Michigan Online Gaming Bill Passes House Ways And Means Committee With Amended Tax Rates

At the end of 2018, Michigan was just a signature away from having legal online gambling, including poker, in their state. Gov. Rick Snyder, a Republican, vetoed that bill just a few days before the new year in one of his last few days serving as governor.

The vetoed bill was sponsored by Republican Rep. Brandt Iden. Nearly a year later, Iden is starting the process all over again.

Iden’s HB 4311, known as the Lawful Internet Gaming Act, passed the House Ways and Means Committee Tuesday by a landslide 10-1 vote. The bill would legalize all forms of online gambling within the state. The bill is expected to be up for a vote on the House floor later this week.

Former Gov. Snyder claimed he vetoed the bill based on concerns over losing tax revenue from brick-and-mortar casinos, as well as the state’s online lottery. Iden introduced similar legislation during the spring legislative session, but it stalled when Gov. Gretchen Whitmer (D) raised similar concerns as her Republican predecessor.

According to The Detroit News, Whitmer wanted higher tax rates to make up for any possible loss in revenue that the School Aid Fund would take with the introduction of online gambling. The fund is currently sustained by tax revenue from existing gambling operations.

Iden told the newspaper that he had tried to reach out to Whitmer for a solution but was told that the entire administration was too busy to negotiate a tax rate.

As a compromise, Iden introduced a tiered tax structure in his latest legislation. Internet gambling operators would be taxed anywhere between 4 and 23 percent, depending on the amount of revenue generated. The more revenue generated equates to a higher tax bracket.

The new rates are higher than the 8 percent rate proposed in the initial piece of legislation but fall well short of the 40 percent that Whitmer desires.

The bill would legalize online sports betting, which in turn would allow brick-and-mortar operations the opportunity to provide those same activities. Sports betting would be taxed at 8.75 percent at the 23 tribal casinos in the state and 12 percent at Detroit’s three commercial casinos. The difference is due to the 3.25 percent tax imposed by the city.

Despite the increased rates, the budget office is still projecting that Michigan public schools would lose $28 million annually.

The bill, however, has bipartisan support. Iden argues that any losses would be negligible because online gambling serves a different market than its brick-and-mortar counterpart. He also said that it’s imperative to beat other neighboring states to market.

Illinois legalized sports betting earlier this year and Ohio has a sports betting bill currently going through the legislative process.

https://www.cardplayer.com/poker-news/24398-michigan-online-gaming-bill-clears-house-ways-and-means-committee-with-increased-tiered-tax-structure