Sports Betting Is Coming To Town: Michigan Governor Signs Bill

Gov. Gretchen Whitmer signed the Lawful Sports Betting Act into law Friday, making Michigan the ninth state to approve legalized sports betting this year and 20th state to permit legal sports betting.

Michigan sports betting headlines a large package of gaming bills signed by Whitmer to modernize the state’s gambling industry. The package includes Internet casino gambling, online poker and daily fantasy sports.

Sen. Curtis Hertel Jr., who played a pivotal role in amending the bills to gain the governor’s support, set March Madness as the goal for retail sports betting to launch in Michigan.

Hertel proved to be right when he told Legal Sports Report that he expected the bills to be signed before Christmas at a time when there was doubt if anything would get done in Michigan this year.

What the Michigan sports betting bill looks like

It turns out that retail sports betting already was legal in Michigan. The Michigan Gaming Control Board has been telling commercial online casinos in Michigan for the past year that they were welcome to seek authorization for sports betting as an approved Class III game.

The casinos had yet to act because typical Class III games in Michigan are taxed at 22%. This legislation sets more favorable rates and permits for mobile and online sports betting.

Key details of the Michigan sports betting law signed by the governor include:

• Three commercial casinos and 23 tribal casinos are permitted to offer sports betting at their facilities and online, pending licensure.
• A tax of 8.4% on adjusted gross sports betting receipts (commercial casinos pay an additional 1.25% city tax to Detroit, which legislators say is effectively 3.25%). Money given to customers for free-play promotions may be deducted from the gross receipts before taxes are levied.
• Fees to offer sports betting include $50,000 for an initial application, $100,000 for the license and $50,000 annually.
• Sports betting operators are limited to using one internet sports betting platform.
• Use of official league data is mandated for in-play wagers unless operators can convince the Michigan Gaming Control Board that data is being offered at commercially unreasonable terms.

A long and winding road for Michigan sports betting

Lawmakers drove the sports betting bill around some unexpected detours.

Entering the year, Rep. Brandt Iden indicated that passing sports betting legislation would be a priority of his in 2019.

He had included a line permitting the Michigan Gaming Control Board to regulate internet sports betting in the iGaming bill vetoed by former Gov. Rick Snyder around this time last year.

Yet it took until September before he worked out the details with stakeholders to introduce the bill on its eighth draft.

Michigan governor comes through on sports betting

During her campaign, Whitmer asserted that she believed sports betting should be regulated in the state.

Where she really stood on the issue came into question in June when she asked for a 15% tax rate and initial fees up to $1 million, then declined to discuss the issue with Iden.

It turned out she was just waiting for a friendly face and fellow Democrat in Hertel to take over the gaming package.

“The administration has been very much engaged in her time with us, something very different from last year when we basically had the administration not tell us he was going to veto the bill,” Hertel said.

In the end, a bipartisan sports betting bill passed and got signed in a year when the Republican-controlled legislature and Democrat governor didn’t see eye-to-eye on much else.

Daily fantasy sports also gets governor’s approval

Michiganders will continue to be able to put money on teams of their own assembling after Whitmer signed a bill to regulate the daily fantasy sports industry in the state.

The DFS law sets the tax rate at the same 8.4% rate as sports betting. Low fees of $20,000 for an initial license and $5,000 annually are meant to encourage smaller companies to join the likes of industry giants DraftKings and FanDuel.