Michigan Senate Approves Online Gambling Legislation

Summary: Late last night, members of the Michigan Senate decided to approve legislation that will allow online gambling in the state.

Over the past few months, we have watched as state after state has moved from considering online casino gambling to sports betting. It seems that lawmakers want to take advantage of what sports betting can provide and lawmakers are more willing to allow this expansion of gaming rather than focus on other elements. In a surprising turn this week, lawmakers in Michigan decided to pass legislation that will allow online gaming to come to pass in the state, operated via the casinos in Detroit as well as tribal venues. The bill now moves on to the House for consideration.

Moving Forward

MichiganThe upper chamber approved online gambling legislation with several bipartisan votes during the final night available during the lame-duck session. Essentially, the decision was made at the very last minute. The measure was sent to the House for final approval. The Senate decided to add amendments to the measure to ensure that Detroit will still earn a minimum of $179m each year via gambling tax revenues, even if less players decide to visit the brick and mortar properties once online gambling is operational.

If the House approves the measure and the bill comes to pass into law, Michigan will become the fifth state to legalize online gambling. The state would join Delaware, New Jersey and Nevada, states that have been in operation since 2013 and Pennsylvania, a state that approved online gaming in 2017 and has worked to set up their industry this year. Gaming is expected by early next year in PA.

The plan would see online gaming revenues taxed at 8%. This is far less than the states 19% tax for casino gambling at land-based venues. Of the total amount, 55% will be dedicated to the state gaming fund, with 30% going to Detroit. Additional monies will be placed in funds to assist with certain programs in the state, including schools, horse racing, and roadwork.

When it comes to tribal gaming, the online operations will be allocated in a different way. The revenues will see 75% going to the state gaming fund and 25% going to the Michigan Strategic Fund. This fund helps with job creation and economic development in the state.

Additional Details

The proposal will not directly authorize online sports betting but sets the groundwork for this category. With the legislation, a special division would be created by the Michigan Gaming Control Board to regulate the industry. Casinos that offer the online gaming option will have to limit gaming to players who are 21 years of age or older. Only players in the state of Michigan will be able to take part, or individuals located in a state where online gaming is legal.

Casinos that want to take part will need to obtain a special online gaming license. The application fee will cost $100,000 with a $200,000 fee paid for initial licensing and a $100,000 renewal fee. For an online gaming platform provider license, operators will have to pay $100,000 and then $50,000 each year thereafter.

For tribal casinos, an amendment can be added to their compact agreement to be able to offer online gaming. A chairperson of a tribe can request the amendment in letter form to the state governor and then the changes would be negotiated.

It will be interesting to see how the House votes on the measure and if players will have access to online gaming in the state, possibly as soon as next year!