Michigan’s Online Gaming Future Awaits A Thoughtful Approach

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Online sports betting will provide dollar-hungry states with a ready-made revenue stream when the coronavirus pandemic dies down, according to Brandt Iden – but they must be careful not to kill the golden goose.

After four years of intense efforts, Michigan Rep. Iden, a Republican, successfully passed legislation legalizing sports betting and online casino gaming in December 2019, and he now hopes regulators will have operators approved by the end of this year.

He believes that successful implementation in the Great Lakes State will now encourage others to speed up the modernization of their own legislation, particularly when live sports return, not least because of the fiscal benefits the move would bring.

But Iden warns that the clamor for cash should not blind lawmakers to the very real need for a competitive tax rate and a sensible regulatory framework to prevent the move being strangled at birth.

He said: “People are itching for sports to come back as there is not a lot on the television. We have a glimmer of hope with the PGA this summer and football and soccer in the autumn, and there will be a lot of pent-up demand to bet on those sports.

“There will also be demand for revenues from states looking to get back on their feet as budgets will have taken a major hit. The temptation is to impose high taxes on industries like betting and gaming, but they need to be very cautious that they don’t kill the golden goose.

“Sports betting is about small margins and we need to support them with low entry fees and low taxation, otherwise operators will not participate. As a result, bettors will continue to bet on the black market — which does much more harm than good to them and the industry.”

ICE North America Digital Conference

Iden, who will be speaking at the forthcoming ICE North America Digital conference, highlights Virginia’s recent decision to enact sports betting into law from July 1 as an example of the potential pitfalls. Whilst welcoming the legislation, he believes the sizable licensing fees, level of taxation, and, in particular, background check costs for each principal, which could affect up to 20 employees at some companies, could prevent participation by all but the biggest concerns in the market.

He added: “Personally, I think 15% tax rate is too high, but fees of $50,000 for background checks are just prohibitive. You cannot kill these companies with fees and taxes as their offering will just not be competitive.

“I get why they did it, but states have to ask themselves does this make sense and is it practical? The same can be said for not allowing Virginians to bet on their university teams when those sports are up and running.

“They will just go over the border to West Virginia or continue using their illegal bookmaker. States need to be thoughtful about how they introduce legislation and then maintain it — otherwise they will continue to drive it underground.”

For more information on ICE North America Digital, which takes place between May 11-15 , and to register for free, click here.

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