Michigan Online Gambling Bill Passes House Vote

Online gambling is one step closer to reality in Michigan. Late Tuesday evening, House lawmakers voted 68-40 in favor of a Michigan gambling bill that seeks to legalize online gambling and sports betting.

If House Bill 4926 becomes law, commercial and tribal casinos in Michigan will be permitted to offer online casino games and online sports betting to customers 21 and older. Only casinos with a physical presence will be allowed to offer the same types of games that are offered in the real world. This includes online poker, slots and table games.

The bill is short on details regarding sports betting other than to state “the division may permit an internet gaming licensee licensed by the division to conduct internet wagering under this act on any amateur or professional sporting event or contest, if that internet wagering is not prohibited by federal law.”

At the time HB 4926 was written, the Supreme Court had not yet decided the outcome of New Jersey’s challenge of the federal sports betting prohibition – hence the bit about sports betting being permitted only if allowed by federal law. Now that the Supreme Court has sided with New Jersey in that case, Michigan may pursue sports betting.

Internet gambling took a significant step closer to reality with Tuesday’s House vote, but it will still be a while before we’ll be signing up to bet online in Michigan. HB 4926 now heads to the Senate for a vote. Tuesday also happened to be the last day of current legislative session heading into a 10-week break.

That means the earliest the Senate can vote on the bill is September. If the bill passes the Senate, it will be sent to Governor Rick Snyder for his signature. The bill will finally become law if it passes the Senate and receives the governor’s signature, but that’s not all.

A bit of text in the bill states: an internet gaming licensee shall not conduct internet gaming until 1 year after the date this act is enacted into law. That means if all goes well and lawmakers move quickly, the earliest Michigan residents will be able to play online at state-licensed casinos will be September 2019. Delays at any point during the process could significantly affect that date.

There’s still some time to go, but it sounds like lawmakers are motivated to move on the bill. As the Detroit Free Press reported Tuesday, State Representative Brandt Iden said the bill “is going to be at the top of the agenda” when the legislature reconvenes this fall.

Other Key Provisions

Some other noteworthy bits found in the Michigan online gambling bill include:

Eligibility: Online gambling licenses will only be issued to licensed brick-and-mortar casinos in Michigan. This includes the three commercial casinos in Detroit as well as the nearly two-dozen tribal casinos across the state.

Taxes and Licensing Fees: Tax rates are set at 8% of gross gaming revenue. Revenues from taxes will be earmarked as follows: 55% going to the city in which the casino licensee is located, 35% to the Michigan internet Gaming Fund, 5% to the state school aid fund and 5% to the transportation fund. Licenses will cost $200,000 up front with an additional $100,000 paid every year thereafter. Internet gaming platform providers must also be licensed at a cost of $100,000 up front and then pay $50,000 per year after that.

Multistate Agreements: The bill allows Michigan to enter agreements with other jurisdictions in the United States in order to facilitate multistate gaming, as long that form of gaming is legal in both states. This provision is particularly important for online poker as it means Michigan can enter agreements such as the one that has New Jersey, Nevada and Delaware sharing poker tables.

Interstate player-sharing agreements will benefit players by opening Michigan’s poker sites to a much wider pool of potential players versus ring-fencing sites within state lines. More traffic equals more cash games, bigger tournaments and a better overall experience for players in Michigan.

Age and Location Verification: Licensed Michigan gambling sites must verify that all customers are 21 or older and located in Michigan before allowing them to play online.

Online Betting Options Slowly Expanding in Michigan

Over these past few years, the types of legal online gaming available to people in Michigan have grown in number. Where at one point, Michigan gambling was limited to brick-and-mortar casinos, the state now has:

Daily fantasy sports: Fantasy sports sites are legal in Michigan, but the state has had trouble passing legislation to formally recognize DFS and establish regulations. Even so, the major daily fantasy sports sites (FanDuel and DraftKings in particular) have been operating in Michigan for several years now without any trouble.

Online lottery: The Michigan Bureau of State Lottery established an online lottery platform in 2014 that offers tickets to real-world drawings, instant win scratch card games and instant keno. These games are all easy to play, and the ability to buy MI lottery tickets online is convenient.

Horse Racing Betting: Michigan allows online horse racing betting conducted by licensed, US-based betting sites. The primary operator in Michigan is BetAmerica, which is one of the largest horse racing sites in the US. BetAmerica is licensed, legal and headquartered on US soil.

Online Skill Games: Games based on skill are legal in the US in states that do not specifically outlaw such games. Online skill games provide competition with real money on the line, but avoid falling into the state’s definition of “gambling” by being based entirely on skill. WorldWinner.com is the primary skill games website available in Michigan.

Now, we’ll be watching this legislation closely to see if Michigan is able to expand into online gambling and sports betting. There are some questions regarding whether or not the state would need to hold a voter referendum in order to allow sports betting.

The law passed in 2004 paving the way for Detroit’s three casinos to open included a bit of text stating the state must hold a referendum before expanding gambling any further. Senator Mike Kowall recently argued that allowing sports betting at casinos would not be considered an expansion because “gambling” is already legal at casinos and sports betting could potentially be added under that definition without requiring a public referendum.

We’ll be watching this law closely over coming months. In any case, it will be a while before this week’s bill can progress now that the legislative session has closed. We anticipate hearing much more about this when the legislature gets back together in September.