Michigan online gambling bill takes first steps

The incredibly slow grind to making Michigan online gambling legal passed its first hurdles earlier this week.

House Bill 4311, dubbed the Lawful Internet Gaming Act advanced through the House Ways and Means Committee on Tuesday after a 10-1 vote. The following day the bill’s progression through the legislature continued after it passed a vote in the Michigan House of Representatives 63-45.

To get the necessary support, the bill’s creator, Representative Brandt Iden had to make a few amendments, specifically around the tax rate. The tax rate originally proposed on online gambling by the bill has been a sticking point since it’s initial reintroduction in the spring.

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It was also one of the main points that derailed a previous bill when it reached the state Governor’s desk last year. That original bill passed through the Michigan House and the Senate before getting vetoed by outgoing Michigan Governor Ricky Snyder in December, 2018. (Q: are there current options for Michigan online poker? Read more here).

To try and avoid the veto of the new Governor of Michigan, Gretchen Whitmer, Iden has added a new tiered tax structure to the bill that would see tax rates on all forms of online gambling, including online poker, jump considerably.

Under the tiered system, for the first three years of operation online gambling operators would pay a 4% tax on revenue less than $4 million. For revenue between $4 and $8 million to rate would be 6%. Revenue between $8 million and $10 million would be taxed at 8%.

Revenue between $10 million and $12 million would be taxed at 10%, while revenue over $12 million would be taxed at 19%.

For the next two years rates all revenue tiers would increase by 2% each year. Following that two-year window rates would be set permanently between 8% and 23%.

Another contentious point of the former online gambling bill was its potential to affect school funding in Michigan. In Michigan more than 25% of all lottery revenue went into the State School Aid Fund. Opponents to the bill have previously argued that online gambling could cannibalize revenues from lottery and in-turn reduce the amount of money going into the School Aid Fund.

To try and keep this from happening and quell fears, Brandt added new language to the current bill that would see tax money from online gambling redistributed to the School Fund to offset any potential shortfalls.

The next stop for the bill is the Michigan State Senate. If it can pass a vote in the Senate it would reach the governor’s desk where the fear of another veto still remains.