Michigan Representative Brandt Iden got his sports betting and internet gaming package out of the Ways and Means Committee on Tuesday, advancing a bill’s march to the governor’s office for the second consecutive year. This time around, Iden had to compromise some more, as the latest version of the legislation includes a mandate that would require licensed operators to use so-called “official league data,” and the bill also increases the tax rate on gross sport betting revenue from 8 to 8.75 percent.
The package of bills is headed to the House floor, though no vote date has been set as yet.
Iden has worked to broker deals various stakeholders for years at this point, and on Tuesday said that the addition of the official league data mandate was a compromise. The professional sports leagues, chief among them Major League Baseball and the National Basketball Association, have been lobbying for the requirement in statehouses across the country. There was little discussion before the package of bills was voted out of committee.
Sports betting has bi-partisan support
“We’re in a good spot, good bi-partisan support and I expect that to carry over with votes on the House floor,” Iden said via text on Tuesday.
Last year, Iden wouldn’t have considered including the data mandate, but Tennessee opened the door over the summer, including the mandate in its mobile-only sports betting law. Illinois lawmakers quickly followed suit, making it the biggest state with legal sports betting to bow to the professional leagues, which have been asking for a “royalty” or “integrity fee” — a direct cut of all wagers — as well as the data mandate for two years now. Michigan would give the leagues a third win on the data front.
Late in Michigan’s 2018 session, a bill passed the House (but not the Senate) that called for an 8-percent tax rate, but explicitly stated “no other tax or fee may be imposed by agreement or otherwise on a casino licensee by this state or a political subdivision of this state for sports betting or internet gaming.” This appeared to be a way to keep from having a royalty, data mandate or anything else tacked on.
The new data requirement brings into play the question of what “commercially reasonable” terms are for purchasing the data. This has been a hot topic in recent months as operators point out that mandating data gives the professional leagues a monopoly. To that end, Iden reportedly offered guidelines for the Division of Sports Betting to help determine what would be considered “commercially reasonable,” including that data should be available from more than one official source.
With regard to the tax rate, even at 8.75 percent, operators would consider that to be a relatively friendly number compared to other rates around the country (34 percent in Pennsylvania), but in the city of Detroit, the tax rate would be 12 percent, as there is a 3.25 percent city tax currently imposed on casinos that would carry over to sports betting. That said, the playing field is somewhat uneven, as tribal casinos will be taxed only at the 8.75 percent rate.
Governor’s office absent
The data mandate and tax increase aside, the most concerning comments came from Representative John Lilly, who said “as much as it pains me, there has been no (effort) from the governor’s office.”
It appears that despite efforts from lawmakers, Governor Gretchen Whitmer’s office has been absent from the sports betting and internet gaming discussion, potentially setting up another fail for lawmakers. Last year, Iden got his bill to lame duck Governor Rick Snyder’s desk before he vetoed it with just days left in 2018.
When Whitmer was elected, the hope was that she would be more open to sports betting and internet gaming, but so far, her office has essentially been silent on the issue.
At Tuesday’s hearing, Iden amended and replaced several of the bills in the package, and all passed smoothly. Time is getting short, though, as the House has only five more session days scheduled before Thanksgiving and nine in December. Iden’s package must get through the House and over to the Senate before the end of the session in order to make it to Whitmer’s desk in time for a signature.
There was no public testimony at Tuesday’s hearing, but Iden read in cards of support from MGM, FanDuel, iDEA Growth, multiple Indian tribes, the NBA, Major League Baseball, the PGA Tour, the Detroit Pistons and two downtown Detroit casinos. There were also several in opposition, including the state budget office and a consortium of secondary school principals.
