Michigan’s Newest Online Gambling Bill Surfaces In House: A First Look

As first reported by the Poker Players Alliance on Monday, Michigan state Rep. Brandt Iden submitted a new online gambling bill, H 4926, on Tuesday.

According to the PPA, the bill will be discussed during a hearing in front of the House Regulatory Reform Committee, which Iden chairs, on Wednesday morning.

HEARING: PPA will testify at a House hearing on new #iGaming bill in Michigan this Wednesday. Stay tuned for more information.

— Poker Alliance (@ppapoker) September 11, 2017

Will new language placate tribes in Michigan?

Iden’s bill is similar to the legislation introduced by state Sen. Mike Kowall earlier this year, but it does diverge in a few respects. Most notably, Iden’s bill makes it clear that tribal gaming operators will have to renegotiate their compacts with the state in order to offer online gaming.

Under Kowall’s proposal, only licensed Michigan casinos and federally recognized Indian tribes that “waived its sovereign immunity with respects to conduct internet gambling,” would be eligible for an online gambling license.

Iden’s bill doesn’t require tribes to waive sovereign immunity, rather it states:

“A federally recognized Michigan Indian tribe may conduct internet gambling if authorized by a compact the tribe has entered into with this state under the Indian gaming regulatory act…”

This tribal vs. commercial aspect is seen as the key sticking point in Michigan. It’s unclear if Iden’s bill goes far enough to actually solve this problem. This is something to keep an eye on during tomorrow’s hearing.

Online gambling tax rate and licensing fees

As was the case with Senator Kowall’s S 203, H 4926 imposes the following fees on licensees:

• After posting an upfront application fee of $100,000, licensed operators will receive five-year licenses at a cost of $200,000 for the first year and $100,000 thereafter.
• Platform provider licenses are also good for five years. They come at a cost of $100,000 when the license is first issued. Licenses cost $50,000 each year thereafter. There is also a $50,000 upfront application fee.
• 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.

The tax rate does differ between the two bills. Kowall’s bill called for a 10 percent tax rate, whereas Iden’s bill bumps the tax rate up to 15 percent.

However, there is a provision in the bill that says the rate can be lowered if the state reaches a compact or amends an existing compact with a tribe.

“If after the effective date of this act, a person executes and enters into a compact, amendment to a compact, or other agreement negotiated with this state, under which a person is able to lawfully conduct internet gaming in this state for a period of time subject to payment of a revenue share or other payment to this state that is lower than the tax rate imposed under subsection (1), the tax rate under subsection (1) is automatically reduced to a rate equivalent, as determined by the board, to the rate paid as a revenue share or other payment under the compact, amendment to a compact, or other agreement negotiated with this state during that period of time.”

What else is the same for Michigan iGaming

The basics of both bills are generally the same.

Both pieces of legislation seek to:

• Give state regulators one year to come up with specific rules and regulations governing licensing and the operation of online gambling sites. This includes self-exclusion and deposit and wagering options.
• Require players to be at least 21 years of age and located inside Michigan’s borders.
• Allow Michigan to enter into interstate compacts with other states and jurisdictions where online gambling is legal.
• Oddly require all online gaming operators to offer online poker.