Lawmakers in the state advanced Rep. Brandt Iden’s bill that would legalize online casinos and poker in the state. The bill was approved in a hearing by the House Regulatory Reform Committee, which Iden chairs.
The most recent version of H 4926 contains new language regarding online sports wagering.
The potential for sports wagering is becoming real for states like Michigan, as New Jersey is challenging the ban on single-game wagering in the US Supreme Court. A win for the state in the NJ sports betting case could mean other states could legalize sports gambling, if the Professional and Amateur Sports Protection Act (PASPA) is struck down.
“That language is in there to start the next round of conversations,” Iden told Legal Sports Report after the bill advanced. “I don’t want us to get ahead of ourselves, but we know that is coming – the repeal of PASPA is likely coming in the spring – and we want to put Michigan in position to put our best foot forward as it relates to sports gaming.”
Internet sports betting in Michigan
The inclusion of sports betting in the iGaming bill was first reported by GamblingCompliance writer Chris Krafcik.
Here’s the language from the amended bill on sports betting:
The division may permit an internet gaming licensee 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.
Nevada and Pennsylvania are the only states which currently have laws that allow for online or mobile sports betting. (Pennsylvania’s is a placeholder in the event of PASPA going away.) New Jersey will certainly move to offer online wagering if it wins in the Supreme Court.
The bill makes no mention of sports wagering being conducted at brick-and-mortar facilities.
A quick summary of the Michigan bill
Iden’s bill is named the “Lawful Internet Gaming Act,” and it would do several things at its core:
- Legalize internet gambling
- Establish the rules and definitions for the industry
- Impose a tax on operators of 10 percent of revenue; this appears to apply to all forms of iGaming, sports betting included.
- Create the Division of Internet Gaming
H 4926 was first introduced in September, although it’s not the first piece of internet gambling legislation the legislature has considered. Sen. Mike Kowall initially raised the issue with a bill of his own last year.
On the sports betting side, Rep. Robert Kosowski introduced an effort earlier this year that hasn’t seen progress.
The most recent amendments to H 4926 include changes to server requirements and a new tax distribution scheme. The sports betting provision was also new.
The legislative calendar has run out for 2017, but the bill appears set to resume progress in in 2018. When it does, it will still need to clear a number of obstacles.
Progress toward online gambling, sports betting
Michigan is considered to be fertile ground to legalize online gambling. However, there are lots of moving parts and potential stumbling blocks. It is a casino state, after all, with various tribal and commercial gaming properties within its borders.
“A number of casinos have reached out to me and expressed interest in opening up a sportsbook, and we want to make sure they not only have the opportunity to do that in the brick-and-mortar casino but with hand-held devices and online as well,” Iden said.
“I think this is a good first step in that direction, but we have to get this component done first. We’ll make sure we can shepherd through and get to the governor’s desk an agreement to do online gaming, and I think from there the next step will be sports gaming.”
That appears to intimate that Michigan will take up the issue of land-based sports betting eventually as well.
There has been Michigan online lottery since 2015, one of the first in the country to offer that sort of product.
The climate for sports betting
At the top level, there’s the problem of PASPA, the federal law the prohibits single-game sports betting outside of Nevada. Any law Michigan passes regarding sports betting would serve as a placeholder pending the outcome of Christie vs. NCAA.
The biggest hurdle appears to be tribal gaming interests in the state. They have been lukewarm at best and opposed at worst to the iGaming bill. They also haven’t been convinced that the original bill or potential iterations settle legal concerns if they want to offer it.
The tribes have already seen their gaming exclusivity eroded by the construction of three commercial casinos in Detroit. To be on board with online casinos, poker and sports betting, they have to be convinced its both legal to do and in their best interest.
Gaming tribes across the country have also been trying to wrap their heads around what to do about sports betting. Not all have been supportive, especially outside of the largest Native American gaming operators.
The Detroit casinos could be seen as benefitting more from the potential of sports betting than the tribes that operate in other parts of Michigan.
The commercial casinos
The state’s commercial casinos indicated via submitted comments during Monday’s hearing that they supported the online gambling legislation moving forward. But they weren’t endorsing that bill as a final product.
On the sports betting side of things, at least MGM Grand Detroit said its parent company wants to see sports wagering expand beyond Nevada, according to The Detroit News.
Greektown Casino said it supported the idea of sports betting while being non-committal. MotorCity Casino declined comment to that publication.
Michigan’s own constitution could provide a stumbling block for progress. Here’s a passage from the Lottery section:
No law enacted after January 1, 2004, that authorizes any form of gambling shall be effective, nor after January 1, 2004, shall any new state lottery games utilizing table games or player operated mechanical or electronic devices be established, without the approval of a majority of electors voting in a statewide general election and a majority of electors voting in the township or city where gambling will take place. This section shall not apply to gambling in up to three casinos in the City of Detroit or to Indian tribal gaming.
The new server requirement — where online gambling servers must be located on a gaming property in the state — seems to be designed to get around this. If the online gambling is taking place on servers in the casinos or on reservations, the argument goes, a constitutional amendment would not be needed.
Former attorney general Mike Cox did opine that the proposed legislation is valid in his eyes.
Matthew Kredell contributed to this story.