LANSING (AP) — A judge has stopped new regulations on Las Vegas-style charitable gambling events in Michigan that had gone into effect earlier this month.
Court of Claims Judge Pat Donofrio issued a temporary restraining order last Friday after a gambling organization, 11 charities and other groups filed a lawsuit to keep a state board from enforcing the rules, which they say will cost millions of dollars in revenue.
Charitable gambling exploded in Michigan to a peak of $197 million reported to the state in 2011 from $7.9 million in 2002.
Charities’ profits rose to $19.2 million two years ago from $3.6 million in 2002 before leveling off recently.
The state stepped in to more tightly regulate the practice after complaints that charities were being unfairly treated by gambling groups running the events.
Charities got 81 percent of the proceeds a decade ago but now receive half under profit-sharing agreements never envisioned when the games were authorized in a 1976 update of the Bingo Act, according to the state.
The rules halted by the judge would give charities more of a take and limit the number of events.
Charities say that while they are taking less of the cut on a percentage basis, they are still raising much more money than previously.
The economic harm to the groups that filed the lawsuit “outweighs the harm” to the state and Michigan’s Gaming Control Board if the injunction is issued, Donofrio wrote.
He said the board didn’t conduct a public hearing on the rules. The board said the requirement was met during a first draft.
If allowed, the new rules would mean about 11,000 fewer charitable gambling events in the state over the next 12 months and more than $9.6 million in lost revenue, the Michigan Charitable Gaming Association said in an affidavit.
Donofrio said the gaming board can apply the old gambling rules while the injunction is in place. A June 12 pre-trial conference has been scheduled.
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