STATE OF MICHIGAN

JENNIFER M. GRANHOLM, ATTORNEY GENERAL

Section 7b of the Michigan Gaming Control and Revenue Act prohibits an officer or managerial employee of a casino, a casino enterprise, or of a licensed casino supplier from making a contribution to an independent committee operated by a professional organization to which the officer or employee belongs.

An independent committee that receives a contribution prohibited by section 7b of the Michigan Gaming Control and Revenue Act is not subject to a penalty for failure to return the contribution unless the committee first receives a notice from the Secretary of State in accordance with section 30 of the Michigan Campaign Finance Act.

Opinion No. 7099

January 9, 2002

Honorable Dale L. Shugars
State Senator
The Capitol
Lansing, MI 48909-7536

You have asked two questions both of which concern section 7b of the Michigan Gaming Control and Revenue Act (Gaming Act), 1996 Initiated Law, MCL 432.201 et seq.

The scope and purpose of the Gaming Act is described in its title, which states, in part, that it is:

An act to provide for the licensing, regulation, and control of casino gaming operations, manufacturers and distributors of gaming devices and gaming related equipment and supplies, and persons who participate in gaming; . . . to restrict certain political contributions; [and] to establish a code of ethics for certain persons involved in gaming; . . . [Emphasis added.]

In furtherance of this purpose, section 7b of the Gaming Act contains provisions that prohibit contributions by certain persons connected with casino operations or with licensed casino suppliers to political candidates and committees, including contributions to an "independent committee" as that term is defined by section 8 of the Michigan Campaign Finance Act, 1976 PA 388, MCL 169.201 et seq.¹

Your first question asks whether section 7b of the Gaming Act prohibits an officer or managerial employee of a casino, a casino enterprise, or of a licensed casino supplier from making a contribution to an independent committee operated by a professional organization to which the officer or employee belongs.

To illustrate your concern, you describe a series of hypothetical situations each involving a certified public accountant who wishes to make a contribution to the Michigan Association of Certified Public Accountants Political Action Committee (MACPAPAC). You advise that MACPAPAC is an independent committee established by the Michigan Association of Certified Public Accountants to identify and make contributions to candidates who support the advancement of the practice of certified public accounting and that it solicits and accepts contributions only from members of the Association. You ask if section 7b of the Gaming Act would operate to prohibit a certified public accountant from contributing to MACPAPAC if the accountant is, for example, (1) an officer of a non-accounting firm that is a licensed casino supplier; (2) employed by, but owns no equity in, a large accounting firm that is licensed as a casino supplier; or (3) the owner of an equity share in a large accounting firm that is licensed as a casino supplier. You also inquire whether it would make a difference if the employee in any of these circumstances had no role in directing or controlling the independent committee.

Subsections 7b(4) and (5) of the Gaming Act provide in pertinent part that:

(4) A licensee or person who has an interest in a licensee or casino enterprise, . . . or person who has an interest in a licensee or casino enterprise, shall not make a contribution to a candidate or a committee . . . .

* * *

(5) A licensee or person who has an interest in a licensee or casino enterprise, . . . or a person who has an interest in a licensee or casino enterprise, shall not make a contribution to a candidate or committee through a legal entity that is established, directed, or controlled by any of the persons described in this subsection . . . .

Violation of these provisions is a felony punishable by 10 years imprisonment, a $100,000 fine, and a permanent bar against receiving or maintaining a casino-related license. Section 18(1)(f) of the Gaming Act. These provisions expressly prohibit contributions to a political candidate or committee not only by a licensee but also by a "person holding an interest" in a licensee or in a casino enterprise.²  Section 7b(2) specifically defines what shall be considered to be such an interest:

(2) For purposes of this section, a person is considered to have an interest in a licensee or casino enterprise if any of the following circumstances exist:

(a) The person holds at least a 1% interest in the licensee or casino enterprise.

(b) The person is an officer or managerial employee of the licensee or casino enterprise as defined by rules promulgated by the board.

(c) The person is an officer of the person who holds at least a 1% interest in the licensee or casino enterprise.

(d) The person is an independent committee of the licensee or casino enterprise. [Emphasis added.]

 

Thus, the plain and unambiguous terms of section 7b(2)(b) make it clear that any person who is an officer or a managerial employee³ of a licensee, or of a casino enterprise, is a "person who has an interest in" that licensee or enterprise; such a person is subject to the prohibition in sections 7b(4) and (5) of the Gaming Act. Moreover, while ownership of a financial interest of 1% or more in the licensee or enterprise is sufficient, in and of itself, to give the person an "interest in" the casino licensee or enterprise under section 7b(2)(a), no such financial requirement is included in section 7b(2)(b). Nor does section 7b(2)(b) make any distinction based upon whether the person does or does not play a role in directing the affairs of the independent committee to which the contribution is being made. To the contrary, under the plain language of section 7b(2)(b), the only relevant factor is whether the person is in fact an officer or managerial employee of the licensee or casino enterprise; if so, that person is prohibited from making a contribution to an independent committee even if he or she does not hold a financial interest in the licensee or casino enterprise.

These explicit provisions of section 7b directly address each of the specific examples described in your inquiry:

1. An individual who is an officer in an accounting firm that is a licensed casino supplier is "an officer or managerial employee of" that licensed supplier and, therefore, clearly does "have an interest in" that licensee as defined by section 7b(2)(b); such an individual would be prohibited from contributing to MACPAPAC under sections 7b(4) and (5).

2. An individual who is employed by a large accounting firm that is licensed as a casino supplier, but who owns no equity interest in that firm, does not have an interest in that licensee within the meaning of section 7b, provided that the individual is neither an officer nor a managerial employee of the licensee; such an employee, therefore, would not be prohibited from making a contribution to MACPAPAC.

3. Finally, the owner of an equity interest in a large accounting firm that is licensed as a casino supplier does have an interest in that licensee if the equity interest is equal to or greater than a 1% interest; such a person, therefore, would be prohibited from contributing to MACPAPAC under sections 7b(4) and (5).

It is my opinion, therefore, in answer to your first question, that section 7b of the Michigan Gaming Control and Revenue Act prohibits an officer or managerial employee of a casino, a casino enterprise, or of a licensed casino supplier from making a contribution to an independent committee operated by a professional organization to which the officer or employee belongs.

Your second question asks whether an independent committee that receives a contribution prohibited under section 7b of the Michigan Gaming Control and Revenue Act is subject to a penalty for failure to return the contribution before the committee is notified by the Secretary of State in accordance with section 30 of the Michigan Campaign Finance Act.

The Campaign Finance Act regulates the financing of political campaigns. It was enacted "to ensure the integrity of Michigan�s political campaigns and offices, thereby protecting the interest of the public at large, individual citizens, and candidates for political office." Senate Legislative Analysis, SB 1570, December 17, 1976.

Section 30 of the Campaign Finance Act, which prohibits a committee from knowingly maintaining the receipt of a contribution prohibited under section 7b of the Gaming Act, provides that:

(1) A committee shall not knowingly maintain receipt of a contribution from a person prohibited from making a contribution during the prohibited period under section 7b of the Michigan gaming control and revenue act, the Initiated Law of 1996, MCL 432.207b.

The term "knowingly," as it is used in this section, is narrowly defined by section 30(2) as follows:

(2) For purposes this section, a committee is only considered to have knowingly maintained receipt of a contribution prohibited under subsection (1) and is subject to a penalty⁴ for that violation if both of the following circumstances exist:

(a) The secretary of state has, by registered mail, notified the committee that the committee has received a contribution in violation of this section and has specifically identified that contribution.

(b) The committee fails to return the contribution identified under subdivision (a) on or before the thirtieth business day after the date the committee receives the notification described in subdivision (a).

Under section 30 of the Campaign Finance Act, a committee that knowingly maintains receipt of a prohibited contribution must return it or be subject to a penalty. By adopting the very limited definition of the term "knowingly" as provided in sections 30(2)(a) and (b), the Legislature has chosen to require a committee to return a contribution prohibited under section 7b of the Gaming Act only after it receives specific written notification from the Secretary of State.

It is my opinion, therefore, in answer to your second question, that an independent committee that receives a contribution prohibited by section 7b of the Michigan Gaming Control and Revenue Act is not subject to a penalty for failure to return the contribution unless the committee first receives a notice from the Secretary of State in accordance with section 30 of the Michigan Campaign Finance Act.

JENNIFER M. GRANHOLM
Attorney General

¹The Gaming Act regulates, inter alia, casino suppliers and requires suppliers to be licensed according to standards set forth in Section 7a. Under the Gaming Act, a "licensee" is a person who holds either a casino license or a supplier's license. Section 7b(1)(c) and (d).

² Sections 7b(4) and (5) of the Gaming Act also purport to restrict political contributions by a "spouse, parent, child, or spouse of a child" of certain casino-related licensees or interest holders. OAG, 1997-1998, No 7002, pp 206, 210 (December 17, 1998), concluded that those portions of sections 7b(4) and (5) that purport to prohibit political contributions by a spouse, parent, child, or spouse of a child violate the free speech provisions of the First Amendment to the United States Constitution and are, therefore, unconstitutional.

³ The Administrative Rules promulgated by the Michigan Gaming Control Board [1998 MR 6, R 432.1101 et seq] do not define either "officer" or "managerial employee." However, the Gaming Act itself defines both terms. A "managerial employee" is defined at section 2(cc) as "a person who by virtue of the level of their remuneration or otherwise holds a management, supervisory, or policy making position with any licensee under this act, vendor, or the board." Section 7b(1)(e) defines the term "officer" as either of the following: (i) An individual listed as an officer of a corporation, limited liability company, or limited liability partnership. (ii) An individual who is a successor to an individual described in subparagraph (i).

⁴ Sections 15(9)-(11) of the Campaign Finance Act authorize the Secretary of State to investigate alleged violations of the act and, in appropriate cases, to issue an order requiring payment of a civil fine. Section 15(12) authorizes the Secretary of State to refer alleged violations of the act to the Attorney General for consideration of criminal prosecution.