Michigan Sports Betting Bill at the Finish Line

Michigan is finally ready to approve sports betting and iGaming now that the state’s tribes have come to the table and agreed to an outline, according to state Senator Curtis Hertel Jr. He says the negotiations with Democrat Governor Gretchen Whitmer are going well, and he expects the bills to be voted out of a Senate committee this week.

“Negotiations are going well,” Hertel told LegalSportsReport.com. “I fully expect the bills will be on the governor’s desk and signed before Christmas.”

Personal relationships helped move the bills forward, as Whitmer once worked for Hertel Sr. when he was speaker of the House. And because Hertel is in the same party as Whitmer, there was more likelihood of an agreement.

But the major roadblock was overcome when the state tribes agreed to the arrangement.

Republican state Rep. Brandt Iden, the sponsor of sports betting legislation in Michigan, said the state’s tribes generally support his measure—as long as it offers a level playing field with the state’s commercial casinos.

“I’ve worked for the past four years very directly with the tribes,” said. “If the tribes opposed sports betting—if they believed it violated their exclusivity under the state gaming compact—they could threaten to withhold revenue sharing payments to the state.”

Michigan has compacts with 12 tribes operating 24 casinos. Seven of those have agreements requiring them to pay 2 percent to 12 percent of net winnings to the Michigan Strategic Fund. In 2018, those payments totaled $53.4 million, beyond the $16 million to $20 million expected from sports betting. All 12 tribes that have casinos pay 2 percent of their net winnings to local governments, totaling $30.1 million in 2018; they would not be impacted by any dispute over sports betting.

Observers note the tribes could be at a disadvantage on sports betting since they don’t have the advanced technology found at MGM’s Detroit casino, for example. However, Iden noted that tribes could hire sports betting operators with the proper technology. Also, he said, sports betting would allow tribes to draw on a statewide betting market, not just players who live near or visit their casinos, of which several are located in small northern communities.

Bryan Newland, chairman of the executive council of the Bay Mills Indian Community, operator of the Bay Mills Casino in Brimley, said he’s excited about sports betting. “We just feel like this is the next step in the evolution of gaming. I just think it’s important that Michigan as a state, and the tribes included, not miss the boat on this,” he said.

But while the tribes are open to sports betting, Governor Gretchen Whitmer’s administration is concerned that betting and online gaming, also included in Iden’s legislation along with daily fantasy sports, may cannibalize lottery sales. Whitmer vetoed an online gaming bill lawmakers passed last year for the same reason. Since it began, the Michigan Lottery has generated more than $250 million in proceeds for education.

The legislation that passed in the House Ways and Means committee in October raised gaming tax rates to 8.75 percent for tribal casinos and 12 percent for commercial casinos; the treasury report called for 15 percent and 18.25 percent. The report also required nearly double the taxes and licensing fees for online gaming and sports betting included in Iden’s draft legislation. In addition, the report wanted online slots removed from online gaming proposals, claiming they too closely resemble some digital lottery games.

Iden was frustrated over the treasury report’s requirements, but felt a compromise could be reached. He said Whitmer’s representatives had refused to take part in discussions. However, his bills are now in a state Senate committee and Whitmer’s representatives reportedly have rejoined negotiations.

Even if his legislation passes, Iden said, another issue may be the need for Whitmer’s approval for tribes that signed the first state compacts in 1993 to offer sports betting. That’s because those early compacts spelled out the games that could be offered in each casino; later compacts simply mentioned broad categories of games.

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