Michigan Joins the iGaming Fray by Introducing Four New Bills; First Clears Committee Vote

With the introduction of four separate bills on March 1, Michigan officially joined the race to become America’s fourth state to regulate online gambling.

At this early juncture in the legislative process, three of the four bills (Senate Bills 202, 204, and 205) are simply penal code supplements to S-203, known unofficially as the “Lawful Internet Gaming Act.”

That bill would create the regulatory framework for a legalized iGaming industry, under which anyone physically located within the state’s borders would be permitted to play online poker and casino games for real money.

Sponsored by state senator Mike Kowall, and co-sponsored by four other lawmakers, S-203 is an extension of similarly constructed iGaming legislation introduced by Kowall last year. The 2016 effort, known as S-889, was put forth in April and passed through the Senate Regulatory Reform Committee by an 8-1 margin, before stalling on the full Senate floor.

On March 8 of this year, the same Senate committee – of which Kowall is a member – voted to move his new S-203 forward in a 7-1 vote.

During the hearing, executive director of the Poker Players Alliance (PPA) John Pappas praised Kowall’s construction of S-203:

“For more than a decade the PPA has been at the forefront of advocating for sensible public policy that authorizes and regulates internet gaming. We know a good bill when we see it, and that is why I would like to thank Senator Mike Kowall for his leadership on this issue.

Moving a poker game from the kitchen table to the computer table is just another part of the way the internet has transformed our lives – extending oversight into internet gaming is simply a reflection of our modern-day society.

Michigan can choose to ignore the internet, or it can embrace it for the benefit of its citizens and its economy.”

Along with Kowall, each of the bill’s five co-sponsors – state senators Curtis Hertel, Bert Johnson, Rick Jones, Marty Knollenberg, and Rebekah Warren – serve on the committee.

And while this passage was widely expected based on last year’s vote, the expedited nature of the committee vote provides lawmakers with additional time to debate the finer points and find compromise.

Those finer points give state regulators one year from the time S-203 is signed into law to create regulatory frameworks to govern a statewide iGaming industry. From there, only brick and mortar casinos already operating within Michigan’s borders would be eligible to apply for an iGaming operator’s license.

In a departure from the model established by Nevada, New Jersey, and Delaware, the number of such licenses to be awarded would not be capped.

Users would need to prove that they are 21 years or older in order to play, and geolocation would be used to ensure that all players are physically located within the state’s jurisdictional boundaries.

Crucially, the law allows Michigan to enter into interstate player sharing agreements with fellow iGaming-legal states. In the estimation of iGaming experts, this provision is considered essential in ensuring continued player pool liquidity growth.

In addition to a 10 percent tax applied to annual gross gaming revenue, iGaming operators would pay a $200,000 fee for the first year of a five-year licensure period, followed by $100,000 each year thereafter.

The five-year platform provider licenses which would be awarded to companies like PokerStars and 888 Casino would follow a $100,000 / $50,000 payment scheme.

Finally, an annual appropriation of $5 million from combined online gaming revenue would be collected and distributed to the state’s First Responder Presumed Coverage Fund.