Michigan Senate to discuss sports betting and online gambling proposal

A Michigan Senate panel Tuesday approved a package of bills with nearly unanimous support that would loosen restrictions on Detroit’s three casinos and legalize online gaming, online fantasy sports contests, sports betting and advance-deposit wagering in horse racing.

According to Sen. Curtis Hertel, an East Lansing Democrat who's been involved in negotiations on the package, If it gains the needed support from the full Senate and House, the proposal could move to the governor's desk this week.

"The intention is to get this to the governor's desk and have votes today," Hertel said.

Initially opposed by Democratic Gov. Gretchen Whitmer’s administration because of the potential impact on the state’s school aid fund, lawmakers appeared to have reached terms more amenable to the governor Tuesday morning, the Detroit News reports.

Under the bills referred Tuesday, new tax revenue from online gaming activities would go to the cost of regulating the activities, the compulsive gaming fund, a fund benefiting first responders with cancer and the School Aid Fund.

"The reality is right now sports betting is happening in Michigan, millions of dollars is being bet in Michigan every single day," Hertel said. "Organized crime is the one that actually is winning right now. By providing a legal, safe and regulated system you're actually taking a big hit to organized crime." 

Whitmer wanted the taxes from the new gambling activities to make up for any loss in revenue the School Aid Fund may experience due to an expected decrease in existing brick-and-mortar gambling operations.

The bill’s sponsor Rep. Brandt Iden increased the tax rates associated with the activities in response to Whitmer's concerns in the package passed by the House last month. That tax rate was raised further still in the package referred Tuesday. 

"This is the big revision that Sen. Hertel and the administration I think worked on and found a landing spot," said Sen. Aric Nesbitt, the Lawton Republican who chairs the Regulatory Reform Committee. 

The revised proposed tax rate for sports betting and fantasy under the bills referred Tuesday would be 8.4% at the state's 23 tribal casinos and 11.75% at the three Detroit casinos, a figure that reflects the 3.25% tax imposed by the city.

The proposed tax rates for internet gaming would be levied at a tiered or progressive rate ranging from 20% to 28% based on revenue, with higher earners assessed higher rates. The high mark would increase to 31.25% for Detroit casinos because of the 3.25% city tax.

Iden had originally proposed an 8% tax for internet gaming. Iden said Whitmer asked for a 15% percent tax on sports betting and a 40% percent tax on internet gaming.

Besides the legalization of sports betting, online gaming, and fantasy sports contests, the package included legislation that also lifts several restrictions on Detroit casinos, including a ban on political contributions on casino licensees. 

The whole Senate voted yesterday to approve that measure, so when signed by Gov. Gretchen Whitmer, casino owners and their suppliers will again be able to make political donations under that bill.

Michigan voters banned political donations by casino interests when they passed Proposal E to legalize casinos in 1996.

As a result, Michigan lawmakers required a two-thirds vote in each chamber to lift the ban. They got that Tuesday, with a 34-4 vote in the Senate. The House passed the same measure last Wednesday, by a vote of 89-16. The bill must now return to the House to concur with changes made by the Senate.