Michiganders received an early Christmas gift last month when the state legislature voted to legalize online gambling, but former Governor Rick Snyder dashed their hopes with a surprising veto on the Michigan iGaming bill.
Snyder – whose eight-year term as Michigan Governor came to an end on Tuesday – wielded his executive veto powers to kill House Bill 4926.
Had it been signed into law, the bill would’ve legalized and regulated online poker and casino games, services which would’ve been offered by the state’s three commercial casinos in Detroit and 23 tribal casinos throughout the state. HB-492 also called for online sports betting, contingent on the legislature authorizing a comprehensive sports betting bill at some point this year.
All of that is a moot point now, however, after Snyder included the Michigan iGaming bill among 40 other vetoes in one of his last official acts as Governor.
HB-4926 was killed off despite garnering bipartisan support within the state house and senate, a decision Snyder attributed to “unknown budgetary concerns.”
More specifically, as he wrote in his veto letter to legislators, Snyder linked those concerns to potential cannibalization of gaming revenue currently enjoyed by the Michigan Lottery:
“I am concerned that the (internet gaming) bills will encourage gambling by making it much easier to do so.
I do not think it is appropriate to sign legislation that will effectively result in more gambling, with a reasonable chance that the state could lose revenue that could be helpful in dealing with social service issues that are ordinarily attendant to increased gambling behavior.”
In 2014, Snyder signed off on a bill to legalize online lottery ticket sales, making Michigan one of only a handful of states to allow the so-called iLottery.
Snyder went on to describe his fear that differences in the tax rate applied to legal online gambling and lottery ticket purchases would eventually diminish the latter’s contribution to the state’s School Aid Fund, which received $924 million from the Lottery over the 2017 fiscal year:
“For each $10 of spending on the lottery, the School Aid Fund receive approximately $2.76.
Under HB4926, because of its lower tax rate, each $10 in online betting translates to just four cents deposited into the School Aid Fund.”
HB-4926 was the brainchild of state representative Brandt Iden (R-61), who introduced Michigan iGaming legislation in four consecutive legislative sessions before finally getting over the hump.
Iden collaborated with colleague state senator Mike Kowall (R-15) to push his bill across the finish line, and in public comments made after the Senate passage, Kowall made it clear that he believed Snyder’s signature was a foregone conclusion.
In an interview with Matthew Kredell of Online Poker Report, Iden described his surprise in learning that Snyder decided to kill a widely agreed upon bill:
“The veto pen came out for my entire gaming package, which is incredibly disappointing. We had no idea this was coming.
We had all the stakeholders supportive of the package and we had alleviated any concerns, so this is a very surprising outcome.”
Asked about the outgoing Governor’s contention that iGaming would adversely impact lottery ticket tax revenue, Iden contended the state was simply seeking to continue its existing governmental monopoly over online gaming:
“I think it’s unfair because you’re taking a state entity like the lottery and trying to compare it to the free-market system of other online gaming platforms.”
If your problem is a concern for the lottery, you’re never going to be comfortable with an iGaming bill because it impedes on the state’s monopoly on the lottery.
That’s not a free-market approach.”