Michigan Legislature Passes Online Gambling Bill; One Hurdle Left To Clear

Legislation to legalize and regulate internet casino gambling and online poker is motoring through the Michigan Legislature on Wednesday, tracking a course straight to the governor’s desk.

The first stop was the Senate floor, where the amended package passed by a vote of 35-3. The House of Representatives concurred with minor Senate changes thereafter, sending the bill to the governor for the final action.

Today is the last day of the state’s legislative session, and Gov. Gretchen Whitmer is expected to sign online gambling into law next week.

Michigan online gambling details

To get the governor on board with online gambling in Michigan, industry stakeholders agreed to an increased tax rate.

Sen. Curtis Hertel Jr., who facilitated the negotiations, explained that the administration wanted to make sure that expansion did not dent the School Aid Fund supported by the Michigan online lottery.

The Senate Regulatory Reform Committee amended bill H 4311, passed by the House in October, with substitute language on Tuesday. That language was substituted again with minor cleanup of the language before Senate passage Wednesday.

Details include:

• Michigan’s three commercial casinos and 23 tribal casinos, pending licensure, may offer online poker, slots, table games and other activities permitted in their retail establishments.
• An internet gaming operator may offer internet gaming under a maximum of two brands, one for online poker and one for casino games.
• A tiered tax structure starts at 20% for adjusted gross receipts of less than $4 million and peaks at 28% over $12 million. Commercial casinos pay an additional 1.25% city tax to Detroit, which legislators say is effectively 3.25%.
• Money that is given to customers as a free-play promotion may be deducted from gross receipts on a limited basis, not exceeding 10% for the first three years, 6% in year four and 4% in year five before expiring.
• Fees to offer iGaming include $50,000 for an initial application, $100,000 for the license and $50,000 annually.
• The majority of state tax revenue from iGaming supports the School Aid Fund, while $2 million annually goes to the First Responder Presumed Coverage Fund that helps firefighters undergoing cancer treatments.

Read more about the sports betting part of the package at Legal Sports Report.

Senate bill nixes multi-state partnerships

The Senate substitute removed a clause from the House bill that allowed the Michigan Gaming Control Board to enter into agreements with other states to regulate multi-jurisdictional internet gambling.

Hertel told Online Poker Report that he removed the language in order to avoid multi-state jackpots for slots or iGaming that might infringe on the state’s lottery offerings.

Removal makes it unclear whether or not Michigan intends to enter a multi-state online poker agreement to share liquidity, such as the one currently linking New Jersey, Nevada and Delaware.

Governor expected to legalize online gambling

Hertel indicated that members of the administration, empowered by the governor, took part in meetings he facilitated to come to terms on a gaming package that Whitmer would support.

Her involvement indicates that there shouldn’t be any surprises like last year when previous Gov. Rick Snyder offered no feedback on the iGaming bill passed by the legislature before striking it down.

“The administration has been very much engaged in her time with us, something very different from last year when we basically had the administration not tell us he was going to veto the bill,” Hertel said.

Tiffany Brown, a spokesperson for Whitmer, confirmed that the governor is on board with the changes made in the Senate. From a statement:

“The governor is pleased with the progress made on gaming over the course of this year, particularly once Sen. Hertel and Rep. [Rebekah] Warren were able to engage and resolve key issues to get this package across the finish line… This is a good, bipartisan solution made possible by working together on a complex issue, and the governor looks forward to closely reviewing this package once it hits her desk.”

Michigan online gambling bill

Here’s the current version of HB 4311 as passed by the Senate: