When the Michigan Senate last week sent a package of iGaming bills to Governor Gretchen Whitmer for signature, nothing in the language itself explicitly legalized sports betting at brick-and-mortar sportsbooks. But according to key bill sponsor Brandt Iden, the language wasn’t there, because, it didn’t need to be. It’s technically been legal to bet on sports at a bricks-and-mortar sportsbook in Michigan since the Supreme Court struck down the Professional and Amateur Sports Protection Act in May 2018.
“Retail [betting] has always been legal since the repeal of PASPA,” Iden told Sports Handle. “In 1996, the voters voted on a referendum that would allow the three commercial casinos in Detroit to allow Class III games, and sports betting was on that list.”
And Michigan’s tribes either have sports betting listed under Class III gaming which they are permitted to offer at properties, or will have it added when Whitmer signs HB 4916, the sports betting bill that is part of the gaming package on her desk.
Bill lowers tax rate to 8.4 percent
The news that retail sports betting is legal came as a bit of surprise to some in the industry.
“It was news to me,” said consultant Brendan Bussman of Global Market Advisors. “That’s not what I was planning on or what I think (stakeholders) were planning on. But I think the biggest thing is that people are excited because sports betting is moving forward in Michigan.”
The bills were sent to Whitmer last week, and she has until Christmas to sign them. According to the state legislative website, the bills were “presented” to Whitmer last Friday afternoon.
Votes are in:
– Legalizing Sports Betting (4916): Passes 35-3.
– Legalizing iGaming/Poker(4311): Passes 35-3.
– Legalizing DFS (4308): Passes 35-3.
— Sports Handle (@sports_handle) December 11, 2019
So, why haven’t Michigan casinos gone live with sportsbooks and sports betting? Taxes.
“The issue has always been, ‘What is the tax rate?'” Iden said. “So, how do we regulate that? HB 4307 sets the tax rate, which has always been the crux of the discussion.”
HB 4307 was passed by the Senate last Tuesday, ahead of the rest of the iGaming package. Overall, the tax rates on sports betting are now set at 8.4 percent, though the commercial casinos in Detroit also have a 3.25 percent city tax.
It would seem the 8.4 percent rate would apply to tribal gaming as well, though it may be called “revenue sharing,” or be termed in such a way that it complies with the federal Indian Gaming Regulatory Act.
Class III gaming in Michigan is taxed at 22 percent, said Iden, so that was the real hold up for operators who want to open physical sportsbooks. The 10 percent number allows operators to have their best shot at running a profitable operation in a low-margin business. Iden was mindful of this as he negotiated the terms of HB 4916.
“No one ever argued that brick-and-mortar” was legal,” Iden said. “The bills never said ‘brick-and-mortar,’ but the didn’t need to. The could open today, but the reason they didn’t is because the tax rate would be 22 percent. Now it will be 8.4 percent.”
Michigan sports betting by March Madness?
Once Whitmer signs the bills — it officially hit her desk on Friday Dec. 13 — it may be a race to go live. Iden and others in Michigan are hoping to fast-track live sports betting like their neighbors Iowa and Indiana did — both states legalized in May 2019 and Iowa sportsbooks took their first bets on Aug. 15 while Indiana books began taking wagers on Sept. 1. It’s unrealistic to think that Michiganders will be betting by the Super Bowl in early February, but with a focused, streamlined approach, March Madness could be a possibility.
“It depends on how much homework the gaming commission has done and how that plays out,” Bussman said. “March Madness is doable, but it’s tight … it’s a mature market, and probably the biggest hurdle was getting the tribes and commercial interests on the same page, so they’re probably past the biggest hurdle.”
Iden suggests the first bets will be taken at a physical sports betting location, as it’s become clear in other states that going live with a retail book is a quicker process than launching a mobile application or website. There is no timeline or deadline for legal sports betting in the legislation.