements will be granted an exemption from the supplier-licensing requirements under this resolution when they submit a certification acknowledging their acceptance of the terms, conditions, and procedures specified in this resolution. All such persons will have 60 days from the date of the letter they receive from the Board requesting the certification. If a person does not submit the required certification on time, that person's current exemption will automatically cease to exist and that person will not be permitted to provide goods or services to a casino licensee.
9. Each applicant for an exemption from the supplier-licensing requirements must include a $200 application fee with its application to cover the cost of the background check authorized by MCL 432.204a(1)(s).
10. An exemption granted under this resolution will be effective for one year from the date of issuance, or until a final decision is made on a renewal application filed at least 30 days before the date that the existing exemption will expire. Each applicant for renewal of an exemption from the supplier-licensing requirements must include a $100 application fee with the renewal application to cover the cost of an updated background investigation.
11. An exemption granted under this resolution will only be in effect so long as all of the requirements for its issuance continue to be met. An exemption from the supplier-licensing requirements is not a license and is merely a conditional waiver of the supplier-licensing requirements of the Rules. In the event that the necessary conditions for exemption from the supplier-licensing requirements are no longer being met, the Executive Director may summarily suspend the exemption and inactivate that person's vendor number. The Executive Director may also summarily suspend the exemption if it appears that the public health, safety, or welfare requires emergency action. Actions or omissions that will require emergency action include, but are not limited to, the following:
a. Termination of the person's contractual or business relationship with the casino licensee(s) or the person's subcontractor relationship.
b. Making material misrepresentations to the Board.
c. Failing to timely disclose information upon request of the Board or Executive Director.
d. Failing to comply with Board resolutions or applicable provisions of the Act or Rules.
e. Discovery of evidence that demonstrates that licensing of the person is necessary to protect the public interest or accomplish the policies and purposes of the Act.
If the circumstances that caused the summary suspension are corrected or ameliorated to the satisfaction of the Executive Director, he or she may reinstate the exemption from the supplier-licensing requirements.
12. A person who has had an exemption summarily suspended may request a hearing. The hearing will be scheduled to commence promptly after the date that the Board receives the request for hearing. To the extent not addressed herein, a hearing on the summary suspension of an exemption will proceed as provided for in Part 11 of the Rules. The hearing will be presided over by the Executive Director or a hearing officer designated by the Executive Director or assigned by the State Office of Administrative Hearings and Rules. A written recommendation based upon the record from the hearing will be filed promptly after the conclusion of the hearing, and a copy will be served on Board Staff and the petitioner at least two weeks before the recommendation is considered by the Board at a public meeting. Board Staff and the petitioner may submit objections to the recommendation. At any point after a hearing is requested, the Executive Director may grant stays or other interim relief as may be appropriate under the circumstances. Denial of the requested stay or other interim relief may be appealed and will be heard at the next scheduled Board meeting.
13. The limitation in Rule 432.1325(2) that temporary supplier licenses are not valid for more than 90 days is waived until further notice from the Board for both gaming and non-gaming suppliers.
14. The Executive Director is delegated and authorized to exercise all power and authority of the Board to exempt, or grant waivers to, any person or field of commerce from the supplier-licensing requirements of the Rules as provided for in this resolution, the Act, and Rules 432.1223 and 432.1322(4), upon the Executive Director's determination that the requirements and criteria for such exemption, as set forth in the Rules and this resolution, are established;
15. A person or entity requesting an exemption must complete an application (unless an automatic exemption applies) and provide any information requested by the Board. The Executive Director must report all requests for exemptions to the Board at the first regularly scheduled public meeting that follows receipt of the request;
16. A person or entity requesting an exemption from the supplier-licensing requirements must certify that the person making the request has read this resolution and accepts and acknowledges that all exemptions granted under this resolution are conditioned upon that person's acceptance of, and consent to, the conditions, requirements, and procedures described in this resolution;
17. The Executive Director must issue a written notice to grant or deny a request for an exemption from the supplier-licensing requirements and must provide a copy of the notice to the person requesting the exemption;
18. The Board may reverse the decision of the Executive Director to grant or deny an exemption on its own motion;
19. A person whose request for an exemption from the supplier-licensing requirements is denied by the Executive Director may petition the Board for review as provided for in Part 7 of the Rules;
20. In all hearings provided for in this resolution, the petitioner shall carry the burden to show by clear and convincing evidence that the petitioner has met the requirements for an exemption.
22. Exemptions granted under this resolution do not affect the requirement of Rule 432.1331 that all individuals doing work for an exempt person who performs work in a restricted area of a casino or in the gaming area of a casino shall hold an occupational license of the level required for the individual's position.
23. Board Resolution Nos. 1998-07, 1998-09, 2003-07, 2005-03, 2006-01, and 2008-04, and Executive Director Order No. 1998-01 are collectively rescinded and superseded by this resolution.
ADOPTED AND ISSUED THIS 8th DAY OF SEPTEMBER 2009.
STATE OF MICHIGAN
MICHIGAN GAMING CONTROL BOARD
Damian S. Kassab, Chairperson
Received and Filed: