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Dispute over online Michigan Lottery sales could hurt MEDC

Aug 17, 2015

Leaders of the Gun Lake Tribe presented the state of Michigan with its first revenue sharing check back in 2011.
Credit Lindsey Smith / Michigan Radio

Making state lottery games available online has resulted in a disagreement between the state and a native tribe.

Twice a year the Gun Lake Tribe gives a big check to the state of Michigan. Last time, in December 2014, it was more than $7 million. The money comes from the tribe’s casino, just south of Grand Rapids.

But this summer, the tribe decided not to pay the state. It says the state expanded gambling opportunities within the tribe's “market area” when the Michigan Lottery started putting games online last year.

“Clearly, when the tribe and the state negotiated our gaming compact we discussed Internet lottery. Both parties agreed that if the state introduced Internet lottery sales or expanded other forms of electronic gaming to social clubs within the tribe’s market area that the tribe would not have to make state revenue sharing payments,” James Nye, a tribe spokesman said in a written statement.

The money went to Michigan’s Economic Development Corporation.

“It goes without saying that the scale and scope of our program must be reduced,” MEDC CEO Steve Arwood said in a written statement.

“The budget reduction will include an impact to staff. While staff details are currently being evaluated, it should be understood by everyone that MEDC could be losing some truly great, hard-working and talented people, who are committed to the citizens of Michigan,” Arwood wrote.

Officials with Gun Lake and MEDC declined an interview.

Jeff Holyfield, Director of Public Relations for the Michigan Lottery, said he doesn’t recall the issue coming up as Lottery Director Scott Bowen discussed making online ticket sales available with state lawmakers and Governor Rick Snyder’s office.

“From our perspective we’re offering the same games in the store. We’re just allowing them to buy online,” Holyfield said. He says the same games are available at more than 11,000 retailers statewide.

The state started beta testing Michigan Lottery games online in August 2014. A soft launch took place in the fall. Holyfield says there are about 160,000 registered users now. Players must live in Michigan.

“Sales are up for all of our games, it’s not an issue of folks turning to the online games options and just going there,” Holyfield said, “We see our instant game sales (at stores) are up nearly 10% for this year.”

Holyfield says they estimate online sales will add $480 million to the state’s School Aid Fund in the first eight years of operation.

“There are discussions about different interpretations of the compact,” Dave Murray, one of Snyder’s spokesmen wrote in an email.

“The governor is aware of the tribe’s decision to withhold economic incentive payments to the state,” Murray said. “The state has and will continue to uphold its obligations under the compact and remains committed to good faith discussions with the tribe to restore its obligations.”

Murray said Snyder has met recently with tribal leaders about the dispute. Both parties say they look forward to a resolution.