When Rep. Brandt Iden took it upon himself to lead the push an online gambling bill in Michigan two years ago, the task seemed monumental. As a tribal gaming state with commercial interests, creating legislation that satisfies all parties is unusual — if not close to impossible.
“This is the first time this has gotten done in a state with both commercial and tribal interests,” Iden said. “And that’s what I’m most proud of.”
Tribes are involved with some online casinos in New Jersey and Pennsylvania, too, but those landscapes don’t compare well to Michigan’s. Gaming tribes in those markets work within the commercial structure.
In Michigan, tribes have their individual compacts with the state. The patchwork landscape most-closely resembles jurisdictions like California, where efforts to legalize online poker have stalled for more than a decade.
To be fair, California is more complicated when it comes to competing self-interests of tribes, card rooms and the horse racing industry. But Michigan’s example shows that these parties can come to the table and make concessions when mutually tempted by profits from online gambling.
“Whenever there are this many stakeholders involved in legislation it’s an arduous task, and we showed we were able to get it done,” Iden said. “I think this is model legislation for the nation.”
Iden authored H 4926, the bill that was amended by the Senate and passed by both chambers on Dec. 20, the final night of Michigan’s legislative session. It’s now awaiting a signature from the governor to make it law.
Iden noted that he worked closely with Sen. Mike Kowall, tribes, commercial casinos and city of Detroit throughout Thursday to make sure everyone was on the same page. The tribal and commercial gaming interests had come to an agreement the previous week.
Commercial casinos made the concession of eliminating Sec. 16 of the House-passed bill, which stated that they could continue to operate internet gaming even if a change in federal law prohibited tribes from doing so.
In return, the tribes waived their sovereign immunity for online gambling, allowing the state to license and regulate all casinos in the same manner. The tribes had previously yielded sovereign immunity over liquor licenses.
“We were trying to create an equal structure, so everyone felt that no one was represented differently as it related to obtaining licensure,” Iden said. “It puts them on a level playing field, which is all they both ever wanted. By everyone having to apply for a license in the same way, nobody has any advantage.”
Iden indicated that the last-minute changes needed to appease Detroit centered around concerns over cannibalization of their brick-and-mortar facilities. Those concerns, of course, have not materialized in the maturing NJ online casino market. Quite the opposite, in fact.
Given that casino revenue affects Detroit’s credit rating — which supports the municipal bonds it sold to come back from bankruptcy — the city wanted protection against any possible cannibalization.
“Brick-and-mortar casinos are going to continue to grow because of internet gaming,” Iden said. “We’ve seen this in New Jersey. But we had to make this change because it’s very important to make sure Detroit can service that debt it has taken on.”
One of the Senate amendments included a hold-harmless clause, guaranteeing those properties at least $179 million in combined annual revenue.
The legislation stipulates that the law would take effect 90 days after the governor’s signature. The new Division of Internet Gaming would then have one year to “promulgate rules governing the licensing, administration, and conduct of internet gaming under this act.”
That adds up to 15 months before online poker could begin in Michigan. However, the “within a year” wording leaves open the possibility that the division could finish the regulations and licensing sooner.
Iden cautioned not to expect an accelerated timeline, however. The sponsor thinks the 15-month moratorium is needed for all casinos to get equally prepared for launch.
“In the event that rules are ready earlier,” he said, “I still don’t think we’ll roll it out until the time set in the bill, so no particular interest feels slighted.”
If everything goes to plan, look for Michigan online gambling sometime in the first half of 2020.