Michigan Paying In 2020 For Ex-Governor’s iGaming Veto In 2018 — But ‘Fast Tracking’ Possible

"Michigan is losing out on a tremendous amount of gaming revenue," Rep. Brandt Iden says, but help could be on the way.
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Nobody knows exactly what then-Michigan Gov. Rick Snyder was thinking when he vetoed the Lawful Internet Gaming Act on Dec. 28, 2018, three days before he was to leave office.

But one thing he surely wasn’t thinking about was how his decision would impact the state if a global pandemic happened to come along a year later.

The legislation was introduced by state Rep. Brandt Iden in September 2017 and moved along deliberately for 15 months before passing comfortably in both the Senate (33-5) and House (71-35). Online casino games, online poker, and online sports betting were all set to become legal in Michigan, until Snyder yanked the rug out.

To Iden’s credit, he got right back to work on the legislation, made tweaks to satisfy Snyder’s successor, Gov. Gretchen Whitmer, and on Dec. 13, 2019, Michigan passed H 4916 and H 4311.

So it seemed that Michigan gamblers had merely lost out on a year of opportunity to play and the state had simply lost out on one year of tax revenue. Former Gov. Snyder’s veto looked like little more than an inconvenient speed bump.

Fast-forward to the spring of 2020, and more extreme effects of the veto than anyone could have imagined are being felt. Due to the spread of COVID-19, casinos throughout the state are closed and the only path to gaming revenue for the past month and a half — and possibly for many months to come — is online.

Michigan could have had iPoker, iCasino, and online sports betting fully operational by now. Instead the state has none of the above.

A bad time to sacrifice tax revenue

“In the era of COVID and casino closures, Michigan is losing out on a tremendous amount of gaming revenue — revenue that funds everything from education to first responders in the city of Detroit, which has undoubtedly been one of the hardest hit in the nation by the pandemic,” Rep. Iden told MI Bets on Thursday evening. “Had former Gov. Snyder enacted my iGaming legislation, we certainly wouldn’t be seeing the same amount of tax collections as we do from retail operations, but it would have provided some dollars for our frontline heroes. Instead we’re collecting zero.”

Sports betting did get off the ground in Michigan before the pandemic started causing closures, but not by much. MGM Grand Detroit and Greektown Casino opened their sportsbooks on March 11 and took bets for five days before the properties were forced to close their doors. MotorCity Casino saw four days of action, opening on March 12.

The Michigan Gaming Control Board reported total sports betting revenue of $105,548 for the month, which resulted in $8,866 in tax revenue.

The whole sports betting industry has taken a massive hit since mid-March, due to all major sports being canceled. Still, states with online sports wagering have been able to offer their citizens minor international sports from soccer to table tennis and more mainstream events like the NFL draft. Michigan, because of the one-year delay to launch, has none of those options.

In March, New Jersey’s online casinos generated $64.8 million in revenue, its online poker sites raked $3.6 million, and total sports betting revenue was $13.2 million, with just shy of 90% of that coming from online/mobile betting.

At Michigan’s tax rates, that would translate to a little over $7 million in tax revenue. Granted, it’s not an apples-to-apples comparison; Michigan is a larger, more populous state, but the online industries would be far less mature in the Wolverine State than they are now in New Jersey. Still, it gives an approximate sense of how much money Snyder’s veto cost the state just last month.

Hope for a quick turnaround?

Notably, the original legislation that Snyder vetoed required a 15-month window before operators could launch online games. So it’s not as though they could have been operational for the entire past year. They would have just been getting rolling around the time the pandemic hit.

The presence of those online gambling options is sorely missed now, to degrees nobody could have envisioned until recently.

But the same highly contagious virus that is currently crushing the brick-and-mortar casino industry might spur an expedited timeline for the virtual side, Iden revealed to MI Bets.

“Thanks to swift action from our regulators, operators, and industry partners, we’re fast tracking the implementation of iGaming to get Michigan back in the gaming business safely and as quickly as possible for our consumers,” Iden said.

Iden recently described the timing of the sports shutdown as “a punch in the gut,” just as outgoing Gov. Snyder’s veto was in 2018.

But it seems likely that in the weeks ahead, we’ll hear more definitive positive news about the Michigan online gaming industry punching back.

Photo courtesy of Shutterstock.com


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