SOCIAL MEDIA INTERNET GAMES

Senate Bill 202 as reported by House committee

Sponsor:  Sen. Jack Brandenburg

House Committee:  Regulatory Reform

Senate Committee:  Regulatory Reform

Complete to 4-26-17

SUMMARY:

The bill adds a new section to Chapter XLIV of the Michigan Penal Code, entitled "Gambling," to specify that the Chapter does not prohibit a social media Internet game from rewarding a player with either a free play or an extended period of playing time as a result of chance or uncertain event.

"Social media Internet game" is defined in the bill to mean a game offered over the Internet or on a telephone or other mobile device.  The term would not include fantasy sports.

MCL 750.310c, proposed

FISCAL IMPACT:

SB 202 would have no fiscal impact on the state, but could potentially have a fiscal impact on local units of government.  If the bill reduces misdemeanor convictions, the bill could result in a decrease in costs for local units.  Reduced misdemeanor charges would result in reduced costs related to county jails and/or local misdemeanor probation supervision.  The costs of local incarceration in county jails and local misdemeanor probation supervision vary by jurisdiction. The fiscal impact on local court systems would depend on how the provisions of the bill affected caseloads and related administrative costs.   There could also be a decrease in penal fine revenues which would decrease funding for local libraries, which are the constitutionally designated recipients of those revenues.

BRIEF DISCUSSION OF THE ISSUES:

Social network games, a type of online game played through social networks such as Facebook, are continuing to gain in popularity.  Many can even be played on smartphones.  According to a May 24, 2012, article in Forbes (MGM Resorts' Planned Social Gaming Website Offers New Growth), "approximately 41% of the U.S. Internet users access social networking sites to play games."  With such growing popularity, some businesses have seen a potential to use similar free online social media games to grow their brand.  In particular, some casinos have created social media Internet games played through their websites as a way to draw new customers to their casinos.  The games are generally free and offer additional plays rather than actual prizes, though additional plays often can be purchased for a few dollars.

However, there has been some concern that such added plays or the ability to buy additional plays constitutes gaming under a state Supreme Court case from the mid-1980s because it creates value.  Since the games are seen more as a marketing tool to promote a specific business, and not as a means of revenue, some feel the gaming laws should be amended to create an exemption for such social media Internet games.

No opposition was offered at committee.  However, should online gambling become legal in the U.S., and in particular, in Michigan, this type of game could become a signnificant revenue stream for casinos.  Already these games are being used to draw people to casinos who otherwise may not have visited one.    

POSITIONS:

A representative of MGM Detroit testified in support of the bill.  (3-29-17)

The Michigan Gaming Control Board indicated support for the bill.  (3-29-17)

Motor City Casino indicated support for the bill.  (3-29-17)

Greektown Casino indicated support for the bill.  (4-19-17)

                                                                                        Legislative Analyst:   Susan Stutzky

                                                                                                Fiscal Analyst:   Robin Risko

■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.