It finally happened.
The state of Michigan has legalized online casino gambling, including sports betting. It was a process that lasted the better part of this decade.
After the legislature delivered the gambling expansion measures to Gov. Gretchen Whitmer, a Democrat, on Dec. 13, she signed them on Friday. Her approval marks a compromise with the Republican-controlled legislature. Since taking office nearly a year ago, Whitmer has expressed concern that online gambling could hurt the state’s School Aid Fund, which is largely funded by the Michigan Lottery and its growing online offerings. Whitmer got some of what she wanted with the legislation.
The American Gaming Association, the casino industry’s top advocacy group in Washington, D.C., responded favorably to the new Michigan law.
With @GovWhitmer’s signature today, Michigan is the 21st U.S. jurisdiction to legalize sports betting. “These new markets offer more Americans a safe, legal way to wager on sports while positively impacting communities.” @BillMillerAGA’s full statement: https://t.co/EvbfDGX6tD pic.twitter.com/9XFhCSq705
— American Gaming Association (@AmericanGaming) December 20, 2019
The two central bills in the package are H 4916 and H 4311.
H 4916 will allow the 23 tribal casinos in Michigan and the three commercial casinos in Detroit to have both retail and online wagering. That’s a historic arrangement.
There’s an 8.4% state tax on adjusted sports betting receipts, as well as an additional 1.25% that the Detroit casinos will have to pay to the city. The tribes don’t have to pay that extra percentage.
Casinos are allowed to partner with just one internet gaming platform. In neighboring Indiana, casinos can partner with up to three “skins.”
Applying for and acquiring a license will cost $150k, with a $50k annual renewal fee.
A state fiscal note anticipated an annual sports betting market of about $240 mm.
Like sports betting, tribal and commercial casinos can offer real-money online table games, slots, and peer-to-peer poker games under H 4311.
For non-sports online gambling, casinos can have two partners, one for poker and the other for the house-banked verticals. Combined with sports, casinos technically can have three online gambling partners.
Earlier this year, Whitmer wanted online slots totally excluded from the legislation. In exchange for her backing off on that idea, she did get a significantly higher tax rate than what was in the online casino legislation vetoed in late 2018 by ex-Gov. Rick Snyder. That bill called for a 9.25% effective tax rate.
H 4311 has a varied tax rate, ranging from a 20% rate for online casino AGR less than $4 mm to a high point of 28% for AGR above $12 mm. Whitmer’s administration once called for a 40% rate.
The online casino gambling fees are the same as they are for sports betting.
One recent change to the legislation, which could be a major setback for Michigan online poker, is that the bill no longer stipulates that the Michigan Gaming Control Board will look at entering into liquidity sharing deals for online casino gaming. That doesn’t mean it can’t theoretically happen under state law, or that Michigan won’t change applicable law later. Currently, only Nevada, New Jersey, and Delaware share online poker liquidity under the control of just one operator.
Worth noting is that the 1961 Wire Act is still creating a cloud over interstate online casino gaming arrangements. We could be several years away from a final resolution to the Wire Act saga.
Michigan could have sports betting in some form by the spring, as at least one Detroit casino has already opened up a sportsbook space (sans betting).
The Michigan Gaming Control Board will be tasked with crafting regulations.
Online casino gambling, as well as online/mobile sports wagering, will likely come a little bit later, possibly in the second half of 2020. Neighboring Indiana was able to launch its state-sanctioned online/mobile sportsbooks only a handful of months after legalizing them.