Sports betting legislation getting support from Michigan Indian tribes

LANSING — Leaders of Michigan's Indian tribes, whose support could be crucial to allowing sports betting in Michigan, are generally on board with legislation that has passed the state House and will be taken up by a Senate committee Tuesday, says the bill's sponsor.

Without support from some of the tribes that have signed casino agreements — known as "compacts" — with the state, legalizing sports betting in Michigan has the potential to create a state revenue hole, rather than being a moneymaker, as planned.

The tribes paid $53.4 million in gaming proceeds to the Michigan Economic Development Corp. and the Michigan Strategic Fund in 2018. That's more than the $16 million to $20 million annually in taxes and fees that sports betting is expected to generate for the state and the city of Detroit.

The House Fiscal Agency agency, in a September analysis, set out a potential "downside risk" of allowing Detroit casinos and tribal casinos to start accepting wagers on sporting events. The tribes could view sports betting as an expansion of gambling they have not sanctioned, the analysis said.

Without support from certain Michigan Indian tribes, sports betting could be a financial loser for the state of Michigan. 

“Instead of offering sports betting,” tribes with casinos could view the legislation as a violation of their compacts with the state and “elect to simply stop making revenue-sharing payments” to the state, the analysis said.

The sports betting legislation is part of a package of Internet gaming bills before the Legislature. It may move more quickly than the other bills, however, since it is seen as tapping a potentially new market through a type of wagering that does not currently exist legally in Michigan, unlike games such as Internet slots or poker, which have live versions already offered in brick and mortar casinos.

Among the concerns is that sports betting could take revenues away from the Michigan Lottery, which would hurt the School Aid Fund. Also, Gov. Gretchen Whitmer, who could veto the bill, says the 8.75% tax rate proposed for sports betting is too low.

Rep. Brandt Iden, R-Oshtemo Township, the sponsor of House Bill 4916, said the tribes support the legislation and want to participate in sports betting through their casinos, provided theyall can do so on a level playing field.

"I've worked for the past four years very directly with the tribes," Iden said Monday.

Some have expressed concern that tribes would be at a disadvantage on sports betting because they don't have the advanced technology a big Detroit casino such as MGM does. But Iden said the tribes can hire operators who have the technology to administer sports betting and it's a chance for them to draw on a statewide betting market, rather than just those who live near or visit what are in many cases the small northern communities where they are located.

The state has entered into gaming agreements with 12 Michigan tribes, which have resulted in 24 tribal casinos.

Only seven of those tribes have agreements that require them to pay between 2% and 12% of their net winnings to the Michigan Strategic Fund. Those payments totaled $53.4 million in 2018.

All 12 tribes that have casinos pay 2% of their net winnings to local governments. Those payments totaled $30.1 million in 2018 and would not be at risk as a result of any dispute over the addition of sports betting.

The tribes have had little to say publicly about the sports betting legislation.

But Bryan Newland, chairman of the executive council of the Bay Mills Indian Community, which operates the Bay Mills Casino in Brimley, said he's excited about the prospect.

"We just feel like this is the next step in the evolution of gaming," said Newland, whose tribe paid $447,000 to support local government in 2018 but does not have a compact that requires payments to the Michigan Strategic Fund.

"I just think it's important that Michigan as a state, and the tribes included, not miss the boat on this."

A representative of the Nottawaseppi Huron Band of the Potawatomi, which owns FireKeepers Casino in Battle Creek and contributed $18.5 million to the Michigan Strategic Fund in 2018 — more than any other tribe, expressed support for the legislation at an Oct. 29 meeting of the House Ways and Means Committee, according to the minutes.

Still, it's too early to say anything definitive until the bill gets through the Legislature in its final form, said Jim Wise, the vice president of marketing at FireKeepers.

Also expressing support for the bill at the Oct. 29 meeting was the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, which owns the Gun Lake Casino in Wayland and paid $9.5 million to the Michigan Strategic Fund in 2018.

The Lac Vieux Desert Band of Lake Superior Chippewa Indians, which owns the Northern Waters Casino in Watersmeet, voiced support for the bill at the committee meeting and the Saginaw Chippewa Indian Tribe, which owns the Soaring Eagle Casino in Mount Pleasant, expressed neutrality. Like Bay Mills, neither of those tribes makes payments to the Michigan Strategic Fund under their agreements with the state.

Among the tribes that make payments to the fund that did not state a position on the bill at the Oct. 29 meeting was the Pokagon Band of Pottawatomi Indians, which operates Four Winds Casinos in New Buffalo, Hartford and Dowagiac and paid $17.1 million to the fund in 2018. The Pokagon Gaming Authority has no comment on the legislation, an official said.

Also not stating a position for or against the legislation at the Oct. 29 meeting were the Little River Band of Ottawa Indians, which operates the Little River Casino in Manistee and paid $5.1 million to the fund; the Keweenaw Bay Indian Community, which operates the Ojibwa Casino in Baraga and Marquette and paid $2.2 million to the fund; the Hannahville Indian Community, which operates the Island Resort and Casino in Harris and paid $1 million to the fund, and the Little Traverse Band of Odawa Indians, which owns the Odawa Casinos in Petoskey and Mackinaw City and withheld its payment to the Michigan Strategic Fund in 2018.

State Sen. Ruth Johnson, R-Holly, a member of the Senate Regulatory Reform Committee that will discuss the legislation at a meeting Tuesday, said doing financial harm to the School Aid Fund or the Michigan Strategic Fund is a major concern for her. 

"The unintended consequences of new bills .. sometimes can be worse than the problem you're trying to solve," said Johnson, who added she is open to hearing solutions.

Iden said one complication is that the tribes that signed the earliest compacts with the state, back in 1993, will require a letter from the governor or some other form of express approval to participate in sports betting, even if the legislation passes.

That's because the 1993 compacts specified by name the games allowed in each casino, whereas the later compacts allowed for broader categories of games.

Tribes with 1993 compacts include Bay Mills, the Grand Traverse Band of Ottawa and Chippewa Indians, which owns the Turtle Creek Casino in Williamsburg, Hannahville, Keweenaw, Lac Vieux, Saginaw, and Sault Ste. Marie.

Iden said he and others involved in the legislation want to make sure all the tribes can offer sports betting, not just those that signed compacts after 1993.

https://www.freep.com/story/news/politics/elections/2019/12/03/michigan-indian-tribes-support-sports-betting-legislation/4350449002/