Another milestone on the way to online gambling in Michigan

Michigan Regulators File Updated Draft Rules For Online Gambling

Legal online gambling in Michigan is creeping ever closer on the calendar.

The latest step on the long road to launch came this week in the form of a new, official draft of the rules for operators. The Michigan Gaming Control Board (MGCB) compiled the first version in May and has now filed the update for official review by the Regulatory Affairs Office.

Mary Kay Bean, a communications specialist for the MGCB, told Online Poker Report that the draft includes a number of changes based on informal comments from stakeholders.

Laying the groundwork for iGaming in Michigan

Most of the proposed rules for Michigan online gambling are the same common-sense provisions seen in other legal US markets. These cover things such as:

  • Licensing processes and fees
  • Technical standards, geofencing, and testing requirements
  • Security, internal supervision, and game integrity protocols
  • Digital record keeping and reporting requirements, including KYC policies
  • Customer protection, responsible-gambling measures, and handling of complaints

Not everything in the rules is so standard, however. A careful reading reveals a few details that could create a different experience for players in Michigan compared to other states with online gambling, such as Pennsylvania and New Jersey.

It’s important to note that these are draft rules and may not make it into the final version.

Limitations on progressive jackpots

The Michigan Lottery has been a bit of an obstacle to lawmakers and regulators as it works to ensure that online gaming doesn’t encroach on sales for its big draws — especially those with large interstate jackpots. Some of the rules relating to online slots seem to be aimed at addressing that concern.

All online slots must have a minimum return to player of 80%, for starters. While virtually all such games return much more than this, contributions to a progressive jackpot don’t count. Michigan casino operators therefore won’t be able to create a lottery-like slot product where a large chunk of play goes toward feeding the jackpot.

More significantly, slots can’t offer any prizes with odds longer than 50 million to 1. Although that sounds like an incredible longshot, the big lotteries hit even more rarely. Powerball, for example, has jackpot odds of over 292 million to 1 which allow its prizes to grow far beyond what an online casino can offer.

Responsible gaming features

All states impose some requirements intended to encourage responsible gaming and discourage problematic player behavior, but the specifics vary.

One notable inclusion in Michigan’s rules is a strict prohibition against the autoplay features that have become fairly common elsewhere. All games also have to show the player how much time they’ve spent playing, either continuously or by a prominent pop-up every 30 minutes.

The rules also contain a prohibition against misleading animations for slot machines. Spinning reels, for instance, can’t show valuable symbols with greater frequency than they appear in the actual game outcomes.

No dressed-up table games?

One rule that will probably require clarification at some point pertains to the appearance of table games. As written, an online table game must “accurately represent the layout and equipment used to play its corresponding authorized non-internet table game.”

This will be of particular interest — or concern — to DraftKings Casino, which has invested heavily in developing custom games. These include things such as basketball-themed roulette and a blackjack game styled after a 1980s arcade cabinet.

As it stands, it’s unclear if these formats will be acceptable despite being mechanically identical to their conventional land-based equivalents.

Question marks remain around interstate poker

There’s very little about poker or other player-versus-player games in the rules except for a passing mention of tournaments.

What’s most noteworthy on that front is what’s not included, namely any mention of multi-state poker. It’s still up in the air whether Michigan will be able to join the liquidity-sharing pool currently consisting of New Jersey, Nevada and Delaware.

At the time Michigan’s gaming bill passed, industry-watchers were dismayed to see the last-minute change to the bill removing the MGCB’s ability to enter into interstate compacts with other regulatory bodies.

Sen. Curtis Hertel Jr., one of the bill’s main proponents, has since said that the legislature’s intention was not to thwart interstate poker. Rather, it was an early effort to curtail the lottery’s worries about large interstate slot machine jackpots hurting its ticket sales.

Hertel has introduced a new bill that would expressly allow interstate poker, though it remains lodged in committee as rule-making proceeds.

Next steps on the road to launch

The MGCB must now prepare a Regulatory Impact Statement while the draft rules are reviewed by three separate state offices. That process should take about a month, after which a date can be set for the critical public hearing — perhaps as soon as September.

The original timeline laid out by the MGCB estimated that the full process would take at least 373 days from start to finish. Since the clock started at the beginning of this year, that would have meant an early 2021 launch.

The shutdown of live casino gaming has adjusted expectations. Although most Michigan tribal casinos have reopened, the three commercial casinos in Detroit remained closed today. Fears of a second shutdown in the fall have moreover made online gambling a higher priority.

An expedited timeline shared with OPR last month now shows 250 days as the new best-case scenario.

“If all goes well,” said Bean, “the MGCB could authorize the launch of internet gaming and internet sports betting this fall. Any delays in the review process would push the launch into early 2021.”

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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