Resolution No. 2003-07 (Adopted 12/16/03) (RESCINDED on 09/08/09 by Resolution No. 2009-01 and 06/29/06 by Resolution No. 2006-01) A Resolution Regarding Vendor Exemptions and/or Waivers From Supplier Licensing Requirements and Vendor Exemptions

STATE OF MICHIGAN

THE MICHIGAN GAMING CONTROL BOARD

 

RESOLUTION N0. 2003-07

 

 

A Board Resolution Regarding Vendor Exemptions and/or 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.

 

 

 

 

WHEREAS, the Michigan Gaming Control Board ("Board") is empowered by the Michigan Gaming Control and Revenue Act, as amended, Public Act 69 of 1997, MCL 432.201 et seq. ("Act") to promulgate rules as may be necessary to implement, administer, and enforce the Act; and,

 

WHEREAS, 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; and,

 

WHEREAS, Rule 432.1322(1) requires that a person shall not, on a regular and continuing basis, supply goods or services to a casino licensee unless that person holds a supplier license; and,

 

WHEREAS, Rule 432.1322(3) provides that a person shall be deemed to be transacting business with 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; and,

 

WHEREAS, certain prospective providers of goods and services have asked for, or inquired about, exemption from supplier licensing requirements under Rule 432.1322(4); and,

 

WHEREAS, the construction of permanent casinos is envisioned to take place upon either the termination of the current injunction or the conclusion of the Lac Vieux Desert litigation and the magnitude of the projects will create unique licensing issues that are unlikely to be present in the future; and,

 

WHEREAS, the Board believes it is necessary to expand and clarify the circumstances in which persons seeking business relationships with casino licensees can be exempted from supplier licensing requirements, or have them waived, because their licensure is not deemed necessary to protect the public interest or to accomplish the policies and purposes of the act; and,

 

WHEREAS, it is necessary to create a system by which licensed casinos can easily verify whether suppliers with whom they are either doing business or contemplating the initiation of a business relationship are in compliance with the supplier licensing requirements of the Act and Rules; and,

 

WHEREAS, the Board has adopted and promulgated Rule 432.1322(4) that provides the Board may exempt any person or field of commerce from the supplier licensing requirements of its administrative rules, if the Board determines that any of the following provisions apply to the person or field of commerce:

 

a. The person or field is an agency of state, local, or federal government,

 

b. The person or field is regulated by another regulatory agency in Michigan,

 

c. The person or field will provide goods or services of insubstantial or insignificant amounts or quantities,

 

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; and,

 

WHEREAS, Rule 432.1223 provides that the Board "may, in writing, waive, restrict, or alter any requirement or procedure set forth in these rules, if the board determines that the requirement or procedure is impractical or burdensome, that the waiver, restriction, or alteration is in the best interest of the public and the gaming industry, and that the waiver, restriction, or alteration is not outside the technical requirements necessary to serve the purpose of the requirement or procedure"; and,

 

WHEREAS, MCL 432.204(8) provides for the Executive Director to perform any and all duties that the Board shall assign to him or her; and,

 

WHEREAS, the Board has adopted and promulgated Rule 432.1214 delegating to its 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; and,

 

WHEREAS, Rule 432.1214(j) specifically 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"; and,

 

WHEREAS, the Board believes it is necessary and appropriate for purposes of administrative efficiency to expressly delegate its power and authority to the Executive Director to waive supplier licensing requirements in certain circumstances described herein and to exempt persons providing goods and services to a casino licensee from supplier licensing requirements where such persons meet the criteria for exemption set forth in Rule 432.1322(4) and this resolution; and,

 

WHEREAS , MCL 432.202(h) defines a "vendor" as " means a person who is not licensed under this act who supplies any goods or services to a casino licensee or supplier licensee"; and,

 

WHEREAS, MCL 432.204a(s) gives the Board the power and authority to "perform a background check, at the vendor's expense, of any vendor using the same standards that the board uses in determining whether to grant a supplier's license"; and,

 

IT IS RESOLVED that vendor exemptions from supplier licensing requirements may be granted to non-gaming related suppliers who are described below:

 

1.        A person who is a publicly traded corporation under the regulation of the Securities and Exchange Commission, or its wholly-owned subsidiary, who also meet all of the following criteria:

 

a .  The person must fill out an application and/or disclosure prescribed by the Executive Director that is designed to elicit sufficient information to carry out the purpose and intent of the supplier licensing requirements in the Act and Rules, and,

 

b.   The annual overall gross revenues from doing business with casino licensees constitutes less than 5% of the publicly traded corporation's annual gross revenues.

 

c.  The person provides 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 continuing eligibility for this exemption.

 

2.  Persons whose transaction with a single casino has the appearance and/or indicia of being essentially a one--time transaction and does not evidence the appearance or intent of doing business with that casino on a regular and continuing basis even though the transaction may exceed the $200,000 limit specified in Rule 432.1322 at which a business is deemed to be doing regular and continuing business.  A vendor exemption in this category shall only be effective for the transaction for which it is requested. It is not available to persons supplying goods or services for the construction of the permanent casinos.  To obtain this vendor exemption a person must fill out an application and/or disclosure prescribed by the Executive Director that is designed to elicit sufficient information to carry out the purpose and intent of the supplier licensing requirements in the Act and Rules.

 

3.  Persons doing regular and continuing business with casino licensees in excess of $50,000, but less than the $200,000/$400,000 limits in any twelve month period specified in Rule 432.1322.  The person applying for this category of vendor exemption must continually satisfy the following conditions:

 

a.  The person must fill out, under oath, an application and/or disclosure prescribed by the Executive Director that is designed to elicit sufficient information to carry out the purpose and intent of the supplier licensing requirements in the Act and Rules.  Any casino doing business with a person in this category must retain the signed copy of this certification in their files and have it available for inspection by the Board.  

 

b.  The person must notify the Board, as soon as reasonably possible, if circumstances change so that it is expected that the person's total dollar amount of nongaming-related business will be more than $200,000 with 1 casino licensee and/or more than $400,000 with 2 or more casino licensees in any twelve-month period and apply for a temporary supplier's license and a full supplier license. In no case may a casino pay, or a person exempted under this provision receive, payment for goods or services provided to the casino within any twelve month period in excess of $200,000 unless the person exempted under this provision has obtained either a temporary or full supplier's license.  Persons availing themselves of this exemption who exceed the $200,000 limit do so with the understanding and acceptance that they will not be paid unless they receive either a temporary or full supplier's license. 

 

4.        Persons doing less than $50,000 of nongaming-related business with licensed casinos in any twelve-month period are automatically exempt as long they meet the following criteria:

 

a.  After supplying $600 of goods and services to a casino, the person submits an application to the casino that, in the reasonable exercise of commercial business judgment, the person will be doing less than $50,000 of nongaming-related business with licensed casinos.  The application, and other information sufficient to carry out the purpose and intent of the supplier licensing requirements in the Act and Rules, shall be submitted on a form prescribed by the Executive Director.  Any casino doing business with a person in this category must retain the signed copy of this application in their files for inspection by the Board and must electronically submit the application to the Board; and,

 

b.  The person has been issued a vendor number by the Board after the filing of the certification.

 

This automatic exemption shall remain in effect for 30 days after the $600 limit has been reached.  No casino shall make payments in excess of $600 to persons exempt under this section until the Board has issued a vendor number to that person.  If circumstances change so that it is expected that the person's total dollar amount of nongaming-related business with licensed casinos will be $50,000 or more, the person and the casino licensee must immediately cease doing business with each until the person does one of the following:

 

a.  Applies for a supplier's license and obtains a temporary supplier's license; or

 

b.  Obtains a vendor exemption under category 3 of this resolution.

 

 

5.  Persons who are engaged in the following fields of commerce:

 

a.  Medical corporations, partnerships, sole proprietorships, or other business entities authorized to transact business in Michigan, to the extent such entities provide medical related services to a licensee.

 

b.  Insurance companies licensed or authorized to transact business in Michigan by the Michigan Insurance Bureau to the extent such companies provide insurance related services to a licensee.

 

c. Professional legal services.

 

d.  A Michigan or federally chartered depository financial institution to the extent such entity provides financial related services to a licensee. This does not include financial institutions that provide financing to a licensee.

 

e.  Michigan public institutions of higher education to the extent such institutions provide education related services to a licensee.

 

f.  Public utilities regulated by the Michigan Public Service Commission to the extent such entities provide regulated utility related services to a licensee.

 

g. Governmental agencies and the United States Postal Service to the extent such agencies provide services related to their agency function to a licensee.

 

h.  Providers of facilities and services utilized by licensed casinos to provide or present advertising, special events or promotional events to casino patrons, including but not limited to, theatres, ballrooms, halls, arenas, parks, stadia, golf courses, and other entertainment, recreational and sports facilities located in the State of Michigan. This exemption includes all goods and services ordinarily furnished by the facility provider for similar or comparable events, including private boxes and admission tickets and seating, to the extent such services are provided to a licensed casino or its patrons and directly purchased or reimbursed by the casino.  This exemption is only available to providers that make their facilities and services available to all licensed casinos on a non-exclusive basis under similar or reasonably comparable terms and conditions.

 

i.  Professional entertainers, sports figures and other celebrities engaged by a licensed casino to appear at casino-sponsored special entertainment or promotional events, and their respective individual agents who do not otherwise provide services to Michigan licensed casinos on a regular or continuing basis. This exemption is not available to promoters or agents that provide their services to a licensed casino on a regular or continuing basis.

 

6.  Persons who are media outlets that sell advertising, limited to newspapers, magazines, outdoor advertising, radio and television outlets that meet the following criteria:

 

a .  The person must fill out an application and/or disclosure prescribed by the Executive Director that is designed to elicit sufficient information to carry out the purpose and intent of the supplier licensing requirements in the Act and Rules, and,

 

b.  The person derives less than 5% of the person's annual overall gross revenues from advertising by casino licensees; and,

 

c.  The person provides the Executive Director with documentation of overall gross revenues, and the gross revenues derived from advertising by casino licensees, on a semi-annual basis in the manner and form directed by the Executive Director.

 

7.  Persons involved in the construction of the permanent casino complexes who submit an application and/or disclosure prescribed by the Executive Director that is designed to elicit sufficient information to carry out the purpose and intent of the supplier licensing requirements in the Act and Rules.  This vendor exemption is strictly limited to work performed on the initial construction of the permanent casino complexes, and is for persons who are not one of the following:

 

a.  A person providing gaming-related goods or services for the construction, maintenance or operation of a casino or casino enterprise;

b.  A person providing nongaming-related goods or services for the construction of the permanent casino complexes where the person is a party to an agreement with a casino licensee, and the amount of business is $200,000 or more within any twelve-month period (or $400,000 total business with more than one casino licensee);

c.  A person who is a prime contractor, which means any person who is a party to a contract(s) or subcontract(s) with another contractor(s) for a major portion of a permanent casino complex construction project as defined by the CSI Master Format Division and Subdivision, and whose contract amount exceeds  $2,000,000, within any twelve-month period;

d.  A person involved in, or who will be involved in either the installation, operation or maintenance of any of the following work areas or activities 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.

e.  All other persons providing goods or services for the construction or operation of a permanent casino complex or casino enterprise when deemed necessary to protect the public interest and to carry out the purposes of the Act and Rules.

 

IT IS FURTHER RESOLVED that persons applying for, or who have been granted, a vendor exemption under this resolution must provide whatever additional information may be requested by the Board or Executive Director to assure compliance with the purposes of the Act and Rules; and,

 

IT IS FURTHER RESOLVED that all persons receiving vendor exemptions or waivers from supplier licensing requirements under this resolution shall be issued a vendor number.  All persons, except those in Subsection 4 who provide less than $600 of goods and services to a licensed casino, must have either an active supplier or vendor number before doing business with a licensed casino.  It is the duty of the licensed casinos to verify that they are only doing business with persons who have complied with the Act, Rules and this resolution.

 

IT IS FURTHER RESOLVED that all persons currently in possession of vendor exemption numbers shall be granted vendor exemptions under this resolution upon the submission of a certified acknowledgement and acceptance of the terms, conditions and procedures specified in this resolution.  All such persons shall have 90 days to submit the acknowledgement and acceptance.  If no acknowledgement and acceptance is submitted within 90 days, the existing exemption shall cease to exist and the vendor number of that person will be deactivated.

 

IT IS FURTHER RESOLVED that any vendor exemptions granted under this resolution will only be in effect so long as all of the requirements for their issuance continue to be met.  A vendor exemption is not a license and is merely a conditional waiver of the supplier licensing requirements of the Act and Rules.  In the event that the necessary conditions for exemption from supplier licensing requirements are no longer being met, the Executive Director may summarily suspend the vendor exemption and inactivate that person's vendor number if it appears that the public health, safety or welfare requires emergency action.  Included in the actions or omissions that will require emergency action, but not limited to, are the following:

 

1.  The termination of the contractual or business relationship with the casino licensee(s) or its subcontractor relationship;

2.  Material misrepresentations to the Board;

3.  Failure to disclose information upon request of the Board or Executive Director;

4.  Any noncompliance with, or violation, of the Act, the Board's administrative rules, or Board resolutions;

5.        Evidence that the person would not be eligible or suitable for licensure.

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 vendor exemption.

 

IT IS FURTHER RESOLVED that a person who has had a vendor exemption and/or waiver summarily suspended may request that a hearing.  The hearing will be scheduled to commence within no more than 21 days. To the extent not addressed herein, a hearing on the denial of a vendor 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.  A written recommendation in writing, based upon the record from the hearing, will be filed within 21 days of the conclusion of the hearing and a copy will be served on Board Staff and the petitioner at least two weeks before the recommendation would be considered by the Board at a the next scheduled public hearing.  Board Staff and the petitioner may submit objections to the recommendation. At any point in the hearing process the Executive Director may grant stays or other interim relief as may be appropriate in the circumstances. Denial of the requested stay or other interim relief may be appealed and will be heard at the next scheduled Board meeting.

 

 

IT IS FURTHER RESOLVED that 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.  

 

IT IS FURTHER RESOLVED that the Executive Director may conduct a full background investigation on any person applying for, or holding, a vendor exemption from supplier licensing requirements when there is reason to believe that the person might not be suitable for licensing under the criteria in MCL 432.207a or may have acted in a manner inconsistent with the purposes of the Act and Rules.

 

IT IS FURTHER RESOLVED , as follows:

 

1.  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 Act and 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 and/or waiver, as set forth in the Rules and this resolution, are established;

 

2.  All requests for vendor exemptions from the supplier licensing requirements under this resolution shall be made in writing and submitted to the Executive Director on forms prescribed by the Executive Director, and the Executive Director shall report all such requests to the Board at its next scheduled public meeting following receipt of the request;

 

3.  All requests for vendor exemptions must be submitted with a certification from the person making the request that that person has read this resolution and accepts and acknowledges that all vendor exemptions granted under this resolution are conditioned upon that person's acceptance of, and consent to, the conditions, requirements and procedures outlined in this resolution; 

 

4.  The Executive Director shall issue a written decision to grant or deny a request for vendor exemption from the supplier licensing requirements, and shall provide a copy of the decision to the person requesting the vendor exemption;

5.  The Board may reverse the decision of the Executive Director to grant or deny a vendor exemption on its own motion;

 

6.        A person whose request for a vendor exemption or waiver 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;

 

7.        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 either met the requirements for a vendor exemption of waiver or, when appropriate, that the petitioner is eligible and suitable for licensure.

 

IT IS FURTHER RESOLVED that exemptions and waivers granted under this resolution do not affect the requirement of Rule 331 that all individuals doing work for the exempt person who perform work in a restricted area of a casino or in the gaming area of a casino in Michigan shall hold an occupational license of the level required for the individual's position.

 

IT IS FURTHER RESOLVED that Board Resolution No. 1998-07, Board Resolution No. 1998-09 and Executive Director Order No. 1998-01 are collectively rescinded and superceded by this resolution.

 

ADOPTED AND ISSUED THIS 16TH DAY OF DECEMBER 2003.

 

STATE OF MICHIGAN

MICHIGAN GAMING CONTROL BOARD

 

 

 

__________________________________

Roman S. Gribbs, Chairperson

 

 

Attest:

 

 

 

__________________________________

 

 

Received and Filed:

 

 

 

__________________________________

Patricia S. James

Board Secretary