Online Gambling Hearing In Michigan Proves To Be Mostly An Informational Excercise
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Michigan Hearing Raises The Question: Is Action On Online Gambling Coming This Year Or Next?

online gambling Michigan hearing recap
On Wednesday, the Michigan Senate Regulatory Reform Committee held an informational hearing to discuss State Senator Mike Kowall’s online gambling expansion bill, SB 889.

Because Michigan is a newcomer to online gambling (at least publicly), and because there were scant details regarding the hearing’s agenda, there was an air of anticipation and ambiguity leading up to the hearing.

Going into the hearing, the question on everyone’s mind was: How far along is Michigan in the process?

After the 90-minute hearing this question remained unanswered, but a number of other blanks were filled in.

Under the hood of SB 889

Before delving into what was said during yesterday’s hearing, here is some background information regarding SB 889.

What SB 889 does

  • Authorizes online poker and online casino games.
  • Restricts access to players 21 and older.
  • Doesn’t prohibit out of state play, so long as there isn’t a conflict with local or federal law.

Licensing and taxation

  • $5 million licensing fee is an advance payment against future taxes owed.
  • Ten percent tax on gross gaming revenue.
  • Limits online gambling licenses to eight.
  • Michigan-based commercial and tribal casinos are eligible to be licensed.
  • Tribal casinos would have to partially wave sovereignty to receive an online gambling license.

Bill sponsorship

  • Mike Kowall

Cosponsors

  • Curtis Hertel Jr.
  • Rebekah Warren
  • Bert Johnson
  • Marty Knollenberg

All five sponsors are on the Senate Regulatory Reform Committee.

The hearing

Which lawmakers were present

Six of the nine Regulatory Reform Committee members were in attendance.

  • Chairman Tory Rocca
  • Vice Chairman Rick Jones
  • Mike Kowall (sponsor SB 889)
  • Rebekah Warren (cosponsor of SB 889)
  • Peter MacGregor
  • Joe Hune

For most of the hearing they sat stoically, and only a handful of questions were asked – most directed to the final witness of the day, Michael Pollock of Spectrum Gaming Group.

Of note, the three missing committee members are all sponsors of the legislation.

Who testified

  • John Pappas, executive director, Poker Players Alliance
  • Jeanne David, responsible gaming manager, Amaya
  • Steven Winter, director of operations, Amaya
  • Matthew Robins, director of compliance, Amaya
  • David Murley, deputy director, Michigan Gaming Control Board
  • Michael Pollock, managing director, Spectrum Gaming Group

Written statements from three of the state’s casinos were also entered into the record:

  • Tyrone Sanders, MGM Grand Detroit – neutral
  • Jack Schick, Greektown Casino and Hotel – neutral
  • Brett Marr, Muchmore Harrington, Motor City Casino – neutral

David Murley also stated that the governor’s official position was neutral.

Positive takeaway #1: SB 889 was three years in the making

Thanks to an off the cuff remark by MGCB deputy director David Murley, we learned that Senator Mike Kowall has been working on online gaming behind the scenes for three years. Based on this, it appears Michigan is further along than most people suspected.

As an aside, I know of a couple other states in which similar behind-the-scenes discussions date back several years.

Unfortunately, it feels like everyone is waiting for someone else to act first.

It also became readily apparent during the hearing that it is Amaya pushing for the bill, and not, as many suspected, MGM. Considering the company’s presence at the hearing, it’s safe to say that Amaya has been quite active behind the scenes in Michigan.

Positive takeaway #2: No vocal opposition

The hearing was basically informational.

In fact, it seemed like the witnesses were handpicked by the bill’s sponsor and were there to address concerns that had been voiced by other lawmakers.

The witnesses did an excellent job of demonstrating the emphasis legitimate online gaming sites place on security, responsible gaming, and financial matters. Matthew Robins compared the AML safeguards in place at PokerStars to banks at one point, and had the PowerPoint slides to prove it.

The PowerPoint demonstrations that were used yesterday may have been boring, but they’re also extremely important. They should serve to dispel any baseless concerns lawmakers may have been pitched by anti-online gambling types.

Neutral takeaway #1: Everyone was relatively… neutral

The gossip heading into yesterday’s hearing indicated there was little resistance to the state legalizing online gaming (Michigan already sells lottery tickets online). Based on the witnesses called and the handful of questions asked, this appears to be the case.

I wouldn’t exactly say the committee was gung-ho on the idea of legalizing online gambling, nor was it making a concerted effort to move the bill forward, but there wasn’t a strong voice of opposition present, either.

My initial reaction to yesterday’s hearing is this: It was meant to set the table for the state to take the next step in 2017.

Bottom line: This was a small, but important first move for Michigan.

Negative takeaway #1: Tribal sovereignty

SB 889 requires tribes involved in online gambling to give up some of their tribal sovereignty – essentially forcing them to operate an online gambling site as a commercial company rather than as a federally-recognized tribe.

The issue of tribal sovereignty could be a deal breaker, and will likely need to be thoroughly debated.

However, this partial revocation of tribal sovereignty is not without precedent in Michigan.

During the hearing it was noted that the Sault Ste. Marie Tribe of Chippewa Indians gave up partial tribal sovereignty to open Greektown Casino in Detroit. The tribe later filed for Chapter 11 bankruptcy protection and the casino has changed hands a couple of times since.

Negative takeaway #2: Limiting licensees

Limiting the eligible number of licensees to eight could also prove problematic.

As Michael Pollock of Spectrum Gaming Group stated, with two dozen tribal casinos, and three commercial casinos, Michigan would be the first state (or locale to his knowledge) that had fewer licenses than eligible licensees.

The good news is Senator Mike Kowall said this number is more or less arbitrary and could be revisited.

Several questions remain unanswered

Are the tribes for it, against it, or neutral? We heard from the three commercial casinos via letters, but what we didn’t hear was where the tribal casinos stand on the matter.

Why are the state’s three commercial casinos neutral towards the bill? This is a particularly vexing position for MGM to take, as the casino corporation has been one of the leading advocates for online gambling expansion across the country.

And finally, with only a handful of questions asked – and most being neutrally worded – where do the legislators stand?

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Steve Ruddock
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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.