Michigan faces a lot of issues before online gambling could become legal
Online Poker Report

Analysis From Michigan Legislative Agency Slams The Brakes On Online Gambling Talk

Michigan online gambling
Several recent articles have mischaracterized Michigan’s efforts to legalize and regulate online gambling as the state seeking to only authorize the activity at land-based casinos.

This is based on a misreading of a recent bill analysis submitted by Drew Krogulecki of the Michigan Senate Fiscal Agency.

The mischaracterization of what the bill is seeking to authorize is one thing. But the analysis report raises a number of other concerns (some real and some imagined). It doesn’t paint a rosy picture for online gambling’s chances in Michigan.

Is the Michigan online gambling bill constitutional?

The key issue is whether the bill (if passed) would represent an expansion of gambling. (The Michigan state constitution exempted several forms of gambling via a 2004 amendment.)

The state constitution currently requires any expansion of gambling in Michigan (unless exempted) to go before the voters. That would come in the form of a statewide referendum.

The report makes the case both for and against different elements of the bill. In the case of the constitutionality of SB 203, it states the bill “could be” unconstitutional:

“Senate Bill 203 could be considered unconstitutional from several different perspectives. Under Article 4, Section 41 of the Michigan Constitution, any law enacted after January 1, 2004, that authorizes any form of gambling must be approved by a majority of voters in a statewide election and a majority of electors voting in the township or city where the gambling would take place. Without requiring a statewide vote, the bill would violate this provision.”

What the Michigan bill is actually saying

The response to this argument within the report wasn’t that online gambling would only be legal at Michigan casinos because they’re exempt from the voter referendum requirement. Rather it’s stating that because Michigan casinos would be the licensees, the bill would be constitutional.

“Article 4, Section 41 of the Michigan Constitution specifically exempts the Detroit casinos (MotorCity, MGM Grand Detroit, and Greektown) and Indian tribal gaming from that section, and it is these casinos and the Indian tribes that would be potential licenses under the proposed Act.”

However, even if the law was deemed unconstitutional, this would simply mean it would have to go before the voters. It would have to pass a statewide referendum before it could be enacted. (That’s a tall order considering the numerous scaremongering campaigns we’ve seen regarding online gambling.)

If the bill passes, is unconstitutional, and Michiganders vote down the referendum, only then would the state limit online gambling to the confines of the state’s land-based casinos.

Other issues the report raises

In addition to the constitutionality of the bill, the report raises several other potential stumbling blocks. Most notably, the very real issue of tribal sovereignty arises. Also brought up: the “fairness” of the tax burdens the bill would impose. (They would be different for commercial casinos versus tribal casinos.)

Per the analysis report:

“Specifically, Senate Bill 203 would require Michigan Indian tribes to waive their sovereign immunity if they wished to participate in online gaming. While this would not be illegal, it could be unacceptable to the tribes. Furthermore, subjecting tribes to Michigan Gaming Control Board licensure and regulatory structures could be challenged as a violation of the Indian Gaming Regulatory Act.”

[…]

“The legislation would not be fair for the Detroit casinos, as they would have to pay a strict tax on any gaming revenue if they wished to participate in online gaming. Indian tribes, however, would have the ability to negotiate a compact with the State and be regulated differently. Theoretically, the Indian tribes that participated could negotiate and pay a lower tax on any online gaming revenue than the Detroit casinos paid.”‘

Some of the ‘bad’ evidence

Unfortunately, the report cites several outdated and/or refuted pieces of evidence to make the case against online gambling. That includes the often mischaracterized FBI memo from 2009, and the early, wholly absurd revenue projections in New Jersey. The report assumes analysts have learned nothing from their early miscalculations in New Jersey. They are of course producing more sober estimates.

It also touches on the usual bogeyman arguments opponents of online gambling use, including:

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Steve Ruddock
- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.