Online Casino and Poker Proposal Introduced in Michigan Legislature

Michigan became the latest state to propose regulating the online gambling industry, after state representative Brandt Iden (R-Kalamazoo) introduced an iGaming package in the House on September 12.

House Bill 4926, also known as the “Lawful Internet Gaming Act,” would allow Michigan’s collection of 23 land-based casinos – both tribal and commercial – to apply for internet gaming licenses.

Those applications would be processed by a newly created Division of Internet Gaming, with prospective operators paying $100,000 to apply, and $200,000 upon being licensed. From there, an annual fee of $100,000 would be paid by operators to maintain their license.

As for the tax plan put forth by HB-4926, Iden has proposed a 15 percent tax on gross gaming revenue. This matches the rate used in New Jersey, where a thriving iGaming industry has generated more than $100 million in tax revenue since launching in 2013.

In a public statement, Iden outlined his reasoning for drafting HB-4926:

“Technology is changing, businesses are going to have to adapt to that and they’re going to need an online platform at some stage.

I-gaming will happen in Michigan and whether I do it, or this governor signs it, I don’t know, but we have to start the conversation.”

Immediately after being introduced, HB-4926 was referred to the House Committee on Regulatory Reform – on which Iden serves as Chairman.

That committee then held its first hearing on HB-4926, allowing Iden an opportunity to address his fellow lawmakers directly:

“If I were a betting man, and I am, iGaming will become law at some stage in the state of Michigan.

I believe it is incumbent upon this committee and this legislature to be proactive and to protect our citizens.

And it will happen. So, the ‘when’ is up to all of you.”

Iden’s proposal follows up on iGaming momentum generated over the last two years.

This March, the Senate Committee on Regulatory Reform voted 7-1 in favor of similar legislation, and in 2016, the same committee authorized online gambling regulation.

During last week’s hearing, several iGaming industry stakeholders – including PokerStars parent company Stars Group and the Poker Players Alliance (PPA) – delivered testimony in support of HB-4926.

The Coalition to Stop Internet Gambling (CSIG), a lobby group launched and funded by land-based casino mogul and billionaire Sheldon Adelson, also contributed testimony opposing the bill.

Michigan’s three commercial casinos – MGM Grand Detroit, Greektown Casino, and MotorCity Casino – each declined the opportunity to testify. But according to Online Poker Report, all three venues currently oppose HB-4926, with MGM Grand Detroit revealing only that it “supports the concept” of online gambling in Michigan.

Mike Cox, who served as Michigan’s attorney general between 2003 and 2010, told the committee that HB-4926 was carefully crafted to comply with the state’s current gaming culture:

“These bills are the product of collaboration … Collaboration primarily with the three states that are doing it well right now, Delaware, Nevada and New Jersey.

Thankfully for us in the state of Michigan, they’ve worked out a lot of the kinks.

These bills are a result of talking with their regulators and using those things that work well, incorporating them for the benefit of Michigan citizens and complementary with Michigan law.”

Interestingly, section 10(a) of the bill includes a provision which appears to mandate online poker, while making other iGaming offerings such as casino table games and slots optional:

“The rules may include only things expressly authorized by this act, including all of the following:

(a) The types of internet games to be offered, which must include, but need not be limited to, poker.”

This caveat would mark a departure from the models established in Nevada, Delaware, and New Jersey, states where operators are free to spread their preferred selection of permissible games.