Michigan Poised to Become Fifth State to Legalize Online Gambling

Michigan State Capital Building on a winter overcast day

Michigan’s legislature, which is controlled by the Republicans, has passed a bill to legalize online gambling. The bill now only requires the signature of Governor Rick Snyder to become law.

Revenues from online gambling will go toward efforts such as environmental clean-up and road improvements although many people believe these funds should be spent on education.

If Michigan legalizes online gambling, it would be the fifth state in the nation to do so.

What are the details?

The bill would impose a tax of 8% on all online wagers, taking out the winnings. This is a significant decrease in the current tax rate on the state’s three casinos in Detroit, which is 19%.

These are the only legal non-tribal casinos in the state, and they will be eligible to apply for online licenses. The state’s 23 tribal casinos can also start online gambling operations once they go through the appropriate steps.

One of the main issues causing debate is the allocation of the tax revenues. The point was narrowly approved by a 56-51 vote.

The bill calls for committing $69m (£54.5m) annually to cleaning up the contamination sites in the state and improving the rates of waste management and recycling. This new revenue will replace a previous bond issue. A previous proposal to raise the state fee to fund these measures was defeated.

More than $100m (£79m) would go toward road construction and improvement. The bill also calls for hiring more mental health professionals for schools and more child protection workers.

Michigan, along with many other states, is seeing increases in tax revenues, largely due to improvements in the economy and their ability to collect taxes for online sales much more easily. It is estimated that the first year of legal online gambling will bring in about $141m (£111.4m) in tax revenues.

What happens next?

It seems certain that the governor will sign the bill into law. If he does, sports betting will also officially be legal. Therefore, Michigan will become the first state in the Midwest to have legal sports betting.

A lot of states that have legal sports betting see significant people crossing into their region from neighboring states to place sports bets. Michigan had been strongly considering introducing integrity fees for the sports leagues. However, this is no longer on the table, so the leagues will not get a slice of every bet.

Who opposes this bill?

Some in the state do not want to see this bill become law. The Michigan Association on Problem Gambling (MAPG) has been voicing its concerns.

The association believes that online gambling will lead to drastic increases in the number of problem gamblers in the state. At the moment, more than 100,000 in Michigan are deemed to be problem gamblers.

Proximity studies show that when a gambling facility opens, the incidence of problem gambling increases within a 50-mile radius. Since online gambling allows people to bet from anywhere, this radius will naturally cover the entire state.

The MAPG does understand that legalization is likely. Therefore, the organization will push for more funding to go toward the prevention and treatment of problem gambling.