The uphill battle to legalize and regulate online gambling akin to New Jersey took a major step forward Wednesday in Lansing, though the path forward remains unclear.
The Michigan House of Representatives held a vote on legislation that would legalize online casino gambling and both retail and online/mobile sports wagering. The vote came about a year after the chamber passed a similar online casino bill that eventually was vetoed by former Gov. Rick Snyder, a Republican. There’s again a threat of a veto, but this time from Gov. Gretchen Whitmer, a Democrat.
In 2018, there wasn’t a stand-alone sports betting bill. The House in 2018 first passed that session’s version of the online casino bill by a 68-40 vote, with support later growing to 71-35 after it was amended in the Senate, according to Michigan Legislature’s website.
Michigan has been considering online casino-style gambling for more than five years.
It’s been known for months that Gov. Whitmer wants a higher tax rate on both sports betting and iCasino than what is in the proposals. The proposed rates were bumped up in amendments made to the bill this week in the House Ways and Means Committee. They aren’t expected to be enough to get Whitmer on board.
Michigan state Rep. Brandt Iden, the Republican sponsor of the legislation, has said he would look to override the veto if he has the votes. Iden has been a proponent of iGaming for years.
On Wednesday in the House, one lawmaker urged colleagues to continue negotiating on the taxes.
Main bill to legalize sports betting in Michigan passes House 63-45.
Dem Rep. Rebekah Warren predicts the gaming bills will be vetoed if sent to the governor in their current form.
— Craig Mauger (@CraigDMauger) October 30, 2019
The online casino bill has long appeared to be a tougher sell, because Whitmer’s administration said earlier this year that it opposes online slots. However, according to a report from the Associated Press, Whitmer is now willing to consider online slots if she can get the tax rate she wants. Whitmer has consistently expressed concern that online gambling, or more specifically online slots, would cannibalize revenue from the state lottery, which contributes more handsomely to the state’s School Aid Fund than the casino industry.
Whitmer wants a sports betting tax rate that is roughly on par with what the Detroit casinos pay on their retail gaming revenue (19%). Iden’s bill calls for sports betting under a 12% effective rate.
The data debate
While the tax rates are under the most scrutiny, the sports wagering bill includes a controversial provision for “official league data.” The U.S. casino industry vehemently opposes that concession to the leagues.
That kind of data mandate, under so-called “commercially reasonable terms,” represents a lobbying win by the sports leagues, at the expense of the sports betting industry as well as consumers.
Indiana, which shares a border with Michigan, legalized sports betting this year and in early October launched online/mobile betting. Indiana sports betting operators are required to pay a 9.5% tax on their adjusted revenue and they are not required to use any “official league data.”
According to experts, the data provision potentially could result in less competitive prices (odds) at Michigan-sanctioned online/mobile sportsbooks than their counterparts in Indiana.
It doesn’t appear the data mandate would bother MotorCity Casino, one of the three brick-and-mortar gambling dens in Detroit. The company that owns the casino also owns the Tigers and Red Wings.
MGM Resorts, owner of MGM Grand Detroit, has been feverishly inking deals with various leagues and teams since PASPA fell, so it’s unclear how the data mandate would impact its business. The Michigan Gaming Control Board would be required to craft and adopt regulations to oversee the new industry.
If Michigan legalizes sports betting under the bill in its current form, it would be the third state in the country with a data mandate (Tennessee and Illinois are the others). No state has launched sports betting — or even released regulations — laying out how the data mandate will be implemented.
The third Detroit casino is operated by Penn National Gaming.
Under the gambling bills, Michigan tribal casino operators sprinkled around the state could also enter the space. They would not be subjected to a tax to the city of Detroit.