Michigan Has New Year’s Eve Deadline To Legalize Online Casino Gaming

Michigan is poised this week to become just the fifth state in the country to legalize state-sanctioned online casino platforms.
Michigan legislature

The clock is ticking for Michigan’s lame-duck governor to sign the state’s recently approved real-money online casino and poker legislation, H 4926.

Gov. Rick Snyder, who is leaving office at the start of 2019, won’t be able to sign the measure into law after Dec. 31. If he fails to sign, the bill would die and not become law. The stakes were high prior to the Michigan Senate’s last-minute passage last week as the session came to a close. The bill can’t carry over into 2019, which means that, if the governor rejects it, the legislation would need to restart in a legislative committee and travel the long, windy political road in Lansing all over again.

There is no indication that Snyder is contemplating either a veto or letting the measure expire. Both he and Michigan Rep. Brandt Iden, who sponsored the legislation, are Republicans. For what it’s worth, Iden’s Twitter photo is of himself and Snyder.

‘Lame duck for the ages’

The passage of Michigan’s online poker legislation came during one of the “most prolific” lame-duck sessions in state history, as Bridge Magazine put itThe Internet Gaming Act was one of more than 300 pieces of legislation that the Senate voted on in a roughly two-week time frame.

Michigan’s political environment was contentious during the lame-duck session, as Republican control of the state’s branches of government was coming to a close after an eight-year run. Michigan considered online gaming for several years before the legislation was finally successful, but it wasn’t partisan politics that held it back.

Fortunately for online gaming, it’s a far less controversial issue than it has been in the past, as more states are considering some form of it than ever before. Michigan was faced with the prospect of missing out on the lucrative opportunity to modernize its casino industry, which consists of three Detroit commercial casinos and two dozen tribal properties sprinkled around the state.

Sharing poker players

According to what Iden’s plans involve, Michigan wouldn’t wait as long as the state of New Jersey to share online poker players with other online poker states. New Jersey kicked off online gambling in late 2013, and it took the Garden State over four years to share liquidity with Nevada and Delaware. Ideally, Michigan would link up for online poker as early as 2020, according to Iden.

The legislation explicitly allows for the interstate online poker compacts.

Pennsylvania, which legalized online poker in late 2017, is still in the midst of the regulatory process ahead of a launch. The ideal scenario is for all five states to eventually share their players.

Here’s a look at the respective adult populations (2021 projections):

  • Pennsylvania: 9.9 million
  • Michigan: 7.6 million
  • New Jersey: 6.9 million
  • Nevada: 2.3 million
  • Delaware: 770,000

Tribal involvement

Arguably the most historic component of Michigan’s online gambling bill is how it created a consensus between the state’s tribal and commercial casino industries. The other iGaming states didn’t have to tackle that problem. For that reason, Michigan could provide a roadmap for other states with similar concerns among diverse stakeholders. Iden told MiBets that he hopes Michigan’s legislation can serve as a “model” for other gaming-friendly states.

The legislation was crafted in order to ensure that “neither side felt slighted,” Iden said. Reaching that point in the process was necessary for the legislation’s last-minute passage. Without the opportunity for the tribes to engage in statewide internet gaming, the tribes would have more than likely sought to halt revenue sharing payments to the state.

Though tribal gaming is regulated by the federal government, Michigan’s tribal gaming groups would be subjected to same licensing process for online gaming platforms. The idea was to make it so neither side had a structural advantage in the nascent industry. It is an historic moment for the Michigan tribal gaming industry to fall under the partial oversight of the Michigan Gaming Control Board, as opposed to renegotiating their respective compacts to allow for their internet betting operations.

Two related online gaming bills (H 5881 and H 6420), which are significantly narrower in scope, would establish a Division of Internet Gaming under the MGCB, mandate DFS regulation, along with establishing penalties for violating the new laws. Those measures also await Snyder’s signature.

Sports betting now a near certainty

From H 4926: “The division may permit internet gaming operators licensed by the division to accept internet wagers under this act on any amateur or professional sporting event or contest.”

It was known several months ago that the Lawful Internet Gaming Act, if successful, would serve as a placeholder of sorts for comprehensive sports betting legislation in 2019. Sports betting needed to fall under the umbrella of online gaming, thanks in part to the fact that online/mobile sports wagering is the prefered product for sports bettors (just look at New Jersey for proof).

Iden told MiBets that the passage of the online casino legislation came with the assurance to stakeholders that the next step would be statutory framework for sports betting. A confident Iden said that a draft of a Michigan sports betting bill could be ready in February. The legislature reconvenes on Jan. 9, so the state appears ready to move quickly.

The bipartisan support of the online casino legislation, coupled with the governor-elect’s support for sports betting, has Iden optimistic that sports betting will be fully legalized in 2019. Neighboring Indiana and Ohio will also seriously consider sports wagering in 2019, providing even further momentum for Michigan. With that said, Iden told MiBets that he isn’t in a race with Indiana or Ohio. Other lawmakers may feel otherwise, motivating quick action on the issue. Eight states nationwide currently have sports betting industries.

The legislation did set the tax rate for a future online sports betting market. It will be the same for online casino (8% state tax plus 1.25% for the city of Detroit).

The taxes are friendly for the industry.

Other important provisions from the bill

The legislation stipulates that online gambling sites can’t launch in the Wolverine State until 15 months after the legislation becomes law. In other words, the best-case scenario is that Michigan online gambling wouldn’t be live until early Q2 of 2020.

According to Iden, the purpose of that provision is to try to put the 24 tribal casinos and the Detroit casinos on equal footing.

While the commercial casinos would pay 9.25% on gross online gaming revenue, the tribal casinos would pay just 8% to Michigan (they wouldn’t owe the Detroit tax).

Both tribal and commercial casinos would have to pay a $100,000 application fee for online betting, along with a $200,000 fee for licensure. It would cost the businesses $100,000 annually to renew the permits. Those are also friendly for operators.


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