Michigan governor vetoes betting and gaming bills

2 January 2019

Michigan’s outgoing governor has vetoed legislation that would have legalised sports betting and online gaming in the state.

Governor Rick Snyder (pictured) refused to progress House Bills 4926, 4927 and 4928, which had been passed by the state legislature during the final session of 2018 on December 20.

Announcing his decision, Snyder said budgetary concerns and a lack of data on how changes to gambling could impact the state lottery and its contributions to public coffers were the primary reasons for his decision.

“I am concerned that the bills will encourage gambling by making it much easier to do so," he explained. "I do not think it is appropriate to sign legislation that will effectively result in more gambling, with a reasonable chance that the state could lose revenue that could be helpful in dealing with social service issues that are ordinarily attendant to increased gambling behaviour.”

Snyder called on the incoming administration under new Governor Gretchen Whitmer to “thoroughly evaluate the revenue implications” of new gambling legislation when the new legislative session begins on January 9.

The legislation was introduced by Rep Brandt Iden, and was passed with bipartisan support, as well as the backing of operators and tribal gaming entities. Iden is yet to respond to Snyder’s decision.

Iden’s Lawful Internet Gaming Act, was approved by the Michigan Senate in December, with 33 Senators backing the legislation, and just five voting against. It was then returned to the House, and passed with 71 votes in favour, and 35 against.

The legislation paved the way for a significant expansion of gambling in the state, with iGaming to be overseen by the Division of Internet Gaming, a new subsidiary of the Michigan Gaming Board.

The state’s tribal and commercial casinos would be eligible to apply for five-year online gaming licences, for an initial $100,000 fee. Successful applicants would then be required to pay a $200,000 licence fee for the first year of operation, then a $100,000 fee for each subsequent year.

Licensees would be able to offer games such as poker, blackjack, slots and other card and table games to players aged 21 and over. There was also scope for allowing licensees to offer sports betting, with the Division of Internet Gaming saying that has the power to permit operators to accept wagers on “any amateur or professional sporting event or contest”.

Operators were to pay a tax of 8% of gross gaming revenue generated from iGaming operations, with commercial casino licensees required to pay an additional 1.25% tax.

This tax receipt would have been divided between a number of recipients. The city in which the licensee is based will receive 30%, to be used for programmes to improve quality of life for citizens, with 5% invested in the State School Aid Fund. A further 5% will go to the Michigan Transportation Fund, with 5% going to the Michigan Agriculture Equine Industry Development Fund.

The remaining 55% would have been deposited in the Internet Gaming Fund, which was created through the bill. This would have allocated $1m of the sum it receives to the state’s Compulsive Gaming Prevention Fund, with the remainder to be used for regulating the iGaming market.