Interview: MGCB Speaks On Stopping Illegal Online Gambling In Michigan

Written By Drew Ellis on November 8, 2023 - Last Updated on November 16, 2023
Michigan Gaming Control Board speaks to PlayMichigan about cracking down on illegal online gambling

The Michigan Gaming Control Board hasn’t been hiding that it’s actively seeking out illegal gambling in the state. It recently addressed the issue with PlayMichigan in an extensive interview.

Raiding of illegal gaming sites has been routine over the years. However, the MGCB and state lawmakers have recently turned their attention to illegal online gambling.

Mainly, that focuses on sweepstakes casinos that operate too similarly to a Michigan online casino while not facing the same rules and regulations.

The same goes for illegal sports betting. Last month, Michigan implemented the Fantasy Contests Consumer Protection Act. That put an end to Daily Fantasy Pick’em sites that utilized a format too similar to Michigan sports betting.

Michigan took some time to join with other states that took action against DFS sites. But, the mitten appears to be ahead of the curve when it comes to these sweepstakes casinos.

MORE: Guide to legal gambling age in Michigan

PlayMichigan discussed these topics with Kurt Steinkamp, MGCB’s Chief of Staff and former Deputy Director of the agency’s Licensing & Investigations Division.

Q: Has the MGCB established a new direction with respect to sweepstakes operators in Michigan?

Kurt Steinkamp

Steinkamp: The MGCB hasn’t established a new direction as much as sweepstakes operators are taking note of our continued regulatory efforts to enforce Michigan gaming laws and subsequently making their own independent business decisions and risk assessments about ceasing their operations in the state.

By providing a comprehensive regulatory framework and granting investigative powers to the MGCB, the Michigan Lawful Internet Gaming Act, which was signed into law in December 2019, aims to protect consumers, maintain the integrity of online gambling operations, and investigate and deter illegal gambling activities within the state. As such, the MGCB has been ramping up efforts on this front and will continue to take action against those who operate illegally in our state.

Recently, certain unregulated gaming sites — like Virtual Gaming Worlds (VGW) that operates Chumba Casino, Luckyland Slots, and Global Poker — have indicated they will soon be leaving Michigan amid regulatory concerns. Additionally, Golden Hearts, which was persuaded to discontinue operations in Michigan in September by Michigan Attorney General Dana Nessel, was also deemed illegal gambling since it used a similar format — essentially mimicking Michigan’s licensed Internet gaming operators without being licensed or regulated by the Michigan Gaming Control Board.

Companies who operate like this and attempt to circumvent established state gaming laws create a false sense of security for players, who erroneously think that their games are legal and safe. The MGCB has always been, and will continue to be, committed to working with the Attorney General’s Office to ensure that Michigan’s gaming laws are strictly enforced and that those who choose to violate those laws are held accountable. As a regulatory agency, the MGCB is entrusted to ensure the conduct of fair and honest gaming to protect the interests of the citizens of the state of Michigan.

Q: Few, if any, other states have moved to abolish sweepstakes operators. What has motivated the MGCB to become a national leader in this area?

Steinkamp: We have several motivations to deter illegal gambling which are not specific only to so-called sweepstakes operators.

First, many companies operating in this space do not meet the statutory requirements to operate legally in our state.

Second, consumer protection is a priority. Concerns such as fraud, identity theft, underage gambling, and targeting vulnerable individuals arise when we talk about illegal gambling. We do not want Michigan citizens to be victimized by these unlicensed and unregulated companies.

And lastly, the MGCB has an inherent obligation — based on its regulatory duties and status as a state agency — to preserve the state’s revenue. Michigan has a highly regulated and legalized gaming industry. Shutting down online sweepstakes casinos that skirt the state’s gaming laws can help protect the state’s revenue streams since such entities compete with licensed operators — diverting potential customers away from regulated, state-sanctioned gaming establishments that provide tax revenue dollars that Michigan residents and communities benefit from.

Q: Are the sweepstakes operators viewed in a similar fashion with online casinos to the way the DFS sites like PrizePicks were considered too close to sports betting?

Steinkamp: No. In the case of DFS sites, the recently promulgated rules clarified that proposition style sports betting may not be offered by a licensed Fantasy Contest Operator. This type of wagering is permitted for licensed sport betting companies.

When sweepstakes operators enter the conversation, the question is “are they legal”? We are finding that many of these companies are not operating legally in our state, and we will continue to take action against those who don’t meet the requirements of our laws.

Q: Is the MGCB increasing its efforts to abolish illegal gambling operations overall?

Steinkamp: We are continuing to work as hard as ever to combat illegal gambling in our state. Notably, as part of its work to halt illegal gaming, the MGCB and the Liquor Control Commission began a joint effort in 2022 to educate the public and business owners about illegal use of gambling machines. This partnership has led to the identification of hundreds of locations throughout Michigan with suspected illegal gambling machines. Our efforts may be seen as increasing proportionate to the number of illegal gambling operations that are being reported and investigated.

The MGCB is committed to helping communities statewide remove illegal gambling machines from storefront operations, gas stations, and convenience stores. The MGCB also publishes fact sheets about Michigan law and unregulated machines on its website, Michigan.gov/MGCB.

You will also continue to see efforts taken to combat illegal Internet gaming.

Q: What is the main reason for the increased efforts?

Steinkamp: Concerned Michigan citizens continue to do a great job with reporting tips to the MGCB regarding suspected illegal gambling operations, such as if they see a gaming machine tucked away in the corner of a gas station or find illegal slot-style machines in bars and restaurants. Similarly, we continue to receive tips of illegal Internet gaming websites. MGCB investigators find these tips invaluable to aid in the agency’s mission of ensuring the conduct of fair and honest gaming to protect the citizens of the state of Michigan.

The more tips that come in, the better the chances are that agency investigators can work with colleagues in the Attorney General’s office to shut down alleged illegal gambling operations.

Michigan residents can report illegal or suspicious gambling activity anonymously by calling the 24-hour tipline at 1-888-314-2682 or by sending a message (not anonymous) to [email protected]. Written tips can also be anonymously submitted to the MGCB using an online form located under the “Report Illegal or Suspicious Gambling Activity” link of the Resources section on the homepage of the agency’s website at Michigan.gov/MGCB.

Q: Did the increased emphasis on tackling illegal gambling come as an internal decision or as direction from the Michigan Department of Treasury? The Attorney General? Elsewhere?

Steinkamp: The MGCB has always been committed to tackling the issue of illegal gambling and frequently reminds the public that they are encouraged to contact the agency with tips of suspected illegal gambling. We take every tip seriously. The agency works hand in hand with the Michigan Attorney General’s Office in its efforts to shut down illegal gaming operations as a matter of public safety and consumer protection.

Concerted efforts to educate the public about Michigan’s gaming laws and illegal gaming machines will continue, since the more citizens know what to look out for, the better we will all be in safer communities where illegal gambling operations cease to exist.

Q: Is the increased emphasis on halting illegal gambling a response to how federal departments are addressing illegal gambling? If so, what does the MGCB hope to address that isn’t being addressed well by the feds?

Steinkamp: Our actions are not in response to how federal departments are addressing illegal gambling. However, we do recognize that federal intervention is likely necessary to combat illegal, offshore sportsbooks and online casinos.

Notably, this past spring, the Michigan Gaming Control Board joined a coalition of seven gaming states‘ regulators urging the U.S. Department of Justice to make combating illegal, offshore sportsbooks and online casinos a priority. In an April 28 letter, MGCB Executive Director Henry Williams and fellow state regulators asked Attorney General Merrick Garland to address the significant threats offshore illegal gambling poses that state regulators cannot tackle alone.

While Michigan has strict laws and rules that govern Internet gaming and sports betting and provide consumer protections, the MGCB remains willing to help the U.S. Department of Justice as it pursues enforcement of U.S. laws against offshore illegal gaming enterprises that take advantage of our citizens.

Q: What results have these efforts to crack down on illegal gambling produced in Michigan recently?

Steinkamp: Michigan law prohibits accepting money or anything of value with the understanding that money, or something of value, will be paid to any person contingent upon the outcome of an uncertain event. Unlicensed casinos, unauthorized online gambling platforms, underground sports-betting operations, or any other form of gambling that is not expressly permitted by Michigan law are all considered forms of illegal gaming. The Board is hard at work fighting illegal gaming in our state.

Below are some statistics that illustrates the MGCB’s recent efforts to combat illegal gambling in Michigan.

Between Jan. 1, 2021, and Oct. 31, 2023:

  • 495 illegal gaming machines were seized in connection with executed search warrants.
  • 11 illegal gambling locations were closed related to MGCB investigations.
  • 152 machines were removed from businesses because of cease-and-desist letters issued by the MGCB.
  • 28 individuals received criminal convictions related to illegal gambling, including 17 felonies and 15 misdemeanors.
  • Over 917 tips were received by concerned citizens of the state of Michigan.
  • More than $378,000 in cash and gift cards related to suspected illegal gambling operations were seized in connection with MGCB investigations.

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Drew Ellis

Drew Ellis is the Lead Writer of PlayMichigan, the No. 1 source for online gambling news in Michigan. A lifelong resident of the state, Ellis has been working in various forms of media since 1998, including more than a decade in the sports betting industry prior to transitioning into US casino markets in 2020.

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