On Thursday morning in Lansing, a Michigan House committee held a hearing on a package of gaming bills, including one that calls for online gambling, including casino games and sports wagering.
There was no vote held, but that could come by the end of the month.
The online casino legislation, which has been a multi-year process in the Wolverine State, includes a provision for online sports wagering, but a comprehensive sports betting bill is needed. Lawmakers met Thursday while the sports betting bill is still being drafted.
“Our office is currently working with the legal drafters on a sports betting bill,” Samantha Zandee, Chief Policy Advisor for Rep. Brandt Iden, told MiBets Thursday. Iden, a Republican, is the sponsor of the online gambling bill and also the chairman of the committee where it currently sits.
“It is still Representative Iden’s hope to introduce and move the bill as soon as it is ready, and to catch it up to the rest of the gaming package before the House Ways and Means Committee,” Zandee added. “We are waiting on an updated draft from the Legal Services Bureau for our review, potential further changes, and then introduction. At this stage, it is difficult to know LSB’s timing.”
For those following Michigan’s online gaming efforts over the past five years, the House Ways and Means Committee hearing, which lasted about 90 minutes, didn’t provide much new insight into the industry. The only significant takeaway is where Gov. Gretchen Whitmer, a Democrat, stands on the legislation. Her predecessor vetoed the legislation late last year on his way out the door.
If the online gaming legislation arrived at her desk in its current form, she would veto it. Her administration stated Thursday that it opposes the legislation in its current form. Iden has said that if the legislature had more time last session it would have considered an override of former Gov. Rick Snyder’s veto, but there is no indication that Michigan legislators would deliver the bill to Whitmer with the intention of overriding her veto.
There will be negotiations to get the tax rate to where Whitmer wants it. Her officials cited expected losses to the state’s School Aid Fund as a reason why the tax rate implications need to be addressed. Under the bill in its current form, online casino operators would pay an 8% state tax on revenue, with the Detroit casinos handing over an additional 1.25% to the city of Detroit. The state’s two dozen tribal casinos would be allowed to offer online gambling under the regulation of the Michigan Gaming Control Board, and they wouldn’t pay anything to Detroit.
Brick-and-mortar gambling in Detroit has an effective tax around of about 19%.
Whitmer’s Administration pointed out Thursday that New Jersey, which is the dominant iGaming state right now, has a higher rate for online than it does for brick-and-mortar gaming. It appears very possible that the Whitmer Administration will look to at least double the proposed 8% state iGaming tax rate.
Sports betting for next NFL season?
Iden, who is himself a sports bettor when he’s in a state where it’s legal, told MiBets in an interview late last month that he hopes that Michigan will have sports betting in some form during the upcoming NFL season. That would imply the legislature doesn’t wait until the very end 2019 to pass legislation. Iden hopes to get legislation to Whitmer this summer.
Assuming she likes the bill, she would probably sign the measure relatively quickly so that the Michigan Gaming Control Board could get going on kicking off sports betting. Like the timelines in other states, Michigan would likely see the opening of brick-and-mortar books at the Detroit casinos first, followed by online gambling platforms.
The Detroit casinos — MGM Grand Detroit, Greektown, and MotorCity — are eager to open their books, Iden told MiBets. Michigan has the potential to realize annual sports betting handle of about $7.8 billion, with about $550 mm in taxable revenue, according to a 2017 Oxford Economics study.