HomePublicationsNewsletter ArchiveVolume 25Issue 34MICHIGAN LEGISLATURE PASSES COMPREHENSIVE GAMING REFORM AND EXPANSION BILLS

On Wednesday, the Michigan Senate and House passed several gaming-related bills that will authorize and regulate fantasy sports, iGaming, and sports wagering.  Additionally, the legislature also passed bills authorizing advanced deposit wagering at horse race tracks, changes to rules governing charitable millionaire parties and a comprehensive modernization of the Michigan Gaming Control Act.  While Governor Whitmer must still sign the bills into law, all indications are that she has been involved in the drafting and negotiation of the bills and that she will likely sign all of the presented bills.

HB 4311 authorizes and regulates internet gaming, with the Michigan Gaming Control Board overseeing the licensing and regulation of iGaming. Only the three Detroit commercial casinos and tribal casinos that currently offer casino gambling would be eligible to offer internet gaming.  Operators would be required to utilize geofencing to ensure that customers are located within the state of Michigan when placing wagers.  Operators are permitted two “skins”, one for interactive poker and a second for all other casino style games. Initial application fees were set at $50,000, with a $100,000 initial licensing fee and a $50,000 annual renewal licensing fee.  

While the taxation rate has been the subject of disagreement between the governor’s office and the legislature, they have compromised at a sliding scale range beginning at 20% tax on revenue up to $4 million and increasing until it reaches 28% on all revenue exceeding $12 million.  Casinos are permitted to deduct free play amounts up to a certain percentage of gross receipts on a sliding scale for the first 5 years following passage. The tax revenue is allocated 30% to the city in which the operator’s casino is located for law enforcement, job training and other similar programs, 5% to the Michigan agriculture equine industry development fund, and 65% to the state.  From the state’s fund, there is an annual $500,000 payment to the compulsive gaming fund, an annual $2,000,000 payment to the first responder presumedcoverage fund, and the remainder to the school state aid fund. 

Internet gaming cannot commence until there is at least one license granted to a Detroit casino and one granted to a tribal casino.

HB 4916 authorizes and regulates sports wagering, including mobile sports wagering.  As with legislation in several other states, it bars wagering on high school or younger athletic events.  Unlike most sports wagering laws, however, the bill mandates that operators use official league data from the respective leagues for any in-game wagers.  As with the iGaming bill, operators are limited to the three Detroit commercial casinos and tribal casino operators.  Tribal operators have the option of offering sports wagering by going through the National Indian Gaming Commission (“NIGC”) or by obtaining a license from the Michigan Gaming Control Board.  If the tribal operators obtain a license from the Michigan Gaming Control Board, then any sports wager can be taken on a mobile or Internet basis provided the customer is in the state, but if the tribe offers the sports wagering under the regulation of the NIGC, then all bets must be made solely on the tribal reservation property.

The legislation permits Michigan to enter into agreements with other jurisdictions to facilitate, administer and regulate multi-jurisdictional sports betting.  Sports betting licenses are valid for a 5 year period, with an initial $100,000 license fee and then $50,000 each subsequent year.  Operators must pay a tax of 8.4% of the adjusted gross sports betting receipts. The allocation of the tax is identical to the allocation required for internet wagering detailed (30% to the local municipality, 5% to the Michigan agriculture equine industry development fund, and 65% to the state, with state funds being distributed as an annual $500,000 payment to the compulsive gaming fund, an annual $2,000,000 payment to the first responder presumed coverage fund, and the remainder to the school state aid fund). 

HB 4307 is a modernization of the Gaming Control Act, which had not been significantly amended or updated since its passage over 20 years ago.  Among many other things, the bill eliminates the ban on political contributions from casino licensees and employees, revises occupational licensing barriers, and permits certain individuals to receive a license if sufficient time has passed from any previously disqualifying criminal conviction. It also reduces the waiting periods for gaming control board members and employees from having an interest in a casino licensee either before or after their board employment and provides for nominal compensation for control board members beginning in 2024. Finally, the bill also increases the ownership threshold from 1% owners to 5% owners who must come forward for licensure. 

HB 4308 authorizes and regulates fantasy sports contests. The Michigan Gaming Control Board would oversee the licensing and regulation of the industry.  Initial licensing fees are $10,000, with annual renewal fees set at $5,000. The bill includes requirements for operators to provide resources regarding compulsive gaming behaviors on websites, as well as to set up self-exclusion controls on a customer’s account. Operators would have to pay an 8.4% tax on revenues.

HB 4310 permits third party facilitator licenses for advanced deposit wagering at Michigan horseracing tracks. Operators are required to have contracts with race meeting licensees to enable customers to wager on live and simulcast racing through their mobile phones without having to physically be at the racetrack. The wagers processed through the third party facilitators are subject to an additional 1% tax.

SB 661, a bill that would permit historical horse racing, passed the Senate but was not included by the House in the package of bills passed on December 11.  More information regarding SB 661 can be found in Volume 25, Issue 33 of the Michigan Gaming Newsletter.

HB 4173 revises the rules governing charities offering casino-style games commonly referred to as millionaire parties.  The bill requires charitable organizations to include in its application to the Michigan Gaming Control Board the name and address of each officer of the applicant, and the name of each dealer at the event. Charitable organizations may host up to 4 parties per year, with each party lasting no longer than 4 consecutive calendar days. The total cap on revenue received from a party is increased to $20,000 for each day of the event.

 

Upcoming Events

Michigan Gaming Control Board Public Meeting

September 15, 2020 - 9:30 AM

Casino Job Board

Official Publications

 

RMC Legal

Visit our other website below: