Hurdle for online casino games in Michigan is cleared

  • Bill to legalize online casino games to go to Senate floor
  • Opposition already registered, with legal minefield expected

Michigan’s latest attempt to pass an online gambling bill has taken a significant step forward, but is still dogged by controversy and confusion. The road for online casino games still looks long and winding.

Michigan's Senate has approved an online casino bill.
Michigan’s Senate has approved an online casino bill.

At a hearing of the Senate Regulatory Reform Committee, the bill was passed by a margin of 7-1. As six of the committee’s nine members were co-sponsors, this was pretty much a forgone conclusion. It will now progress to be heard on the Senate Floor, but pundits are predicting a legal minefield for the bill, which could hinder it passing into law.

Senate Bill 203

Senate Bill 203 (SB 203) aims to authorize online games that “must include, but need not be limited to, poker.” It prohibits betting on sports.

If the bill is ever passed, the only organizations eligible to apply for internet gaming licenses would be the state’s existing commercial casino operators and the federally recognized tribes who are already authorized to run gaming operations in Michigan.

The Bill has received less than enthusiastic support from major stakeholders though, due to lingering questions, particularly how the new legislation would impact on existing tax and concession arrangements with the state’s 12 gaming tribes.

Tribes fear losing tax immunity

States are prohibited from taxing gaming tribes under Federal law (Indian Gaming Regulation Act 1988). The only money they can collect from them is regulation costs. However, States can collect tax above the cost of regulating gaming if they grant meaningful concessions to the tribes. This could include for example an exclusivity deal over a geographical area or casino game.

In SB 203, Michigan fails to address how these complex arrangement will translate into online gambling operations and tax arrangements. As raising revenue is one of the many reasons for the campaign to bring online gambling to the State, the tribes fear they would be called upon to concede their hard-won tax immunity and line-up with other commercial gaming enterprises.

Hearing’s witnesses and statements

No tribe (or commercial casino operator for that matter) attended the bill hearing. However, three commercial operators expressed their neutral positions in notices submitted to the committee. Four gaming tribes used the opportunity to register their opposition.

Witnesses who appeared at the hearing were also represented at a similar online gambling hearing in Pennsylvania just hours before. They were: Poker Players Alliance director John Pappas; Nicholas Menas of Amaya Gaming; and Paul Irvin from the Innovation Group.

OUR VERDICT

We’ve been here before. An online casino bill which seemed promising in 2016, then stalled, and eventually fizzled out. There is no denying the support for such a legal change, but online casino fans in Michigan still face a lengthy wait for real change.

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