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Michigan to Introduce Legal Online Gambling Soon?

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Even though it looked as though legal online gaming and sports betting weren’t going to be brought into effect in Michigan this year, things may be taking a positive turn for the state. Why? Because the Legislature has sent a package of bills to the state’s Governor, Gretchen Whitmer (D). These bills, which were sent to the governor's desk on Wednesday, Dec.  11 – the last day of the legislative session for 2019 – are expected to be signed into law, and once they are, they will allow any existing licensed casinos in Michigan to provide internet gambling options, including online poker sites, blackjack, and slots.

Michigan Legalized Online Gambling

[UPDATE: Dec. 23, 2019]

On Friday, Dec. 20, Governor Whitmer affixed her signature to the package of gaming bills that crossed her desk. This means that sports betting, internet gaming, and daily fantasy sports are now legal in Michigan.

Whitmer acknowledged that part of her earlier concern with the bills was the protection of the School Aid Fund. With her doubts now resolved, she declared that expanded gaming is “a real bipartisan win for our state.”

The arrival of the first MI online poker and casino sites still must wait until the necessary licenses are applied for and approved. Some lawmakers have expressed their hope that at least sports betting will go live in time for March Madness, but this is a very ambitious target given that the college basketball tournament is less than three months away.

Gaming Bills Pass with Overwhelming Margins

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After previously being approved by the House, it was early on Wednesday afternoon that the Senate elected to pass the gaming bills, and according to reports, an overwhelming majority of the legislators within chose to support them. The bills were then returned to the House, where the changes made by the Senate could be agreed upon. All but one of the bills were approved by the House with the remaining one supposedly to be voted on early next year. That final bill deals with a penalty provision, but it does not affect the legalization of online gambling in any way.

The existing Michigan casinos (both commercial and tribal) won’t only have the option of providing residents with online gaming services but sports betting opportunities too. This will include brick-and-mortar sportsbook options as well as online. Of course, this all depends upon if Whitmer actually does proceed with signing the bills into law. The expectations for the governor to sign the bills is high though, meaning that Michigan could soon host state-licensed, real money internet gaming for its residents.

One outcome that Michigan’s gaming community won’t be hoping for is a repeat of 2018. Following quite a flurry of activity toward the end of last year’s session, Michigan became the fifth state to pass a legal online poker bill. Yet, even though there were successful votes in both the House and the Senate at that time, former Governor Rick Snyder (R) surprisingly opted to veto the Lawful Internet Gaming Act on Dec. 28, just one week after the bill had been voted on successfully by the House and the Senate. This left Michigan without legal online gambling possibilities for another year.

Rick SnyderOutgoing Governor Rick Snyder Vetoed the Online Gaming Bills Presented to Him at the End of 2018

A Positive Stance After a Bleak Outlook

It did seem like State Representative Brandt Iden (R) wouldn’t get any forward movement on the Lawful Internet Gaming Act in 2019, and it looked like a repeat outcome of 2018 was likely. While Iden went on to create the separate Sports Betting Act, he had every intention of pushing both this and the iGaming bill through legislation.

Brandt IdenState Representative Brandt Iden Has Been a Supporter of Legal Michigan Online Gaming for Several Years

Even with this being the case, the Governor and Iden had radically different views on how online gambling should be structured. While Whitmer looked for a starting tax of 8% on online gaming revenue which would then increase through several stages up to 40%, depending upon revenue totals, Iden’s bill called for a fixed tax of 8%, regardless of revenue and a further 1.25% towards placating local casinos. Whitmer also had a demand that online slots would be prohibited from being legalized.

Despite this, there were some suggestions that Iden would proceed with presenting a bill to Whitmer regardless of whether or not she would support it. It was also stated that Iden had tried to create meetings with Whitmer and her team so as to be able to provide vital information on the gambling bills, but he hadn’t had much of a response from her. It's possible that partisan politics came into play as Iden and Governor Whitmer belong to opposing parties.

State Senator Curtis Hertel (D), on the other hand, seemed to have better luck in negotiating with the governor. He was the one who took to negotiating the bills with her once it became apparent that Iden wasn't making much progress. He has mentioned that he has hopes for online gaming to be active in time for March Madness.

Curtis HertelState Senator Curtis Hertel Took the Lead in Reaching a Compromise With Governor Whitmer

Gaming Bill Details

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It was on Oct. 30 that Bill 4311 (the legislation dealing with internet poker and casino) was voted on by the House, and in its original form, it passed with 62 votes in favor of it against 46 opposing while 2 members chose not to vote at all. When Dec. 11 came around, the Senate voted on the amended version with 35 votes in favor of the Bill against just 3 who were opposed to it. The final concurred bill was then passed by the House 96 to 12 and transmitted to the governor on Dec. 13.

When it comes to the final version of the bill, the tax rates stated are laid out in an increasing rate, depending upon how much in gross receipts the operator earns. Those taxes are paid on a monthly accounting period and exist as follows:

  • For adjusted gross receipts less than $4,000,000 per year, a tax of 20%
  • For adjusted gross receipts of $4,000,000 or more but less than $8,000,000 per year, a tax of 22%
  • For adjusted gross receipts of $8,000,000 or more but less than $10,000,000 per year, a tax of 24%
  • For adjusted gross receipts of $10,000,000 or more but less than $12,000,000 per year, a tax of 26%
  • For adjusted gross receipts of $12,000,000 or more per year, a tax of 28%

One final note to include about this is that if a city has also imposed a municipal services fee equal to 1.25% on a casino licensee, the city will charge a 1.25% fee on the adjusted gross receipts of an online casino gaming operator that holds a casino license under the Michigan Gaming Control and Revenue Act 1996. This really only applies to Detroit, which is where the state's three commercial casinos are located.

The tax received from all online operators will then be divided among the following:

  • 30% will go to the city in which the internet gaming operator’s casino is located, to be used for various public safety and city improvement schemes
  • 65% towards the state of Michigan fund, to be distributed for the board’s cost of regulating and enforcing internet gaming, $500,000 towards tackling problem gambling, $2,000,000 towards worker’s disability compensation, and all remaining money to the state’s School Aid Fund
  • 5% to the Michigan Agriculture Equine Industry Development Fund

Sports Betting Bill Sees Widespread Approval

The Sports Betting Bill (HB 4916) had even greater success with members of the Senate and House, receiving just 8 “nay” votes from representatives and 3 from senators. This type of wagering appeared to be more palatable and less controversial than casino and poker games as evidenced by the fact that the tax rate on sports betting is just 8.4% plus an additional 1.25% for casinos in Detroit.

Doubtless, the stampede of states that have legalized betting on sports in the wake of the 2018 Murphy Supreme Court decision provided an incentive for legislators to ensure that Michigan was not left behind. At the moment, 12 other states in the US provide legal and live sports betting to their residents. At the same time, another six of the country’s states have legalized sports betting but haven’t launched it yet. Operators in Michigan are impressed with the 8.4% tax rate on revenue with the general consensus being that they are able to work with any rate that exists below the 10% level.

SCOTUS in 2018In May 2018, the Supreme Court Ruled That the Federal Prohibition Against Sports Betting Was Unconstitutional

Yet, there is a part of the legislation that operators aren’t so enthused over. Legislative Analyst Jill Dorson mentioned that the fact that operators must buy sports data used for proposition bets from respective leagues, such as the PGA, NFL, NHL, and so on, isn’t something that they’re so happy with. While two other states in the country have included similar “official data” provisions in their legislation, it is as yet unclear what kinds of costs are associated with the requirement.

Licensing and Other Rules

To be able to operate legally within Michigan, internet gaming and sports betting companies will need to apply for the necessary licenses. An initial application for such needs to be accompanied by a fee of $50,000. Should an application be successful, then the operator must proceed with the payment of a license fee equating to $100,000. Each year of licensure thereafter, a further $50,000 is required. Online gambling licenses remain valid for five years, with re-application being necessary after that time period.

The fee structure for a sports betting license is identical to that for an online gaming license. Qualifying entities that wish to institute both forms of wagering will have to apply for each type of license separately though.

Internet gaming licensees will be allowed to operate up to two brands: one for multiplayer card games and another for casino table and slot machine fare. Alternately, operators can offer only one of these types of gambling if they so choose, or they can combine both poker and casino into one single brand name. Sports betting is limited to a single internet platform per license holder.

Revenue Projections

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With the introduction of legal online sports betting and gaming, it is estimated that between $15 million and $40 million will be raised in funds. Thanks to the sum of money going toward the state, including the School Aid Fund, Governor Whitmer will no doubt be satisfied as this fund is something that she is keen to protect.

It is because of this fact – and the fact that Whitmer’s own requirements for higher tax rates on online gaming operators are being satisfied – that many people now believe the bills will be signed into law. The Governor has been through various negotiations with the supporters of the bills, and they have been tailored to suit her requirements as to how she believes the state’s gambling sector should be run. Now she just needs to follow through with signing the package of bills that has been left on her desk.

Brandt Iden Sees the End in Sight

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“It’s been a long journey to move sports betting and casino-style gaming into a regulated, safe, and modern environment,” said Iden, who has pretty much been the main driving force behind not only the internet gaming bill but the entire package that was forwarded on to Whitmer. He continued on to say that the end is in sight though, and he put forth his opinion on it being quite the opportunity for Michigan to take advantage of and excel.

Various factors will now determine how long it will take The Great Lakes State to provide online gaming. Of course, the bills need to make their way past the Governor initially, but then rules will need to be produced as an accompaniment to the legislation while license applications will need to be made available and then accepted. Furthermore, licensed operators will have to introduce the required technology to support online gaming.

Alongside the bills for online gaming and sports betting to be signed into law in Michigan, the package handed over to Governor Gretchen Whitmer incorporates bills for the licensing of online fantasy game operators. Not only that, but there’s a bill that allows third-party facilitators to handle online bets on horse racing events.

Gretchen WhitmerThe Last Step Before Online Gaming Legalization in Michigan Is the Signature of Governor Gretchen Whitmer

Current Online Poker Options for Michigan

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While poker players within Michigan wait to see what route Governor Whitmer takes with regard to the various bills, it’s true to say that there have been online poker options available to the state for some time now. A selection of poker rooms accept players from Michigan already, and this is possible due to them being located offshore.

It might be wise to set yourself up with accounts at these rooms sooner rather than later. Whenever legalized poker appears in a given jurisdiction, there are usually a number of operators that cease accepting new custom from that part of the world but are willing to grandfather in old users. By acting now, you can avail yourself of this opportunity, which might not exist for Michiganders a few months or years hence.

If you’d like to discover one of these online poker rooms yourself, then we suggest that you inform yourself via our guide to poker sites in Michigan. We have recommended a few high-quality, legal poker rooms in this guide. For similar information that pertains to the United States as a whole, rather than just Michigan, check out our online poker educational page for Americans.