Michigan is on course to become the latest, and likely the last, state to legalize sports betting in 2019. The state Senate passed and the House concurred Wednesday on a package of gaming bills that will usher in legal mobile sports wagering, iGaming (online casino and poker), and daily fantasy sports (DFS).
The Lawful Sports Betting Act received broad appeal in both chambers, passing the Senate, 35-3, in the early afternoon, and the House, 100-8, just hours later.
The path to legal sports betting in Michigan has been long and not without potholes, the deepest when lame-duck former Governor Rick Snyder vetoed of a package of iGaming bills last December. But that is now history and after another year of negotiations and maneuvering, the table is set for legalization in a state with a large tribal gaming industry. Michigan will become the first state with a major tribal gaming presence to legalize — of the 26 casinos in Michigan, 23 are tribal-owned.
Michigan statewide mobile sports betting likely in 2020
The bills vetoed in Dec. 2018 would have set the stage for legal sports betting, and despite the crushing veto, House Republican Brandt Iden (District 61) had plans to push forward almost immediately after the veto.
“The governor just vetoed the bills,” Iden told Sports Handle last December. “I am surprised and disappointed. With this many stakeholders on board, it took us two years to get to this point, and it’s the first time in any state history that we had all the parties that were supportive of the bill (on the same page).”
Iden, who tells stories of being at sportsbooks in neighboring Indiana nearly every time he testifies about his bills, waited 10 months to re-file his sports betting package. By then, he believed he had a framework that would work for all, and had the state’s tribal gaming interests on board.
Getting the tribes to agree to legislation is no small feat, and Iden said in a hearing earlier this month that he expects Michigan will now be the blueprint for other states with powerful tribal gaming interests. In other states, negotiating with the tribes has been a major road block, in part because they are opposed to mobile sports betting and because many are reluctant to modify longstanding tribal-state compacts concerning the operation of gambling facilities. In California, the state with the largest tribal gaming interests, tribes have banded together to try to get a referendum on the November 2020 ballot to legalize sports betting — but without mobile.
The road from September to now has been a little bumpy, but along with Senate counterpart Curtis Hertel and fellow Representative Rebekah Warren, a deal was struck earlier this week with Governor Gretchen Whitmer, and based on the statement her office released Tuesday, it appears she’ll sign the bills.
“The governor is pleased with the progress made on gaming over the course of this year, particularly once Senator Hertel and Representative Warren were able to engage and resolve key issues to get this package across the finish line,” reads a statement from press secretary Tiffany Brown. “The governor’s top priority when getting this done was to protect the School Aid Fund, and Senator Hertel and Representative Warren helped make that happen and addressed a number of other concerns she had. This is a good, bipartisan solution made possible by working together on a complex issue, and the governor looks forward to closely reviewing this package once it hits her desk.”
At issue all along has been Whitmer’s concern that iGaming would take potential revenue away from Michigan’s lottery, which helps fund the school-aid program. Whitmer was initially lobbying for a 15 percent tax on sports betting, but in the final sports betting bill, the tax rate is 8.4 percent, and the compromise was to increase taxes on iGaming from a sliding scale of between 4-23 percent to a sliding scale of between 20-28 percent. In addition, Hertel and Warren amended the package of bills to include $2 mm in tax revenue for the First Responder Presumed Coverage Fund, which reportedly was a key item for Whitmer.
The bill also gained the support of the professional sports leagues for its inclusion of a “data mandate,” that is the requirement that licensed operators purchase data — on “commercially reasonable” terms — from leagues or its third-parties for any in-game wagering. There is a clause in there that allows licensees to dispute that commercial reasonableness. Michigan becomes the third state following Tennessee and Illinois to include such a mandate; sports betting is not yet live in either state, so the impact of such a mandate is yet to be seen.
Next steps
From here, the package of bills must go back to the House for concurrence, and then will be sent to Whitmer’s office. The transfer of bills isn’t always instantaneous, but all signs point to the package getting out of the legislature and onto Whitmer’s desk within days.
The same three Senators voted against all the gaming bills Wednesday, and Senator Ed McBroom took a moment before the vote on HB 4916 to share his reasons why.
“The state of Michigan is addicted to people’s money. It preys on the most vulnerable society,” McBroom said. “The business of gambling does everything it can to take the largest amount of money from every user it can.’ It’s not like going to Disney World where you get what you pay for; it takes, it takes and takes and takes with the illusion of a payout that is statistically unlikely to ever happen. The state and the house always wins. And now, the expansion and organized sports betting is a huge step that furthers the harm and what it does to society.”
Of note, Iden’s package legalizes state-wide mobile sports betting and allows each licensee one “skin” (or online brand). There are currently 26 casinos in Michigan. The three Detroit casinos — the MGM Grand, MotorCity (Ilitch Holdings) and Greektown (Penn National) — are the only non-tribal owned gaming properties in the state. They’ll each get one “skin” for mobile sports betting, and Sports Handle projects there will be 15 total skins available state-wide, as some tribes own multiple casinos and may only be entitled to a single skin.
The bill does not explicitly legalize sports betting at brick-and-mortar locations/sportsbooks, though Iden said previously that he believes doing so would take minimal legislative action. (Others are construing the bill differently.) But physical sportsbooks are almost certainly coming to the commercial and tribal casinos.
Lawmakers may be planning to get iGaming done this session, and then open the 2020 session with legal retail sports betting. The scenario would be similar to Rhode Island, but in the reverse. In 2018, Rhode Island legalized retail sports betting and followed that with bills to make mobile sports betting legal in early 2019. The mobile bills essentially mirrored the retail bills.
Since last December when sports betting was nearly at the finish line, Michiganders have watched as Indiana legalized and launched sports betting and Illinois legalized, with plans to launch in 2020.
As in Indiana and New Jersey and Pennsylvania, Michigan residents (or people located within state borders) will be able to register remotely for sports wagering accounts, and with such a framework, Michigan and its 10-million population will likely see monthly betting handles approaching $200-300 million within a year of going live.
