Bills that have cleared an initial legislative hurdle would legalize online gambling in Michigan and start the process toward possibly also allowing sports betting in the wake of a U.S. Supreme Court decision.
The state House late Tuesday voted 68-40 in favor of the legislation, which is not expected to be considered by the Senate until September at the earliest after lawmakers adjourned for a summer break. An 8 percent tax would be collected from wagers, minus winnings paid out — which would be less than a 19 percent tax now paid by Detroit's three casinos.
Those casinos could seek an internet gambling license. The state's 23 tribal casinos could conduct online gambling if they secure authorization from the state through a compact.
"The way people game is moving more and more to the online platform," said the bill sponsor, Republican Rep. Brandt Iden of Oshtemo Township near Kalamazoo. "Everything we do today is moving to an online platform, and that's exactly what this does. It takes the same games that you can play inside the casino and now puts them online and regulates it from a standpoint of ... you can now do it legally."
He said the Michigan Gaming Control Board believes it has the parameters to authorize sports betting but wants the Legislature to "take the initial step." Establishing a tax for online gambling, including internet sports wagering, is a first move, he said. He plans to next introduce legislation to set an 8 percent tax for sports betting inside casinos.
The Supreme Court last month paved the way for all 50 states to allow sports gambling. The main House bill would create a new Division of Internet Gaming to regulate online gambling. It could enter into agreements for "multijurisdictional" internet gambling if is conducted only in the U.S. and is consistent with state and federal law. The division could permit internet sports wagering.
Gaming board spokeswoman Mary Kay Bean said the agency was reviewing the House-passed legislation.
"If the bill becomes law, the MGCB is prepared to regulate sports betting in Michigan," she said. "The MGCB has not received a request from a casino wishing to offer sports betting. If and when a request is received, the agency will determine whether the activity requested is permitted under state law."
An analysis of the House bills from the nonpartisan House Fiscal Agency says state and local governments likely would collect less in gambling taxes. That's mainly because casinos would have an incentive to promote online gambling — with a lower proposed tax rate — at the expense of brick-and-mortar wagering, which is taxed at a higher rate. The report notes that the fiscal impact would depend on whether internet gambling would have a "substitution, neutral or stimulative effect" on other forms of gambling, and it adds that online gambling presumably would reduce Lottery sales — mainly by diverting participants from the iLottery system.
The analysis does not examine the revenue impact, however, of legalizing sports bets. Americans wager about $150 billion on sports each year illegally, according to the American Gaming Association. The group in 2017 estimated a minimum $23 million tax windfall to Michigan from legal sports betting.
Asked if Michigan's tribes support the bill, Iden said there is still "work to do" but he believes the tribal casinos got "90 percent-plus" of what they wanted. The tribes, he said, are concerned with a provision that would let the Detroit casinos continue to offer online wagering if the federal government later states that the tribal casinos cannot offer gambling outside their reservations.
"We're going to continue to work through that, but they were very helpful in getting the bill where it is today," Iden said.