MI online gambling bill tries to appease tribes, commercial casinos

Michigan Online Gambling Springs Back To Life Following Changes

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One state is going from the back burner to the front for online gambling.

Michigan online casino legislation is up for consideration in 2017. A bill introduced in March by Senate Majority Floor Leader Mike Kowall was passed by the Senate Regulatory Reform Committee soon thereafter.

And then everything ground to a halt. Nary a whisper has been heard out of Michigan on the subject of online gambling.

That was until last week.

First reported by Gambling Compliance (paywall) a new version of Michigan’s online gambling bill, S 203, has been introduced.

The new version is the latest attempt to “thread the needle” between the state’s tribal and commercial gaming interests.

A look inside the new MI online gambling bill

Structurally, little has changed in the bill.

As noted when the bill was first introduced in March:

  • It calls for state regulators to craft rules and regulations on the licensure and 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.

The revisions to the bill deal with the dynamic between tribal and commercial casinos.

Who regulates the tribes?

When S 203 was first introduced, it tasked the Michigan Gaming Control Board with licensing and regulating commercial and tribal online casinos, should a tribe acquiesce to the arrangement.

That would essentially make tribal online operators commercial online gambling operators. The alternative for tribes wishing to regulate online gambling in-house required amending their existing compacts with the state.

Under the new version, tribes would offer online gambling as sovereign governments and self-regulate after amending their state compacts. The option to function as a commercial online gambling operator would be taken off the table.

The tribe would have to abide by the responsible gaming, age verification and other consumer protections governing state-regulated online gambling operators.

This was one of the chief complaints voiced in a letter dated March 8 sent to Senate Regulatory Reform Committee Chair Tory Rocca by the Nottawaseppi Huron Band of the Potawatomi Indians and the Saginaw Chippewa Indian Tribe of Michigan. Both tribes opposed the bill as written in March.

The letter reads in part:

“The provisions allowing tribes to conduct internet gaming through amendments to their gaming compacts also fail to acknowledge that Indian tribes already have the right to conduct on reservation internet gaming for any Class II or Class III game the tribe is currently authorized to operate under IGRA and the tribe’s Class III gaming compacts with the state.”

Not so fast: 12-month online gambling moratorium

Another related change to the language of S 203 would place a 12-month moratorium on the state’s commercial casinos when it comes to launching online gambling sites. It also requires the state to act on a request by a tribe within 90 days.

The 12-month delay coupled with the 90-day timeframe to amend compacts to add online gambling would mitigate commercial casinos’ potential first-mover advantages. This was another issue brought up in the March 8 letter.

“Fundamental flaws in the legislation, along with a multitude of internal inconsistencies within its provisions, threaten to erode tribal sovereignty and provide unfair advantage to competitor licensees,” the letter reads.

Does Michigan online gambling have a chance?

There is always a chance, but Gambling Compliance’s sources sounded pessimistic Kowall can “thread the needle” and craft legislation that is amenable to all parties.

And there are a lot of interested parties:

  • The Senate, where the bill has support;
  • The House, where the bill’s fate seems less certain;
  • Gov. Rick Snyder, who’s been quiet on the issue;
  • Commercial stakeholders; and
  • Tribal stakeholders.

As Dave Palermo noted earlier this year, just from a tribal standpoint, Michigan’s path to online gambling is fraught with pitfalls. Michigan’s second bite at the online gambling apple has run into the same roadblocks that derailed it last year.

Still, Kowall remains optimistic. But even he expects the online gambling talks to drag on through the summer and into the fall.

According to a May 19 article in Gongwer.com (paywall), Kowall is confident he has the votes to pass the bill in the Senate. But he wants to make sure the governor and Senate leadership are “comfortable with the language” before proceeding.

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Lack of support is somewhat surprising

Despite the pro-online MGM being one of the commercial gaming interests in Michigan, stakeholder support for the bill is nonexistent, at least publicly.

Neither the state’s commercial casinos nor tribal casinos have come out in favor of the bill. The only entity fully backing the bill has been Amaya, the parent company of PokerStars. It has been actively endorsing the bill in Michigan.

The state’s three commercial casinos — Greektown, MGM Grand  Detroit and MotorCity — are on the record as neutral to the original proposal. The state’s dozen gaming tribes have either been silent or on the record as neutral or opposed to the bill.

- 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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