Michigan Gaming Control Board Cracks Down on Unregulated Operators

In a move aimed at curbing the rise of illegal gaming activity in the state, the Michigan Gaming Control Board has initiated action against three online gaming operators by issuing cease-and-desist letters for operating without proper licenses. This action is part of the Michigan Gaming Control Board’s ongoing efforts to protect its gaming population from unregulated online platforms and prevent the loss of valuable tax revenue to offshore operators.

Cease and Desist Letters Issued

The following companies received cease and desist orders from the Michigan Gaming Control Board: PredictionStrike Inc. from Bay Shore, New York; Sweepstakes Limited (Stake.us) from Limassol, Cyprus; and VGW LuckyLand, Inc. (VGW) from San Francisco, California. The letters, sent on Oct. 19, Nov. 2, and Dec. 5, 2023, respectively, outline the nature of the violations committed by the companies.

The Lawful Internet Gaming Act of Michigan explicitly mentions that only licensed operators are allowed to offer internet gaming in the state. Similar restrictions apply to betting under the Lawful Sports Betting Act. In Michigan, companies that operate without requisite licenses are liable to face penalties that have been outlined in the Michigan Gaming Control and Revenue Act. Under the act, errant operators can be imprisoned for a maximum of 10 years or face fines up to $100,000 or both.

Violations of Unregulated Operators Outlined

The letters explicitly mention the violations being committed by the three unlicensed operators that it has targeted. These violations include:

  • PredictionStrike: Offering gaming and internet sports betting in Michigan without being licensed in the state as an internet gaming operator and a sports betting operator
  • Stake.us: Promoting an unlicensed online lottery and/or raffle for customers that buy its products through its internet website
  • VGW: Conducting illegal gambling by offering an internet game in which a player wagers something of monetary value for the opportunity to win something of monetary value

Three key Michigan laws have been violated by the gaming companies contacted by the Michigan Gaming and Control Board:

  • Lawful Internet Gaming Act: This act explicitly states that internet gaming can only be provided by a licensed gaming operator in the state. Similarly, the Lawful Sports Betting Act sports betting may only be offered by a licensed sports betting operator or by the provider of a licensed sports betting platform. Currently, only tribal casinos within Michigan and casinos licensed by the Michigan Gaming Control and Revenue Act are legally allowed to apply for an internet gaming operator license or a sports betting operator license.
  • Michigan Gaming Control and Revenue Act: This act explicitly prohibits a party from conducting gambling in any form without a license issued by the Michigan Gaming Control Board. This particular act is broad in its ambit and extends to the collection of money or anything of value with the understanding that the money or item of value can be paid to a person based on the outcome of a certain event. Thus, the act broadly defines gambling and places firm measures on the activity in the state.
  • Michigan Penal Code: Similarly, the Michigan Penal Code broadly prohibits any form of unauthorized gambling that involves considerations, prizes and chance. For example, accepting money, or anything of value, with the understanding that money, or anything of value, will be paid to any person based on the outcome of an uncertain event is prohibited.

The Executive Director of the Michigan Gaming Control Board issued a statement to emphasize the importance of the state’s regulations, saying: “Gambling regulations are in place for a reason, and illegal gambling operations are not welcome in Michigan. We do not want businesses that skirt the law having access to Michigan citizens and leaving them vulnerable because they are playing on unregulated sites that leave them with no recourse and that siphon funds away from communities, because they are not paying taxes like a regulated, legal gambling establishment, would.”

In response, PredictionStrike Inc., Sweepstakes Limited (Stake.us), and VGW LuckyLand, Inc. (VGW) have each implemented measures to prevent Michigan residents from gambling on their websites. In Oct. 2023, Chumba Casino and Luckyland slots both exited the Michigan Market shortly after the Michigan Gaming Control Board cracked down on the free-to-play Golden Hearts casino, in addition to its ruling against daily picks-style fantasy sports.

While the VGW site has disabled purchases, they had planned to allow existing customers to continue playing and redeeming prizes until the end of Jan. 2024.

The actions taken by the Michigan Gaming Control Board signify a doubling down of the state’s commitment to maintaining the integrity of its growing gaming industry. The Michigan Gaming Control Board aims to protect state residents from the potential harms of illegal gaming by ensuring all of the state’s gambling activities adhere to the predefined regulations.

About the Author
Nikhil Kalro

Nikhil Kalro

Nikhil Kalro covers the sports betting industry and revenue reporting at Gaming Today. Much of his work analyzes state revenue information, including betting activity and revenue for individual states and sportsbook operators. In addition, Nikhil provides news updates on the gambling industry itself, including product launches and legal issues. Nikhil’s previous experience includes five years with ESPN.

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