Michigan Legislature Sets Up Online Gambling For 2018, As House Committee Approves Bill

Bill resurfaces in Michigan

An amended version of H 4926, a bill introduced by Rep. Brandt Iden in September, was approved by the committee by a vote of 12-3 with one “pass” vote. Iden chairs the Regulatory Reform Committee.

Iden’s bill provided an alternative path forward for online gambling after legislation introduced by Sen. Mike Kowall stalled in the Senate.

Despite several amendments, including a realistic compromise for tribal gaming operators, Iden’s bill fell victim to the same forces that halted legislative progress in the Senate. Namely, questions arose about the constitutionality of the legislation and a lack of support from commercial and tribal stakeholders. Iden noted the committee held stakeholder meetings yesterday to work out some of their concerns.

Iden has remained optimistic about the legislation, and the newly amended bill seeks to solve both of these problems.

What’s new in the Michigan online gambling bill?

First reported by Gambling Compliance’s Chris Krafcik on Twitter, the bill has been amended in two critical ways.

1. Online gambling servers are now required to be housed in casinos.
2. The bill uses a new tax distribution scheme.

The requirement that servers need to be located inside the state’s casinos bolsters the state’s argument that the authorization of online gambling isn’t an expansion of gaming that requires a constitutional amendment. Rather it’s a new gaming product being offered by and at the state’s casinos.

The new tax scheme is likely an attempt to gain stakeholder support, particularly from the state’s three commercial casinos. Despite agreeing with online gambling in principle, they have been lukewarm on the legislation up to this point. During the hearing, the three commercial casinos (Greektown, MotorCity and MGM Detroit) now support the bill. Several tribal casinos still oppose the legislation.

The biggest change to the tax scheme was an amendment to reduce the tax rate from 15 percent to ten percent.

A pair of companion bills — H 4927 and H 4928 — also advanced.

Time is not on Michigan’s side

This is a very late-session push for online gambling. Tomorrow is the last scheduled day of the 2017 legislative session in Michigan. Further, the bill would still have to pass the House and the Senate.

Fortunately, Michigan is one of the states that allows bills to carry over from the first year of a biennium session to the second.

As such, H 4926 will begin 2018 where it left off in 2017.

During the hearing, Rep. Iden said, this is “the first step in the process,” and that he plans to work with the Senate next year to pass the bill.