Michigan Introduces Online Casino Bill SB 889

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Saturday, April 30th, 2016 | Written by Stephen Smith

Pennsylvania, California and New York are all seriously considering legalizing online gambling as a way of increasing revenues for state budgets. Now, you can add another state to the growing list of places where online gambling could potentially become regulated in the future–Michigan. On April 15, 2016, a bill called The Lawful Internet Gaming Act was introduced to the Michigan State Senate as an important first step in the regulating process. As an extract from the bill states:

“In order to protect residents of this state who wager on games of chance and skill through the Internet and to capture revenues and create jobs generated from Internet gaming, it is in the best interest of this state and its citizens to regulate this activity by authorizing and establishing a secure, responsible, fair, and legal system of Internet gaming that complies with the United States Department of Justice’s September 2011 opinion concerning [the Wire Act].”

Background on the Michigan Bill

The Lawful Internet Gaming Act (SB 889) was sponsored by State Senator Mike Kowall (photo), and as is standard practice, the bill has subsequently been turned over for consideration in committee. Specifically, the Michigan Senate Committee on Regulatory Reform will be responsible for evaluating and either recommending or rejecting the legislation. However, with Mike Kowall sitting and serving as the vice chair of the Oversight Committee and Commerce Committee, it seems that there is a good chance of the legislation being at least seriously considered.

Key Details of the Bill

Following an announcement of the proposed Lawful Internet Gaming Act, details about its features were shared with the public. It has been established that:

– The Bill Has a Minimum Age Requirement. In order for players to be able to gamble at the online tables and slot machines in Michigan, they will need to be at least 21 years old.

– The Bill legalizes two forms of online gambling. If the bill passes, both online poker and online casino games will be lawful and regulated in the state.

– There Are Requirements on Who Can Apply for Licensing. Only Michigan-based casinos and tribal casinos in the U.S. will be eligible for a license. Only eight licenses will be issued if the bill passes.

– A Fee Will Be Required. In order to obtain a license, prospective online gambling operators will have to pay a fee of $5 million. $100,000 of that money is due at the time the application is returned to the state. It is non-refundable, so operators cannot get it back if they are ultimately denied a license.

– Gross Gaming Revenue Will Be Taxed Under the Law. The legislation proposes a 10 percent tax on the gross revenues generated by online gaming. This number could be increased or decreased as the bill moves forward.

– There Is No Location Requirement. The Lawful Internet Gaming Act makes it legal for people outside of Michigan to use their virtual casinos and poker tables, provided they are in a location where online gambling is legal. This will make it possible for Michigan iGaming operators to pool players from other states where online gambling is legal or from foreign countries that have regulated online gambling.

Prospects of Success

It’s much too soon to know whether or not The Lawful Internet Gaming Act will ultimately be successful. While there does seem to be support for the bill, we’ll have to keep an eye on Lansing to see how things progress with the attempt to regulate online gambling.

One factor that it is important to realize, however, is that online gambling bills in the US have got a poor record of passing on their first attempts. California, for instance, has been trying to pass a bill for around ten years already with no success, while New York has also introduced numerous online gambling bills to no avail. Another factor not in the bill’s favor is the state legislature taking a break in June until December, with only a few legislature session taking place within that period of time.

On a more positive note, Michigan already has an established gambling industry which includes the lottery, casinos, and horse tracks, which should therefore circumvent any potential moral arguments against a further gambling expansion. These markets have already being reaping significant rewards for state coffers, and with online gambling unlikely to cannibalize existing businesses, their legalization should therefore result in a net positive contribution to state coffers.