Pennsylvania and Michigan Still in the 2017 Online Gambling Legalization Mix

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Various states have attempted to legalize online gambling over the years after the Unlawful Internet Gambling Enforcement Act was introduced back in 2006, but few have succeeded. There have been so many legislative failures, mainly resulting from the lack of enough support among lawmakers as well as powerful anti-iGaming lobbyism, that news about one state or another introducing an online gambling legalization effort are now generally received with great skepticism.

A number of states have introduced multiple iGaming bills since the beginning of the year, but most of them have been voted down by legislators. However, there are two states where online gambling efforts are still alive and have enough time to be passed into laws before the end of the year.

Pennsylvania is looking for recurring revenue flow and iGaming is seen as one potential source of such revenue. On the other hand, Michigan emerged as a dark horse earlier this year and, despite making several small steps at a time, has big chance to open its gambling market for Internet services. More about the two states’ legalization efforts and struggles could be read below.

Pennsylvania

Pennsylvania’s online gambling legalization push spans at least five years. And lawmakers supporting the idea have tried various ways to eventually make online casino and poker games legal within the state’s borders.

The effort has gained more considerable momentum over the past two years. However, it has been part of a larger package of gambling-related reforms for the greater part of these two years. The legalization of iGaming services was the closest to realization late last fall when it was only up to the Senate to vote on a sweeping omnibus gambling bill that had online gambling tacked onto it.

A vote did not take place before the end of the 2016 legislative session. However, the state’s iGaming effort was quickly revived at the beginning of 2017 only to face halted progress.

Pennsylvania lawmakers are in a desperate quest for $2.2 billion to close a huge gap in the state’s 2017-2018 budget. The state is almost three months into its current fiscal year but has still not secured the necessary finances to cover its expenses.

Earlier this year, the Senate produced a bill that, among other things, included online gambling as a potential and permanent revenue source. The bill was then handed to the House and was to be considered by lawmakers from the Legislature’s lower chamber after the end of the summer recess.

Members of the House’s GOP caucus instead produced a separate budget deficit plan. One that was almost an exact opposite to its Senate counterpart. Initially, online gambling and gambling expansion as a whole were not included in the House’s plans for improving the state’s financial condition. Eventually, House lawmakers admitted that gambling could after all bring much-needed revenue.

The House GOP bill barely gained the necessary support to be referred to the Senate. However, Senators voted it down last week and, as reported by local media, a new budget plan has been under discussion, although behind closed doors.

Gambling expansion is more popular in the Pennsylvania Senate. As for Gov. Tom Wolf, the state’s highest ranking official has pointed out that he would support the addition of more gambling options only if the move proves to bring additional revenue to the state.

The lack of accord on the legalization of the so-called video lottery terminals at taverns, bars, and truck stops had been one of the biggest stumbling blocks in gambling expansion negotiations between the Senate and the House. The former had previously supported the move, while the former had opposed it vocally.

Reportedly, VLTs have been excluded from the gambling mix, which gives better chances for online gambling as part of the overall gambling expansion push to succeed this year. What is more, the stalled progress on securing finances for Pennsylvania’s budget deficit has already begun taking its toll as the state’s credit rating was downgraded a few days ago, and lawmakers are desperate to find a solution to the growing problem.

A recent opinion piece by PennLive suggested that online gaming, together with online lottery sales and daily fantasy sports contests, could be the “piece that could thread the needle” for the state’s budget impasse. In other words, the legalization of these services could secure recurring revenue. And the state needs recurring revenue now more than ever, and it needs it quickly.

Michigan

Unlike Pennsylvania, Michigan’s iGaming legalization history does not span years and years back. Talks about the potential authorization of online casino and poker games in the state first emerged last year, but did not gain much momentum.

The effort was revived this spring with the introduction of SB 0203 by Senator Mike Kowall. In fact, Sen. Kowall led last year’s iGaming legalization push, as well.

Generally speaking, this year’s proposed legislation allowed for the legalization of online casino games and poker within the state’s borders. Aside from Michigan’s commercial casino operators, the bill also offered owners of tribal casinos the opportunity to launch iGaming operations, in case these are legalized eventually. However, as per SB 0203, tribes had to “waive their sovereign immunity” in regard to the operation of online gambling services.

In terms of taxation, Sen. Kowall’s piece of legislation featured a 10% tax rate on revenue from iGaming services. However, the bill lacked in specific regulations on how the online gambling industry would be monitored and prevented from violations. The Michigan Gaming Control Board will be vested with that responsible task and will have a year to prepare the necessary regulations.

SB 0203 passed the Senate Regulatory Reform Committee almost immediately after its introduction. However, the piece has failed to move any further since then. On the other hand, this does not means that hopes for iGaming legalization in 2017 are dead yet.

Earlier this month, a separate bill was introduced by House Rep. Brandt Iden. Very much like SB 0203, HB 4926 calls for the legalization of online casino and poker games without providing a framework for the industry’s future regulation. Another common thing between the two legislative pieces is the fact that they both contain a requirement for online gambling operators to run poker operations. The new bill, too, allows for Michigan to negotiate interstate agreements with other states where online gambling is legal. This is a necessary provision for the potential establishment of shared poker liquidity networks.

Unlike SB 0203, HB 4926 proposes a 15% tax on licensed operators. Another major difference in the two pieces is the treatment of tribal casino operators in relation to the legalization of online gambling. Under the House bill, federally recognized Indian tribes will be able to offer online gambling services if they had previously entered a compact with the state under the Indian Gaming Regulatory Act of 1988.

HB 4926 was introduced in mid-September and was referred to the House Committee on Regulatory Reform. The piece is yet to be voted on by committee members, but it is still unclear when exactly they will be able to cast their votes on it.

http://www.casinonewsdaily.com/2017/09/26/pennsylvania-and-michigan-still-in-the-2017-online-gambling-legalization-mix