Michigan Sports Betting Bill Draft Unveiled Ahead Of Feedback Deadline

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Policymakers in Michigan are working on the seventh draft of the upcoming sports betting legislation.

MI Bets obtained a copy of the latest version of the bill that stakeholders have been asked to submit feedback on by July 11. The legislation is from state Rep. Brandt Iden, one of the most respected gaming policymakers in the country. Iden, a Republican, has been seeking to pass gaming expansion legislation in the Wolverine State for the past several years. He was on the verge of doing so last year, before the former governor vetoed the iGaming legislation that reached his desk shortly before the New Year.

The sports betting legislation has not been introduced yet, but it could be filed in a matter of days after the July 11 feedback deadline, depending on stakeholder feedback.

00282’19 Draft 7

 

What’s inside?

The 22-page draft is the statutory framework for legal sports betting in Michigan, but the state’s Gaming Control Board would be tasked with fleshing out all the regulations on the activity. Think of the bill as legalizing the regulation of sports wagering by the state. The plan would be to capture tax dollars from money that is already being spent by Michiganders via underground bookies or offshore gambling websites that don’t offer consumer protection.

Iden has long pitched online gaming regulation as a consumer protection initiative.

The legislation would allow the Detroit casinos, as well as the more than 20 tribal casinos sprinkled around the state, to have brick-and-mortar sportsbooks. The casinos could also be approved to have online/mobile sports betting available statewide. The platforms would become inaccessible outside state borders.

The commercial casinos would be subjected to regulation by the Michigan Gaming Control Board. The Detroit casinos would pay $200k for an initial license, with a $100k renewal fee after that. A management services provider license would cost $50k annually, while a supplier license would be $5k each year.

As far as skins for online/mobile sportsbooks, the casinos could have just one apiece.

From the bill:

A holder of a sports betting license may operate or may contract with a management service provider to operate sports betting at casinos and not more than 1 individually branded digital sports betting platform approved by the division. An authorized participant may create a sports betting account on a sports betting platform without being present on the premises of the casino.

The last part of that provision would allow for sports bettors to sign up remotely for an online sports gambling account, a crucial component to competing with offshore platforms.

The legislation contains language for the use of “official league data.” Like Illinois and Tennessee, the Michigan bill calls for such data for the purposes of in-game wagering.

The tax rate is set at 8% in the bill, but it’s not going to remain that way. Iden told MI Bets that he’s willing to raise it to 10%, while the governor is calling for a 15% sports betting tax. It wouldn’t be surprising if they end up meeting in the middle. It would be on the slightly high end of what a sports betting tax ideally should be, but it’s still far lower than the 36% effective tax rate in Pennsylvania.

Internet gaming legislation

The sports betting bill, which doesn’t have a number assigned to it yet, could only become law if two other pieces of gambling legislation also pass the legislature and receive a signature from the governor. The sports betting bill is tie-barred to the Michigan Lawful Internet Gaming Act (HB 4311), as well as to the bill to regulate daily fantasy sports gambling (HB 4308).

Under the sports betting bill, a sports betting licensee must hold a license to conduct internet gaming in order to offer sports betting via the internet. In other words, a casino must obtain approval to conduct online casino gambling (such as blackjack or poker) in order offer online sports wagering. It’s worth noting that the tribes could conduct online gambling under HB 4311.

You can think of these bills as being effectively attached at the hip.

Right now, there is a tall hurdle to clear on the online casino front. Michigan Gov. Gretchen Whitmer, a Democrat, has, through the Department of Treasury, opposed the inclusion of online slots. Whitmer also wants a higher state tax rate on online casino revenue than the 8% that is currently in the bill. Whitmer has concerns about a reduction of revenue to the state’s School Aid Fund, thanks to her position that online casino would take a bite out of the state’s online lottery program.

Proponents of legalizing online gaming in Michigan are actively negotiating with the governor on the tax rate. It remains to be seen what will happen with regard to online slots. If 100% of the state tax revenue from online casino gambling goes toward education, it appears Whitmer could change her position on online slots, the most lucrative form of online gambling for a casino.

Iden told MI Bets he is willing to direct all state tax revenue from online casino gambling to the School Aid Fund. A new version of HB 4311 is forthcoming.

Brian Pempus

Brian served as a senior reporter and online content manager for Card Player Magazine for nearly a decade before joining USBets in October 2018. He is currently focused on legal and regulated sports betting and online gaming. He's an avid jiu-jitsu practitioner in his free time.

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