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September 16, 2019

The legislation now heads back to the House for final approval

Michigan Senate votes for legalized internet gambling

Michigan Senate votes for legalized internet gambling
The proposal would make Michigan the fifth state in the country to legalize internet gambling, following Delaware, New Jersey, Nevada and Pennsylvania.
United States | 12/27/2018

The state's upper chamber approved on Thursday sweeping legislation that would expand legal gambling by allowing online gambling through Detroit and tribal casinos.

T

he Michigan Senate approved the legislation in a series of bipartisan votes on the final night of the lame-duck session, shooting the measure back to the House for final approval, the Detroit News reports. Senate amendments would ensure Detroit would continue to receive at least $179 million a year in gambling tax revenue even if fewer players visit the city’s three brick-and-mortar casinos.

The proposal would make Michigan the fifth state in the country to legalize internet gambling, following Delaware, New Jersey, Nevada and Pennsylvania.

Under the plan, revenue from internet games like poker would be taxed at eight percent, less than the 19 percent tax for in-person casino gambling. Fifty-five percent of the new revenue would go to the state gaming fund, 30 percent to Detroit and additional dollars would be devote to schools, roads and horse racing.

Taxes on internet gaming through tribal casinos would be allocated differently, with 75 percent going to the state’s gaming fund and 25 percent to the Michigan Strategic Fund, which promotes economic development and job creation.

The proposal would not directly authorize – but would likely pave the way for – internet gambling on sports, which several states are considering in the wake of a May ruling by the U.S. Supreme Court. The legislation would create a division of internet gaming under the Michigan Gaming Control Board that could permit licensed casinos to accept online wagers “on any amateur or professional sporting event or contest.”

The main measure in the multi-bill package passed the Republican-led Senate in a 33-5 vote, winning support from all 11 Democrats.

Casinos that offer online gambling would be required to ensure that gamers are over the age of 21 and limit participation to individuals located in Michigan or another jurisdiction where internet gaming is legal.

The proposal would allow casinos to apply for a special internet gaming license, subject to a $100,000 application fee, a $200,000 fee for an initial license and an annual $100,000 renewal fee. An “internet gaming platform provider” license would cost $100,000 with a $50,000 yearly renewal fee.

Tribal casinos could also seek an amendment to their compact agreement with the state to allow internet gambling. A chairperson could request the amendment in a letter to the governor, who would be required to negotiate the amendment “in good faith” with the tribe.

The legislation would also create a new license for internet gaming vendors, who could provide goods, software or services to a casino with an internet gaming license. Their initial license would cost $5,000, with a $2,500 yearly renewal fee.

The division would be required to create new rules to administer the internet gaming law within one year of it taking effect. The state would generally decide which games would be allowed but would be required to include poker.

The legislation would allow the state to develop a “responsible gaming database” to prohibit players who have been convicted of a felony or crime involving gambling, along with anyone who has a “notorious or unsavory reputation” that could hurt public trust or confidence in internet gambling.

An earlier version of the legislation passed the House in June but had stalled in the Senate, partially amid concerns over the impact on Detroit tax revenues.

A House Fiscal Agency analysis had projected the legislation would likely reduce tax revenue for the city if fewer people went to Motor City, MGM Grand or Greektown casinos, where in person gambling would be taxed at a 19 percent rate, as opposed to 8 percent online.

The legislation now heads back to the House for concurrence.

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