Licensing, Taxation Of Online Poker And Casino Operators Would Be Low In Michigan Bill

A First Look At Michigan’s New Online Gambling Bill Shows It Is Friendly To Casinos

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New online gambling legislation emerged in Michigan on Wednesday. With the introduction of a series of bills, Michigan became the sixth state to introduce legislation that would legalize online gambling this year.

State Sen. Mike Kowall led last session’s online gambling legalization efforts. He is the primary sponsor of Michigan’s new bill, S 203, The Lawful Internet Gaming Act.

A look inside the Michigan online gambling bill

The new bill picks up pretty much where Michigan left off last year.

  • It calls for state regulators to craft rules and regulations governing licensing and the operation of online gambling sites within one year of the bill becoming law.
  • Only licensed Michigan casinos will be eligible for an online gambling license. Unlike last year’s bill, there doesn’t appear to be a cap on the number of licenses that can be issued.
  • All players must be at least 21 years of age and located inside Michigan’s borders.
  • It allows Michigan to enter into interstate compacts with other states and jurisdictions.
  • Aside from the cost of regulating the industry, the only specific appropriation of online gambling revenue is an annual, $5 million payment to the First Responder Presumed Coverage Fund.

One of the more interesting elements of the bill is a section that reads: “The types of internet games to be offered, which must include, but need not be limited to, poker.”

It would appear that all online gambling operators in Michigan will be required to offer online poker. Unlike some New Jersey operators, they cannot exclusively offer online casino games.

Industry-friendly licensing fees and tax rates

It appears online gambling licenses in Michigan will be broken into three tiers:

  • Operator’s will receive five-year  licenses at a cost of $200,000 for the first year and $100,000 thereafter.
  • Platform provider licenses are good for five years and come at a cost of $100,000 when the license is first issued. Licenses cost $50,000 each year thereafter.
  • Vendor licenses require a one-time up-front payment of $5,000 to the division, and $2,500 in subsequent years. Like operator licenses, vendor licenses are good for five years.

By comparison, in bills in other states:

  • New York is asking for $10 million up-front licensing fees to operate online poker sites.
  • Pennsylvania is asking for $8 million per online gambling license.
  • California would charge online poker operators $12.5 million.

Michigan is also imposing a relatively low tax rate on operators, as the bill calls for operators to pay just 10 percent of its gross gaming revenue to the state.

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Next stop: committee hearing and vote

Following its introduction, the bill was referred to the Senate Regulatory Reform Committee. According to the Poker Players Alliance, there will be a hearing and a vote on the bill next week.

In addition to Kowall, the bill is co-sponsored by five other state senators:

  • Rick Jones
  • Rebekah Warren
  • Marty Knollenberg
  • Curtis Hertel
  • Bert Johnson

All six of the sponsors are sitting members of the Regulatory Reform Committee. That all but guarantees that the bill move forward, considering the committee only has nine members.

- 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.
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