Michigan Inching Closer to Legal Sports Betting, Online Gambling
Michigan is on the cusp of legalizing sports betting and online gambling after the state Senate Regulatory Reform Committee unanimously approved Tuesday morning a package of bills on the matter to send them to the full Senate floor.
The set of measures allow for digital sports betting through both commercial and tribal casinos. They also permit online gambling services, including casino-style games and poker.
Sen. Curtis Hertel said Tuesday that the Senate is likely to pass the package on Wednesday morning, with concurrence in the House expected later today. The measures will then be passed on to Gov. Gretchen Whitmer for final approval.
The Governor’s office was the final of many hurdles that prevented the Legislature from moving forward with the legalization of betting and iGaming at a much earlier point this year. Gov. Whitmer wanted to make sure that the practices will be taxed properly and that their authorization will not have a devastating impact on the Michigan Lottery, which also offers online products.
Money for Schools
Michigan’s top official has expressed concerns that the legalization of online gambling could create a “substitution effect” that could see people who have been playing online lottery switch to poker and other Internet games. Such a substitution effect would impact proceeds the state gets from lottery products.
The state’s Lottery contributes a large portion of its revenues to Michigan’s School Aid Fund. Thus, for a $1,000 net win from online lottery products, Michigan schools get $700.
The state’s Republican Legislature and Democratic Governor looked for two months for a sweet spot that would ensure contributions to the School Aid Fund would not be severely impacted due to the legalization of more gambling options on the territory of Michigan.
Online Gaming, Betting Tax Rates
Following the latest round of discussions between Gov. Whitmer and the Legislature, a previously proposed 8.7% sports betting tax rate was reduced to 8.4%. Casinos in Detroit that will be offering sports betting will be subject to an additional 3.25% tax.
On the other hand, the tax rates for online gambling rose dramatically. A previous iteration of the iGaming measures placed the rates for online casino games and online poker at between 4% and 23%. Under a new tiered system that was approved Tuesday, operators would pay a 20% tax for adjusted gross receipts of less than $4 million, a 22% tax for gross receipts between $4 million and $8 million, a 24% tax for gross receipts of between $8 million and $10 million, a 26% tax for gross receipts of between $10 million and $12 million, and a 28% tax for gross receipts exceeding $12 million.
The sports betting-related provisions in the package of bills permit each wagering licensee to offer one digital sportsbook only and no skins. For online gaming, license holders will be able to offer up to two skins – one for casino games and one for online poker.
License application fees would cost $50,000. Approved operators will pay $100,000 for the initial license and an annual renewal fee of $50,000.
Source: Michigan Poised To Legalize Sports Betting After Windy Road, SportsHandle