LANSING – Internet gaming and sports betting is soon expected to be legal in Michigan after the Legislature sent a package of bills to Gov. Gretchen Whitmer on Wednesday, on the last session day of the year.
The bills, which are expected to be signed by Whitmer, will allow existing licensed casinos to offer poker, blackjack, slots and other casino-style games over the Internet.
The legislation also will allow those casinos to set up theaters to accept wagers on live sporting events and accept sports bets online.
“It’s been a long journey to move sports betting and casino-style gaming into a regulated, safe and modern environment – but the end is in sight, and with it a great opportunity for Michigan will begin,” said state Rep. Brandt Iden, R-Oshtemo Township, a major sponsor of the package.
The Senate passed the gaming bills by overwhelming margins early Wednesday afternoon and returned them to the House, which had already passed the same bills, to concur with changes the Senate made. The House concurred Wednesday with changes to all but one of the bills, which is expected to be voted on early next year and only deals with a penalty provision, not the central legalization issue.
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How soon online gaming actually begins in Michigan will depend on a number of factors, assuming Whitmer signs the legislation, officials said. Those include how long it takes to produce rules to accompany the legislation, how long licensing takes, and how long it takes for licensed operators to have the required technology in place.
“My hope is that by March Madness, it will be live,” said Sen. Curtis Hertel, D-East Lansing, who spearheaded negotiations related to the bills on behalf of the governor, referencing the NCAA basketball tournament.
Together, online gaming and sports betting are expected to raise between $15 million and $40 million annually for the School Aid Fund, based on preliminary estimates from the Senate Fiscal Agency.
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The bills should also be a boon for Detroit casinos and provide a hedge for them against a likely downturn in the mature casino market after years of steady growth, said Alex Calderone, a financial consultant with expertise in the gaming industry who is managing director of Calderone Advisory Group in Birmingham.
“This is a game changer, where this is an opportunity to grow the pie,” Calderone said.
Sports betting, in particular, has the potential to draw new customers to downtown Detroit casinos who will also patronize nearby bars and restaurants, he said. Detroit’s MGM Grand is already promoting its new Moneyline Sports Lounge, with 60 TVs, in anticipation of the change, he said.
But Calderone said it’s possible the Michigan Lottery could lose some business to online gambling. That would cut into whatever financial gains the School Aid Fund made as a result of online gaming, since most lottery proceeds also go to the School Aid Fund.
There are also worries that online gaming and sports betting could increase problem gambling in Michigan.
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Michael Burke, executive director of the Michigan Association on Problem Gambling, told the House Committee on Regulatory Reform in September that legal sports betting will result in vast increases in advertising, with sports and gambling enthusiasts being urged to bet during games. The explosion in cellphone technology will result in an ease of betting that will compound problems for those with gambling addictions, he said in written testimony.
Burke urged lawmakers to allocate at least 1% of revenue to combating problem gambling. The legislation provides for $1 million a year for that purpose, with half coming from Internet gaming and half from sports betting.
Other bills in the package provide for licensing of online fantasy game operators and third-party facilitators to handle online wagers on horse races.
Whitmer, a Democrat, has expressed support for the package, subject to a detailed review.
“The governor is pleased with the progress made on gaming over the course of this year,” spokeswoman Tiffany Brown said Tuesday, after a Senate committee advanced the bills.
“The governor’s top priority when getting this done was to protect the School Aid Fund,” Brown said.
“This is a good, bipartisan solution made possible by working together on a complex issue and the governor looks forward to reviewing this package once it hits her desk.”
Jill Dorson, a legislative analyst who covers sports betting legislation for SportsHandle, said 12 states outside Michigan have live, legal sports betting. Another six jurisdictions, including the District of Columbia, have legalized sports betting but have yet to launch it, she said.
Michigan’s 8.4% tax rate on sports betting is seen as a good one by operators, who feel they can work with any rate below 10% in what is a thin profit-margin industry, Dorson said.
The part of the Michigan legislation the operators don’t like is a mandate that they buy sports data used for proposition bets — such as the length of a drive in a professional golf tournament — from leagues such as the PGA, NFL, NBA and NHL, she said. Two other states have included such requirements in their sports betting legislation and it’s not yet clear what sort of costs the requirement will add to sports betting operations, she said.
Michigan will be the first state with a large tribal casino component to launch legal sports betting, Dorson said.
Sen. Ed McBroom, R-Vulcan, voted against the gambling bills, as did Sen. Jim Runestad, R-White Lake, and Sen. Roger Victory, R-Georgetown Township.
McBroom said the state is addicted to money, just as some people are addicted to gambling.
“We are constantly pushing the boundaries of social mores,” said McBroom, citing the “glorification of alcohol” and the recent legalization of marijuana.
Gambling appeals “to the basest of human instincts to avoid work and get your bread without any sweat,” he said.
Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4. Read more on Michigan politics and sign up for our elections newsletter.
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