Merry Christmas, Michigan. Governor Gretchen Whitmer is expected to sign a large online gaming expansion package into law after successful negotiations with the legislature on tax rates and education funding wrapped up Tuesday morning.
The legislature moved quickly after the gaming expansion bills were approved in the Senate Regulatory Reform Committee on December 10th. The Senate voted in favor the gaming package Wednesday morning and the House concurred to send the bills to the desk of Governor Gretchen Whitmer.
The three key bills in the gaming expansion package include:
- HB 4916: In-person and mobile sports betting
- HB 4311: Online gambling and poker
- HB 4308: Daily fantasy sports
What’s Legal Under the New MI Gaming Laws
The new Michigan gambling laws authorize:
- Retail sportsbooks at casinos
- Mobile sports betting
- Online casino games
- Daily fantasy sports (which was already happening, but now it is officially legal and regulated)
Under the new gaming laws, Michigan casinos may apply for licenses to operate retail sportsbooks on casino property, up to two individual online gambling sites and one mobile sports betting platform.
What Happens Next?
The bills are now en route to the Governor’s desk for one more signature before becoming law. Governor Whitmer is expected to sign the bill as she has been deeply involved in negotiations with lawmakers over tax issues related to the legislation.
The speed with which the House and Senate have acted on these bills indicates an agreement satisfactory to all sides has been reached. Michigan did yank the rug out from under us in 2018 with the surprise veto of Governor Rick Snyder, but a repeat of last year looks unlikely this time around.
Assuming Governor Whitmer signs the bills as expected, the next step will be for the Michigan Gaming Control Board (MGCB) to draw up regulations, review licensing applications and give the go-ahead for the first sportsbooks and gambling sites to go live.
When Will the First Mobile Sportsbooks and Gambling Sites Launch?
There is no hard timeline for when the first sportsbooks and gambling sites go live, but as BettingUSA’s Steve Ruddock reported on Twitter, we are likely looking at an early 2020 launch for sports betting and later 2020 launch for online gambling:
no. If approved, and no reason to think it won't be at the moment, sports would likely launch early 2020, online poker and casino maybe by end of 2020
— Steve Ruddock (@SteveRuddock) December 10, 2019
Stage is Set for Competitive Michigan Gambling Market
The new Michigan gaming legislation appears to set the stage for a competitive mobile sports betting and online gambling landscape.
A reasonable mobile sports betting tax (8.4% + 1.25%) and manageable online gambling taxes (28% at the high end + 1.25%) should encourage a multitude of operators to form partnerships with local casinos and enter the MI market.
Total initial licensing fees of $150,000 for sports betting and $150,000 for online gambling/poker are also quite reasonable.
Additionally, there should be plenty of competition with many operators able to enter the market. The Michigan sports betting law allows each of the state’s 26 casinos to launch one online sports betting platform and two online gambling platforms.
A full reading of the sports betting and online gambling bills reveals no other problematic provisions that could potentially thwart a healthy industry. Overall, things are looking up in Michigan.
Who Will Offer Online Gambling and Sports Betting in Michigan?
Michigan casinos will hold the online sports betting and gambling licenses but are authorized to partner with third-party providers to power their online gaming platforms.
Casinos have not confirmed any such partnerships as of yet, but we will be looking for announcements of such over coming weeks and months. Some of the bigger brand names that may eventually enter the Michigan market include the following.
- FanDuel Sportsbook: FanDuel has aggressively pursued sports betting since the Supreme Court overturned the federal ban. FanDuel launched online sports betting in Indiana, New Jersey, Pennsylvania and West Virginia shortly after each state passed laws allowing such. In addition, FanDuel has retail sportsbooks operational in Indiana, Iowa, Mississippi, New Jersey, New York, Pennsylvania and West Virginia.
- DraftKings Sportsbook: Like FanDuel, DraftKings has been quick to take advantage of favorable sports betting laws in states that have passed accommodating legislation. DraftKings has launched mobile betting in four states and retail sportsbooks in two more.
- PointsBet US: PointsBet has only launched mobile betting in one state so far (New Jersey) but has partnerships in place to enter additional states. Company reps have said they plan to pursue an aggressive expansion policy.
- BetRivers Sportsbook: BetRivers.com is active in two states and says it has plans to expand further as legislation permits. The company also has a partnership in place with Gun Lake Casino for social gaming. That partnership could easily be expanded to include sports betting
- BetAmerica Sportsbook: BetAmerica offers mobile betting in New Jersey and has applications for mobile betting pending in additional states. That’s in addition to retail sportsbooks in Mississippi and Indiana. Based on this, it would be safe to bet on BetAmerica making an appearance in Michigan sooner or later.
- BetMGM Sportsbook: BetMGM has mobile and retail operations in multiple states, so it stands to reason the company will be giving Michigan a close look. Plus, MGM Resorts International operates the MGM Grand Detroit and therefore has an easy route to online gambling and sports betting in Michigan.
- William Hill: William Hill is heavily involved in online sports betting and gambling in markets around the world. In the US, this includes mobile betting in New Jersey, Iowa and Nevada. Look for William Hill to also make a run at online gaming in Michigan.
- Caesars Online: With mobile betting in New Jersey and physical casinos dotting the country, Caesars has all the financial and technical resources it needs to enter the Michigan online gaming market.
- 888 US: 888 specializes in online gaming and is one of the largest operators on the international stage. In the US, 888 offers online gaming in New Jersey, Nevada and Delaware. 888 has not pursued expansion as aggressively as some other operators, but that is by design.
- Bet365: Bet365 has not made as much noise in the US as we would have expected given its status as one of the world’s largest and most respected gambling operators, but it does operate in New Jersey and is plenty capable of entering Michigan should it choose.
- FOX Bet Sportsbook: FOX Bet was formed as a partnership between international gaming giant The Stars Group and FOX Sports specifically to target the growing US sports betting market. FOX Bet offers mobile betting in two states and has a partnership in place with Penn National Gaming to launch online gaming in cooperation with Penn-owned properties in Michigan.
- Unibet: Unibet is another big player on the international stage that has its eyes on the US market. To date, Unibet has launched online gaming in New Jersey and Pennsylvania.
A Look at the Three Online Gaming Bills
The gaming expansion package approved by the House and Senate consists of three key bills along with a handful of smaller bills dealing with administrative matters. The three big bills of the day include one for sports betting, one for online gambling and poker, and one for daily fantasy sports.
Lawful Sports Betting Act
HB 4916 approves retail sportsbooks at Michigan casinos and online betting. Key points from the bill follow:
- Authorized: In person, online and mobile sports betting approved
- Approved sports wagering events: “A sports activity that involves the athletic skill of 1 or more players or participants” and does not include “any sport or athletic event played by individuals that are at the high school level or below unless the majority of participants in the sport or athletic event are 18 years of age or older.”
- Minimum age to bet on sports: 21
- Sports betting regulated by: Michigan Gaming Control Board
- One skin: Each casino authorized to offer sports betting may operate a single online/mobile betting platform.
- Approved wagers: Law allows a wide range of wager types including (but not limited to) “single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange betting, in-game betting, proposition bets, and straight bets”
- Application and licensing fees: $50,000 followed by a successful licensing fee of $100,000. Licenses are valid for five years and come with an annual licensing fee of $50,000
- Tax rate: Sports betting operators pay an 8.4% tax on adjusted gross sports betting receipts (AGR). Municipalities may also assess a 1.25% fee on AGR on sports betting operators that hold a casino license in that city. Note: it is unclear if retail sportsbooks will be taxed at the standard Class III gaming rate of 8.1% or if retail and mobile will both be taxed at 8.4%.
- Suppliers licenses: Sports betting suppliers must also be licensed. The initial license application fee is $5,000 with an annual $2,500 renewal fee. Investigation costs may be added to the licensing fee.
- Restrictions: Sports leagues may request that the Gaming Control Board prohibit certain types of wagers or wagers on a particular event. The Board may grant that request if it determines such wagers threaten the integrity of the event.
- Official data: Sports leagues may inform the Gaming Control Board that they require sports betting operators to use official league data for in-play betting. If such a request is made, all operators must only use official league data within 60 days of Board notification unless the league cannot provide such data “on commercially reasonable terms.”
- Responsible gambling: Sports betting operators must allow patrons to voluntarily self-exclude themselves from establishing an account and the Gaming Control Board may add customers who have self-excluded to the responsible gaming database.
The Michigan Gaming Control Board will regulate sports betting and is granted the authority to “do anything necessary or desirable to effectuate this act, including, but not limited, all of the following:”
- Develop qualifications, standards and procedures for approving sports betting licenses
- Promptly approve, deny, suspend, revoke, restrict or refuse to renew all sports betting licenses
- Conduct all hearings related to violations of the new MI sports betting law
- Collect all licensing fees, taxes and payments
- Establish testing and auditing requirements for sports betting licensees
- Establish responsible gaming and player protection requirements, including privacy and confidentiality standards
- Develop a code of conduct governing Gaming Control Board employees to avoid actual or perceived conflicts of interest
- Conduct audits of sports betting operators
- Establish rules and regulations governing the conduct of sports betting in Michigan
Lawful Internet Gaming Act
HB 4311 creates the Lawful Internet Gaming Act to regulate online casino games and poker. Key points from the bill follow.
- Two skins: Each Michigan casino may operate up to two independent online gambling platforms by itself or in partnership with approved third-party providers. Each platform may offer any combination of online poker and casino gaming.
- Minimum age to gamble online: 21
- Regulator: The Michigan Gaming Control Board will issue licenses and oversee the conduct of online gambling and poker. Duties of the MGCB for online gambling largely mimic those for overseeing sports betting – issuing licenses, collecting taxes, drawing up regulations, encouraging responsible gambling and so on.
- Eligible licensees: Commercial casinos and Class III tribal casinos may apply for online gambling and poker licenses under the Lawful Internet Gaming Act.
- Licensing considerations: The MGCB will evaluate online gaming licensees for suitability according to financial ability, prior history in regulated gaming and criminal record.
- Application and licensing fees: Online gaming licenses are valid for five years from the date of issuance. The initial application fee is $50,000, the licensing fee is $100,000 and is followed by an annual $50,000 renewal fee. The MGCB may assess additional fees for investigation costs.
- Suppliers licenses: Gaming suppliers must apply for licenses that come with a $5,000 application fee plus additional costs for investigations (not to exceed $5,000), a $5,000 licensing fee and $2,500 annual renewal fee.
- Types of games allowed: The types of online casino games to be offered by licensees “must include, but need not be limited to, poker, blackjack, cards, slots, and other games typically offered at a casino, but does not include pick numbers or other lottery games typically offered by the Bureau of Lottery..”
The Act establishes a graduated tax rate based on adjusted gross receipts (AGR) each calendar year as follows:
- AGR less than $4 million: 20%
- AGR of $4 million to $8 million: 22%
- AGR of $8 million to $10 million: 24%
- AGR of $10 million to $12 million: 26%
- AGR of $12 million or more: 28%
Municipalities may also assess a 1.25% fee on AGR for internet gaming operators that hold a casino license in that city.
Fantasy Contests Consumer Protection Act
HB 4308 creates the Fantasy Contests Consumer Protection Act and the key points are detailed below. Daily fantasy sports (DFS) sites already operate in Michigan, but HB 4308 formally legalizes their operations, establishes a licensing process and enacts new regulations governing the industry.
- Minimum age to participate in DFS contests: 18
- Restricted types of fantasy contests: DFS sites may not offer contests based on the outcomes of races involving animals or “games or contests ordinarily offered by a horse track or casino for money, credit, or any representative of value, including any races, games, or contests involving horses or that are played with cards or dice.” DFS sites may not offer contests based on high school or youth sporting events or any event that is not an athletic event.
- Highly experienced players: The Act defines highly experienced players as individuals who have entered more than 1,000 fantasy contests or who have won more than three prizes valued at $1,000 each or more from a single DFS operator. Highly experienced players must be identified by a symbol attached to their names and the operator must offer some contests not open to highly experienced players.
- Social fantasy contest exemption: Individuals may offer fantasy contests without acquiring a license if those contests are held solely from their private residences, those contests are not offered to the general public, each contest is limited to no more than 15 participants, the individual collects no more than $10,000 in total entry fees in any single calendar year and at least 95% of entry fees are paid out as prizes.
- Casino exemption: Casinos licensed by the MGCB do not need licenses to host fantasy contests.
- Licenses and fees: Fantasy sports licenses are valid for one year from the date of issuance. There is an initial licensing fee of $20,000 followed by an annual renewal fee of $5,000.
- Prohibited participants: DFS operators must prevent employees and relatives of employees living in the same household from participating in contests run by that operator. Operators must also prevent athletes and officials involved in an athletic event from participating in contests based on that event.
- Segregated funds: DFS operators must keep player funds separate from daily operational funds or maintain a cash reserve covering the value of all player funds.
- Annual audits: Licensed DFS operators must submit to an annual audit conducted by a CPA to ensure continued financial suitability and compliance with the segregated funds provision.
- Scripts: DFS operators are not to allow the use of scripts except for scripts that are made readily available to all customers
- Advertising restrictions: DFS operators may not target minors or people who have restricted themselves from DFS in advertising and promotional material.
- Responsible gambling: DFS operators must allow customers to restrict themselves from entering any further contests.
- Transparency: DFS operators must allow customers to access their playing histories, including a summary of entry fees paid, games played, previous lineups and prizes won.