Michigan Online Gambling, DFS Bills Await Senate Vote

Michigan could be weeks away from legalizing online gambling and daily fantasy sports if a set of bills gets Senate approval

Michigan might be close to the finish line on the legalization of online gambling and daily fantasy sports, according to the author of a set of bills calling for an Internet-focused overhaul of the state’s gambling industry.

Rep. Brandt Iden’s Lawful Internet Gaming Act was approved in the House in June. The piece now awaits vote in the Senate and if it gains the necessary traction in the upper chamber of the Michigan Legislature, it will allow the state’s three commercial and 20-plus tribal casinos to offer online casino games. The bill needs to be voted by the Senate by December 20 when the legislative session is set to end. The piece will die if no vote takes place by the end of the year.

Michigan lawmakers attempted to legalize online gambling in previous years, but their efforts failed in the Legislature every time.

The state House also passed a fantasy sports bill earlier this week. That piece, too, is sponsored by Rep. Iden and is now heading to the Senate floor for a vote. Rep. Iden said earlier this week that the distinction between fantasy sports contests and online gambling was a very important one, with fantasy sports being a game of skill and not of chance, and that was why he was pushing to legalize the two activities through separate bills.

Internet Gambling and DFS Regulation

Under H 4926, or the Lawful Internet Gaming Act, the state’s casinos would be allowed to operate gambling websites offering different casino games, including blackjack, roulette, and poker. Online gambling will be taxed at 8% of the overall gaming revenue generated.

Rep. Iden believes the legalization of Internet gaming will increase revenue to the state. However, a recent analysis by the House Fiscal Agency suggested that gaming revenue could actually drop because the difference in the tax rate with the state’s existing casinos. Brick-and-mortar gambling venues are currently taxed at 19% on casino revenue.

According to Rep. Iden, online gambling would not displace the existing casinos, but will rather create new markets, attracting new players and expanding the customer base to “younger millennial types who are used to doing everything on their mobile devices.”

H 4926 contains sports betting provisions, but Rep. Iden said earlier this week that he is working on a comprehensive sports betting bill, which he intends to introduce next year. Under the Lawful Internet Gaming Act, the Michigan Gaming Control Board would be tasked with establishing the parameters for online sports betting. However, a separate legislative piece will be needed to set other important details, including taxation.

As for the daily fantasy sports bill, it would require interested operators to pay a license fee of $50,000 and an annual renewal fee of $20,000 in order to be able to provide their services in Michigan. According to Rep. Iden, the fees will encourage “serious actors” to participate.

However, according to the Small Businesses of Fantasy Sports Trade Association, the proposed $50,000 fee was “too steep” and DraftKings and FanDuel would probably be the only operators that would be able to pay it, leaving smaller DFS businesses outside the Michigan fantasy sports field.

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