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Legislation

US – Michigan poised to legalise sports betting and online gambling

By - 12 December 2019

Michigan’s Legislature will vote Wednesday to legalise 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 authorise sports wagers and the fifth to allow casino-style games to be played online.

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. A spokeswoman for the Michigan Gaming Control Board declined to comment until the bills are on the governor’s desk.

Supporters said gamblers are already betting on sports and gambling online through illegal bookies or non-US websites.

“Frankly you don’t even know if you’re getting your money back if you win,” Mr. Hertel said. Legalising 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,” Mr. Hertel said.

Casinos that open physical or online sports books will pay an 8.4 per cent tax on receipts after winnings are paid out. Those offering online games like poker will pay a tax of between 20 per cent and 28 per cent, 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 $18m in new taxes or similar tribal payments.

Much of that money, up to $14m, would go to the state’s school aid fund, which covers public schools. That would equate to nearly $10 per student. Some revenue, $4m 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.
While the legislation won overwhelming Senate approval on Wednesday, 35-3, 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 legalised and organised gambling is the industrialised mass extraction of people’s money.”

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 per cent tax that may generate up to $1m 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 repeal a prohibition on people with at least a 1% stake in a casino donating to candidates or political committees.

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