Michigan Sports Betting, Online Casino Still Far From Finish Line After Latest Hearing

A short hearing in Lansing on Tuesday included an olive branch to the governor, but it's unclear if it will be enough.
Michigan Sports Betting Online Casino Hearing

Michigan still has a long way to go before potentially legalizing the regulation of sports betting and/or online casino gambling within its borders.

Legislation on the table to legalize the lucrative forms of gambling have languished so far in 2019. Michigan has for years tried to get out in front on the issue, in an effort to replicate the success of New Jersey. In September, New Jersey online gambling generated $67.3 mm in revenue.

In September, the three Detroit casinos — MGM Grand, Greektown, and MotorCity — generated $112.3 mm in gaming revenue. Legalized online gambling is a huge opportunity to boost revenues. The Detroit casino market was up just 0.3% through the first nine months of this year compared to 2018.

The sports betting bill — HB 4916 — and the online casino legislation — HB 4311 — were recently decoupled so that it is possible for Michigan to legalize one and not the other in 2019.

Hearing notes

The Michigan House Ways and Means Committee, chaired by Rep. Brandt Iden, the Republican sponsor of both pieces of legislation, met briefly Tuesday morning. The committee voted to move the proposals to the House floor for possible consideration. It’s unclear if/when they will be voted on by the 110 members.

Iden said that a new version of his sports betting bill will raise the proposed state tax rate to 8.75%, less than a percentage point more than previously pitched. When combined with a 3.25% tax on adjusted sports betting revenue to the city of Detroit, the bill would have a 12% effective rate.

Gov. Gretchen Whitmer wants a 15% state tax rate, in addition to the separate rate for Detroit.

Iden called raising the rate from what he previously proposed a significant concession. It’s unclear if the Whitmer Administration will budge. Iden has said that he would consider trying to override a veto, if he has the votes in the legislature. Late in 2018, former Gov. Rick Snyder vetoed a gambling expansion package that included online/mobile sports wagering. Iden has said that he would have considered an override there as well, but the veto came just days before Snyder left office.

As for online casino, Iden said that he was “very disappointed with the administration.” According to Iden, Whitmer and her team have not been open to meaningful negotiating.

Still, Iden said Tuesday morning that he was amending his proposal to include a tiered tax structure that could see online gaming revenue taxed at a rate as high as 26.25%.

Whitmer wants a tiered tax structure with a rate as high as 40%. She also wants online slot machine games excluded out of fear that they would cannibalize iLottery revenues.

Online slots remain included in Iden’s internet gambling bill.

Reading the tea leaves

Most other states looking at real-money online gambling have opted to go with sports betting first, with the potential for iCasino legalization later.

Despite years of debate, Michigan looks to be on that path, with the sports betting legislation not facing the same uphill battle as the iCasino bill. HB 4916 is the horse to bet on.

Iden mentioned sports betting discussions in Ohio, as well as legal online/mobile sports wagering in neighboring Indiana, as cause for concern for Michigan. It appears more likely that the Republican-controlled legislature would override a Whitmer veto on sports wagering than on iCasino.

In 2018, the final version of the online casino bill cleared the House by a 71-35 vote, an impressive bipartisan accomplishment — but there is likely still considerable opposition.

There was no stand-alone sports wagering bill last year. It is likely that sports wagering would have more bipartisan support, and thus potentially enough to make Whitmer blink.


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