A Massachusetts gaming company promoting online “charitable promotional games” was deemed illegal in Michigan. This came after an investigation into the gaming website led to action by the Attorney General.
Working with the Michigan Gaming Control Board, Michigan AG Dana Nessel issued a cease-and-desist to Golden Hearts Games. Additionally, Nessel threatened the company with a lawsuit if they continued to operate in the state without a license.
Michigan AG investigated for two years
Nessel alleged that the company violated the Lawful Internet Gaming Act by offering internet gaming without a license. The Department of Attorney General in Michigan actually issued the cease-and-desist last year. Nessel issued it after the MGCB began investigating Golden Hearts in August 2021.
However, Golden Hearts continued to operate in the state despite the order. Last month, the Department sent notice of its intent to file legal action against the company. Then, Golden Hearts agreed to halt its activity.
Golden Hearts signed an Assurance of Discontinuance, which states it will no longer operate its gaming site in Michigan. The company filed the Assurance of Discontinuance with the Ingham County Circuit Court on Sept. 1.
The state also alleged that the gaming company deceived consumers into thinking the gaming site was legit and legal, which would be a violation of the Michigan Consumer Protection Act.
An update to the site’s Terms and Conditions added this clause: “Residents of Michigan or individuals physically located in the state of Michigan are prohibited from creating an account and playing on Golden Hearts Games. Failure to comply with this condition will result in the closing of your account and the loss of all winnings acquired through your use of the Services…”
What is Golden Hearts Games?
Golden Hearts is categorized as a “social casino,” which operates under a model legal in most states. Technically, users aren’t depositing and playing with real money. Instead, they can purchase digital currency native to the platform. However, the currency has no cash value. Players can redeem it for cash prizes.
Several other sites offer gaming under the same model. They are also called “sweeps casinos” or “sweepstakes casinos.” The legality of the sites is sometimes called into question. But so far, they enjoy a legal status in most states.
Massachusetts online casinos aren’t legal yet. But this model has allowed other companies to operate in many states with similar legal landscapes. On the other hand, Michigan legalized online casino gaming in 2019.
The company operates its gaming site in most U.S. states from its Massachusetts headquarters.
The Golden Hearts website says it is a “free-to-play social casino.” The site allows users to donate to charities of their choice through the company’s Golden Hearts Charitable Foundation, a U.S. 501(c)(3) public charity.
MA and MI join other states calling for crackdown on illegal gambling sites
Consumer protection isn’t the only reason for regulators to take aim at illegal gambling. In addition to responsible gambling concerns, regulators argue that unlicensed operators also cost the state money in the form of potential tax revenue lost.
“Unlicensed gaming robs our schools and our government of essential funding and leaves consumers unprotected,” Nessel said in the press release.
In May, regulators from Massachusetts, Michigan, Colorado, Louisiana, Mississippi, Nevada, New Jersey, and Illinois came together to ask the U.S. Justice Department to do more to combat the proliferation of illegal gambling operations.
In a letter to U.S. Attorney General Merrick Garland, the states said that offshore and other operators “often take advantage of the legalized landscape in jurisdictions such as Massachusetts to attract customers to their products.”
There is research to back up their claims. The American Gaming Association published a report last year that showed Americans spend more than $510 billion a year gaming with illegal and unregulated operators.
The report underlines the potential loss to legal gambling states. “The scale of the tax loss is enormous: more than half of all potential state gaming tax dollars are lost to unregulated operators,” the report stated.
On top of the tax revenue issue, illegal operators pose other problems. Being unregulated, the sites can lack age verification, guarantees that the games are fair and will pay out, and controls that prevent illegal activity like money laundering.