State is poised to legalize sports, online gambling

By David Eggert
Associated Press

LANSING (AP) — Michigan’s Legislature voted Wednesday to legalize sports betting and internet gambling, expanding options for gamblers in a state with three commercial casinos in Detroit and two-dozen tribal casinos elsewhere.

The bills reflect a compromise with Gov. Gretchen Whitmer after lawmakers agreed to a higher tax on i-gambling than was initially proposed. Michigan will become the 20th state to authorize sports wagers and the fifth to allow casino-style games to be played online.

A look at the development:

—When may sports betting begin?

It is unclear. Casinos will need a license from state regulators who will be writing rules. Some lawmakers had hoped sports wagering could start by the Super Bowl, in early February. Sen. Curtis Hertel Jr., an East Lansing Democrat, doubted it could begin by then but said the NCAA basketball tournament, which starts in mid-March, is a realistic goal. It may take longer to set up mobile sports betting and online games. A spokeswoman for the Michigan Gaming Control Board declined to comment until the bills are on the governor’s desk.

—Why allow it?

Supporters said gamblers already are betting on sports and gambling online through illegal bookies or non-U.S. websites. “Frankly you don’t even know if you’re getting your money back if you win,” Hertel said. Legalizing sports and i-gambling will protect consumers and generate new tax revenue for local and state governments, they said. “Providing a legal and safe and regulated option that actually brings in money for the state is a good thing. I trust people to make decisions with their own lives,” Hertel said.

—How much revenue?

Casinos that open physical or online sports books will pay an 8.4% tax on receipts after winnings are paid out. Those offering online games like poker will pay a tax of between 20% and 28%, depending on their amount of adjusted gross receipts. Projecting i-gambling revenues is difficult because of the potential “substitution effect” — people who play the Lottery online migrating to poker and other internet games offered by the casinos — and a range of other complicating factors. The nonpartisan Senate Fiscal Agency projects that if gambling activity rises by 5%, it would generate nearly $18 million in new taxes or similar tribal payments.

—Who benefits?

Much of that money, up to $14 million, would go to the state’s school aid fund, which covers public schools. That would equate to nearly $10 per student. Some revenue, $4 million a year, would be earmarked to a state fund that compensates first responders for lost wages and medical benefits if they get cancer from fighting fires.

—Criticism

While the main bills won overwhelming approval on Wednesday, 35-3 in the Senate and 96-12 and 100-8 in the House, there were some detractors. Sen. Ed McBroom, a Vulcan Republican, said gambling is a vice that “preys on the most vulnerable in our society by promising something for nothing. ... The purpose of legalized and organized gambling is the industrialized mass extraction of people’s money.”

—Age

Only those age 21 and older could participate.

—In-game betting

Michigan will allow in-game sports bets — the outcome of a drive in football, what the next hitter will do in baseball — not just wagers placed before an athletic game starts. In-play wagers would be based on official data supplied by sports leagues, unless a casino can show regulators that a sports governing body will not provide a feed on “commercially reasonable terms.” Rep. Brandt Iden, an Oshtemo Township Republican, called the in-game option a “key part” of the legislation.

—What else

The proposed laws, some of which has been in the works for years, also will regulate paid fantasy sports leagues like DraftKings and Fanduel and impose an 8.4% tax that may generate up to $1 million annually. They will clarify that private leagues in which money changes hands among friends are legal. Other measures will make regulatory changes related to charity poker rooms known as “millionaire parties” and overhaul rules for the Detroit casinos. One provision will repeal a prohibition on people with at least a 1% stake in a casino donating to candidates or political committees.

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