This Wednesday the Michigan House of Representatives legalizes sports betting, internet gaming and gambling on fantasy sports, even though lawmakers haven’t reached a consensus with Gov. Gretchen Whitmer.
The Sports Betting Act passed by a vote of 63-45.
The new bill introduces an 8.75% tax on sports betting, and an extra 3.25% tax for Detroit casinos. For online betting, the tax would start at 4% and eventually increase to 23%. The sports betting tax would generate up to $30 million in revenues based on a projected $225 million betting market.
“More than a dozen states, including some of our neighbors in the Midwest, have already legalized sports betting and have reaped the benefits,” said Rep. Michael Webber,. “If Michigan follows suit, we could generate another revenue source for vital public services and improving our school systems.”
After 10 months of negotiations, all stakeholders seem to be on board with the Michigan sports betting legislation, with the exception of the ones that count the most.
Whitmer said the 8.75% tax rate is too low as he previously endorsed a report asking for a 15% tax rate on sports betting with initial licensing fees up to $1 million.
The tax rates in other states that have legalized sports betting range from a low of 6.75% in Nevada to 51% in Rhode Island. If Michigan stuck with an 8.75% rate, it would be the second-lowest rate behind Nevada. In other nearby states, Indiana has a 9.5% tax rate while Illinois will have a 30% tax rate when sports betting takes effect early next year.
Thirteen states and the District of Columbia have approved sports betting since the U.S. Supreme Court paved the way for expanded gambling across the nation in 2018.
One of the governor’s main fears is that the increased opportunities for gambling would result in less money going into the state lottery that helps support the School Aid Fund. She has proposed a tax rate of 12% on both sports betting and gambling on fantasy sports. Taxes on online gaming would range from 2% to 19%, depending on the games and the amount that is being gambled.
The Michigan State Budget Office and two public education associations in the state submitted cards in opposition to the bills prior to the House Ways and Means Committee vote Tuesday, where the legislation passed 10-1.
The nay vote came from Warren, the committee’s minority vice-chair, a supporter of the issue in general who served as a conduit between the committee and administration.
Warren explained that: “We’re getting ever so much closer to having a package of bills that meet all of those objectives: can get the majority vote that’s needed, the supermajority vote when it’s needed and get the administration to sign off with Gov. Whitmer’s signature. Unfortunately, there are a couple of pieces of this package that are not quite ready yet. … Please hear me saying the goal is to get to ‘yes,’ we are just not ‘yes’ today.”
The gambling bills – the main one is HB 4916 – including internet gaming, are in the hands of state Senate for consideration. The chamber will have to send them to the governor’s desk by year-end.
“We continue to have revenue concerns regarding the bills’ negative impacts on the School Aid Fund,” said Tiffany Brown, spokeswoman for Whitmer. “The administration has taken every meeting we’ve been invited to regarding this legislation and will continue to work closely with the bill sponsor, tribal leadership and stakeholders to attempt to address our concerns.”
Iden said he was disappointed with Whitmer’s efforts to kill the bill.
Iden has been the driving force behind expanding legalized gambling in Michigan. He ushered through bills last session that would legalize betting on fantasy sports and online gambling through the states 23 tribal and three Detroit casinos.
Before calling a committee vote, Iden rattled off a long list of cards submitted in support of the legislation: DraftKings, FanDuel, MGM, iDEA Growth, Lake Superior Chippewa, Huron Band of Potawatomi, Greektown Casino, Motor City Casino, NBA, MLB, PGA Tour, and the Detroit Pistons.
“This substitute, really, I think helps to bring all the stakeholders that participated in the conversation on board,” Iden said. “We had a lot of in-depth discussions as it related to the rules and regulations and how sports betting was going to be outlined in the state. We obviously know other states are ahead of us as it related to this issue. Indiana and Illinois have already moved forward. Ohio is quickly on our heels.”
Even though the bills had widespread support in the Legislature, they were vetoed by former Gov. Rick Snyder, who opposed the expansion of gambling in the state and also feared a loss of revenue to the state lottery.
Under the bills, people would be able to bet on both the traditional outcome of games and do live betting on things such as whether a baseball pitch will be a ball or a strike or whether a field goal in a football game will be good or flubbed.
