Online Gambling Bill Is Revived in Michigan

Michigan State Capitol sign

Michigan’s outgoing governor vetoed a bill to legalize online gambling in December, but bipartisan efforts will persist to pass a similar bill in 2019.

  • Online gambling legalization bill was passed by the Michigan legislature
  • Outgoing Governor Snyder vetoed the bill on his second-to-last day in office
  • Positive signs are that the two parties will pass a similar bill in 2019

Journey to online gambling legalization

The Michigan legislature, which is under Republican control, approved a bill to legalize online gambling in December. However, the outgoing governor, Rick Snyder, vetoed it as one of his last moves in office. Therefore, Michigan’s attempt to become just the fifth state in the US to have legal online gambling was at least postponed.

Because Snyder had been in office for the maximum period, he could not run for re-election in November, and Democrat Gretchen Whitmer is the state’s new governor.

The veto of this bill was a blow after a lot of bipartisan work had gone into it. State Representative Brandt Iden had attempted to push such a bill through for many years. It was difficult because the tribal and commercial casinos both have considerable political power and their interests often do not align with one another.

In the last week of the 2018 legislative session, the final version of the bill got the green light from the Senate. While the bill only explicitly mentioned poker, it was also going to apply to casino games once the proper regulations were put into place.

Why did Snyder object?

Snyder sent a letter explaining his vetoes before he left office. He said that he thought online gambling would jeopardize the existing iLottery and lottery revenues. He also felt that the Michigan School Aid Fund would not receive adequate funds from online gambling taxes.

Many experts rebutted his claims of potential cannibalization. They pointed at online gambling legalization in other states where no such issues arose.

The bill would have imposed an 8% tax on online wagering revenues, minus winnings paid out. The current tax rate for the three state casinos in Detroit is 19%. There are 23 tribal casinos in the state in addition to the three non-tribal casinos in Detroit.

These establishments will be able to apply for a license when the process begins. The allocation of the tax revenues was the main sticking point in the Senate. It is estimated that in the first year of having legal online gambling, tax revenues will increase by more than $140m (£110m).

New bill likely to pass

Detroit has been experiencing a lot of issues since the Great Recession. The city has finally been able to get out of its financial mess after having to declare bankruptcy. However, it needs new forms of economic development.

One major source of revenue for the city would be a tax on online gambling. The bipartisan approach taken for the legalization bill shows that this is a good idea. It can have hugely positive effects on the city and state as a whole.

Local businesses would see significant upticks in revenues, as well as the casinos themselves. There was huge disappointment after Snyder vetoed the bill on December 28. However, the support is so strong that a new bill is very likely to pass.

Supporters are focusing their efforts on informing the new governor about the many great benefits legal online gambling can have for the region. They do not want to face another veto.

Estimates from Amaya Inc. project additional revenues of as much as $60m (£47m) annually from the casinos in Detroit alone. There is also the problem that many residents of Michigan are using illegal offshore gambling websites. Therefore, the thriving black market is draining money that could be going to the state.

Both political parties are committing to working together to push this bill over the line finally in 2019. They are confident that Snyder’s veto will not last very long.