Argument Over VLTs at Tracks Heats Up

10 December 2003

By David Waddell

This week the Michigan Legislature begins its final week of scheduled session for the 2003 calendar year. The Michigan Senate and House are tentatively slated to meet next week with its holiday recess scheduled to begin during the third week of December. Tomorrow, December 10th at 10 a.m. in room 402 of the State Capitol, a group calling itself the "Michigan Citizens for Responsible Gaming" will be sponsoring an anti-racino legislation press conference, which will include testimony by U.S. Representative Mike Rogers (R), former Republican Lt. Governor Dick Posthumus, and Michigan Senator from Detroit Buzz Thomas (D).

As the Legislature seeks to finalize action for 2003, the Racino Legislative Package that would legalize video lottery terminals ("VLTs") at Michigan's seven tracks and allow off track betting and telephone and Internet wagering on horse racing, is receiving a major push for passage by horse track interests, Michigan House Speaker Rick Johnson (R), and by the package's sponsor Representative Larry Julian (R).

The bills included in the racino legislation, also coined as the "Agriculture Enhancement Package" by its backers, include the following legislative initiatives, which are tie barred, requiring that they all must pass in order to take effect.

• House Bill 4609 (H-2) - The proposed bill would amend the Michigan Horse Racing Law. It passed the Michigan House of Representatives on May 22, 2003 and is pending before the Michigan Senate Committee on Gaming and Casino Oversight which is Chaired by Jason Allen (R). The proposed legislation would allow the Michigan Horse Racing Commissioner to issue up to 15 off-track betting parlor licenses to licensed horse track owners or licensed Detroit casino operators. The betting parlors would be permitted to accept live, telephone or Internet wagers on live or simulcast horse racing.

• House Bill 4610 (H-3) - The proposed bill would amend the Michigan Lottery Act and allow the Lottery Bureau to implement and operate video lottery terminals at licensed Michigan racetracks. It passed the Michigan House of Representatives on May 22, 2003 and is pending before the Michigan Senate Committee on Gaming and Casino Oversight which is Chaired by Jason Allen (R). The proposed legislation would allow a track licensee to install up to 500 video lottery terminals (VLTs), and apply for permission to install more with a maximum of 2,000 VLTs to be authorized at each location.

• House Bill 4611 (H-1) - The proposed bill would amend the Michigan Penal Code to make it a Class D felony for manipulating the outcome or payoff of a VLT. It passed the Michigan House of Representatives on May 22, 2003 is pending before the Michigan Senate Committee on Gaming and Casino Oversight which is Chaired by Jason Allen (R).

Proponents of the racino package believe that the legislation will dramatically improve the economic condition of Michigan's agriculture economy, as revenues from the off track betting and VLTs will increase the purse pool paid to horsemen. Revenues would also aid Michigan's School Aid Fund and the City of Detroit. Opponents of the package contend that the racinos will draw down on the visitors to Michigan's existing tribal and Detroit casinos and reduce the amount of money the casinos are paying in fees and taxes.

One major issue of contention in the proposed legislation is the regulation of the VLT machines. Under the current legislation, the authority to regulate the electronic gaming devices proposed for installation at Michigan tracks would be assigned to the Michigan Lottery rather that the Michigan Gaming Control Board, which regulates the electronic gaming devices operated in the three Detroit casinos. In order to assure the integrity of Michigan's gaming industry it seems logical that the Michigan Gaming Control Board should be assigned the regulating duties for all electronic gaming devices in the state rather than creating a new system that would require a lot of additional state personnel to be hired. The Gaming Control Board operates a laboratory that currently tests all gaming related equipment used in connection with gaming activities in the Detroit casinos. It would be well suited to provide the same regulatory oversight for slot machine gaming activity at any additional locations (including tracks) that the state decides to permit.