Online Casino Gambling Legalization For Michigan Up In The Air Under New Governor

Michigan will be a top state to watch as negotiations between the governor and online gambling proponents heat up.
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Michigan has looked at legalizing online gaming for about six years. It could cross the finish line in 2019.

Earlier this month, the administration of Michigan Gov. Gretchen Whitmer, a Democrat, indicated that it doesn’t think online slots should be permitted under an online gambling law. The argument is that they could cannibalize revenue generated by the state’s online lottery, which provides substantial funding for education. Whitmer partly ran on an education platform. In a similar way, the online lottery vs. online casino revenue battle is also afflicting the state of Pennsylvania.

Michigan state Rep. Brandt Iden, a Republican, is still optimistic something will get done this session. Last year, state lawmakers delivered a package of gambling bills, including the Michigan Lawful Internet Gaming Act, to former Gov. Rick Snyder, who vetoed it. It’s unclear if a bill will be delivered to Whitmer this year.

Iden told MI Bets last week at the All American Sports Betting Summit at New Jersey’s Monmouth Park racetrack (which has a sportsbook) that he’s still pushing the legislation.

“I’m currently holding up the bills in my committee while we’re trying to broker a deal with the governor’s office,” Iden said. “The issue continues to be the online lottery. They believe it will be cannibalized by what we’re going to do online with sports betting, and then with any other online casino games, thus impacting the School Aid Fund. I believe we’re going to have to increase the tax rate. In my bill, I currently have it at 8%. I’m going to have to bump it up to a higher number, I recognize that. I communicated that to the governor’s office. I’m looking for a deal so we can get this done by the start of football season.

“We’re trying, I’ve just got to get it going — I’ve got to get her to say yes,” Iden added.

Different circumstances

Last year, there wasn’t the same urge in Lansing for passing legislation so sports betting could kick off as soon as possible. In May of last year, the U.S. Supreme Court struck down the federal prohibition on sports wagering outside of Nevada. Michigan’s online gambling bill contains a provision for online/mobile sports wagering regulation, but a full-fledged sports wagering bill is needed, and expected.

MI Bets previously reported that the sports betting bill could have hit the table in May, but delays ended up pushing back the introduction. It’s unclear when it will be filed.

It’s a fluid situation in Michigan, as Iden is also expected to put out a new version of the online casino legislation. The gaming bills sit with the House Ways and Means Committee, which he chairs. The gaming package, which also includes the regulation of fantasy sports and the expansion of gaming for the horse racing industry, has been sitting with Iden’s committee since March.

“The way I’ve redrafted the [iGaming] bill, the substitute that’s forthcoming, it would take all the money that comes in from this and direct it to education,” he said. “So it can be apples to apples.”

Hurdles for sportsbooks

As for sportsbooks, Iden said he wants the tax rate at 10% or lower (it’s currently at 8% for both online/mobile and retail). Whitmer’s administration wants it at 15%.

The fate of Michigan’s online casino and sports betting (both in-person and online/mobile) efforts for the remainder of this year depend entirely on how the negotiations go and where various stakeholders fall on the gaming package and the forthcoming amendments.

In a place like Louisiana, which failed to legalize sports betting in 2019, the state’s casino industry appears to have played a role in helping defeat legislation that would have allowed DFS giants DraftKings and FanDuel, which are top sportsbooks in NJ, to get a head start on the market. Michigan has more than 20 tribal casinos, and they would be allowed to offer online gambling, including sports wagering, under the regulation of the Michigan Gaming Control Board, should Iden’s bill become law in its current form.

Behind-the-scenes lobbying on the gaming front is complex, with stakeholders jockeying for position to capture market share under new gambling opportunities. There have been talks of allowing the sports leagues to obtain an “official league data” mandate for in-game betting, a highly controversial provision in the eyes of the casino industry.

Another issue that complicates Michigan’s gambling expansion efforts is that the owners of the MotorCity Casino, one of three gambling dens in Detroit, also own the Tigers and the Red Wings.

John Brennan contributed to this report.


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