Sports betting and online gambling would become legal at Michigan casinos under legislation approved Wednesday by the House, though Gov. Gretchen Whitmer continues to have concerns that the expansion could syphon revenue from the state’s iLottery.
The main measures in the 10-bill package passed on 63-45 and 62-44 votes, with many Republicans and some Democrats in support. The legislation , which also would regulate the fast-growing paid fantasy sports industry, was sent to the GOP-led Senate for future consideration.
An 8.75% tax would be collected on sports wagering receipts, minus winnings paid out — less than a 19% tax now paid by Detroit’s three commercial casinos. The city of Detroit could also collect an additional 3.25% tax, said Rep. Brandt Iden, the sponsor of the main bills.
The tax rate for online gambling, excluding sports bets, would range between 4% and 19% in the first three years depending on much internet revenue a casino generates. It would rise to 6% to 21% in year four and, in year five and beyond, go to between 8% and 23%. Detroit could collect an extra 3.25% tax.
The state’s 24 tribal casinos also could offer sports and online wagering. Their revenue-sharing payments would be negotiated with the state through compacts.
Iden dismissed Whitmer’s worries that school funding, which comes in part from the Lottery, may be hurt by legalizing sports betting and online gambling. He said the tax rates would be higher than under legislation that former Gov. Rick Snyder vetoed last year.
“The tax rate went north. We got her more than half of what she asked for on both” internet gambling and sports betting, said Iden, a Republican from Kalamazoo County’s Oshtemo Township. “The money was directed to the school aid fund. My directive, from what I had always heard, was ‘protect the school aid fund.’ I believe that these bills did that. So it’s very confusing to me when the governor says they’re not in support.”
Iden estimated the bills, if signed into law, could eventually generate between $80 million and $100 million in new tax revenue annually.
Rep. Rebekah Warren, an Ann Arbor Democrat, voted no after saying the legislation as written would be vetoed. She urged legislators to keep negotiating.
“We continue to have revenue concerns regarding the bills’ negative impacts on the school aid fund,” said Whitmer spokeswoman Tiffany Brown. “The administration has taken every meeting we’ve been invited to regarding this legislation and will continue to work closely with the bill sponsor, tribal leadership and stakeholders to attempt to address our concerns.”
Whitmer aides on Wednesday gave House GOP leaders suggested changes to the package, including three options for taxation systems. Under one scenario, rates would differ for online table games vs. online slots. In another, online slots and instant games would not be allowed.
Whitmer also called for taxing sports betting and daily fantasy sports operations such as DraftKings and FanDuel at between 10% and 11%.
Iden described the legislation as a consumer protection initiative, noting that sports betting and online gambling already are available at offshore sites.
“We need to make sure that people are being protected,” he said. “People play. We know people play. We’ve got to make sure that the regulations are there.”
The U.S. Supreme Court in 2018 paved the way for all 50 states to allow sports gambling. It is underway in 13 states and has been authorized in five more, according to the American Gaming Association.
At least four states allow their casinos to offer online poker or other forms of internet gambling.
House Bills 4916-18, 4308-12, 4323 and 4173: http://bit.ly/2NDZMh5