Christmas could come early for poker aficionados in Michigan, as a comprehensive bill that will pave the way for the legalization of regulated online poker, sports betting and online gaming in the state could be passed within the next week.
While there is strong optimism at the moment that that the bill will become law before 2019 closes, one will remember that in 2017, a similar bill was able to pass through the House of Representatives and the Senate, only to be vetoed by then Governor Rick Snyder. Online gambling proponents remain hopeful that this new bill will not face the same fate as the last bill.
The bill had made its way to the Senate in October after being passed by the House of Representatives, but lawmakers needed to iron out key issues.
Significant Progress Has Been Made
Back in June, Whitmer’s administration demanded that tax and licensing rates included in the bill should be increased for sports betting and online poker, while dropping the rate on online slots. The bill’s main sponsor State Rep Brandt Iden initially rejected the idea, saying it would only push away prospective operators, but he eventually agreed to introduce a slight increase to the fees, as the bill moved past the House in October.
Senator Curtis Hertel Jr. then took charge of the negotiations with the Governor. Now, the State Legislature and current Governor Gretchen Whitmer have reportedly reached a compromise with regards to taxation and rates, which means she might sign the bill into law before Christmas. The bill also gained the backing of the state’s three commercial casinos and 23 tribal casinos.
Senator Hertel who said they have gone through a very difficult process in order to reach a breakthrough and get the Governor back to the negotiating table. Previous attempts to legalize online gaming in the Great Lakes State had met with little success, with successive governors remaining hesitant to give the green light due to the fact that state lottery revenues could be placed in jeopardy once online casinos are legalized.
Michigan’s school fund benefits significantly from revenues generated by the State Lottery. In the last financial year, the Michigan Lottery poured in nearly $1 billion to the school fund. Seven percent of that contribution accounted for online games, which Snyder and Whitmer believed worked in similar fashion to online slots. Pro-gambling lawmakers sorted out these issues by making sure the School Aid Fund retains its benefits.
Governor Whitmer refused to sign a similar bill into law last year, but this time around she is pleased that important issues have been resolved through bipartisan cooperation. Whitmer’s spokesperson Tiffany Brown said the Governor will closely review the proposal once it arrives at her desk.
Tax and Licensing Rates
The bill requires casinos to pay $50,000 up front to apply for a license. If a casino successfully obtains a license, it will need to pay $100,000 for the first year and $50,000 for each succeeding year. A $5,000 initial licensing fee also awaits supplier, and afterwards they will each foot $2,500 for the license for each additional year.
The bill proposes a tiered tax structure, starting at 20%, up to 28% of revenue for both casino games and online poker. A $4 million revenue will be taxed at 20%; 22% tax will be imposed on revenue from $4-8 million; 24% on $8-10 million; 26% on $10-12 million; and 28% on $12 million and above.
Lawmakers decided to increase the rates originally introduced in the bill back in October, but the figures are still significantly lower when compared to the 54% tax rate currently implemented in the newly-opened Pennsylvania online poker market. Online sports wagering and daily fantasy sports will be taxed at much lower rate of 8.4%, while the three commercial casinos operating in Michigan will also be levied an extra 1.25% municipal tax.
Under the new bill, online operators will not be allowed to fully deduct promotions and free-play, but they can introduce up to 10% deduction for the first four years of their operation. Afterwards, they will no longer be permitted to deduct.
If the bill is ultimately approved by Governor Whitmer, Michigan would join Nevada, New Jersey, Delaware, Pennsylvania, and West Virginia as these are the only states in the country that have legalized online poker.

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