- »Michigan Set to Legalize Online Poker
Michigan Set to Legalize Online Poker
Online poker is coming to Michigan, giving residents of the Great Lakes State and early Christmas present. Industry experts predict the passing of a comprehensive online gaming bill within the next week.
It is a complete U-turn from the start of the year when legalized gambling seemed to grind to a halt. Michigan was set to become the sixth U.S. state to legalize online gaming, but outgoing Governor Rick Snyder put paid to that. Governor Synder used one of his final legislative acts to stop a bill that would have legalized online poker in Michigan.
The bill, named Lawful Internet Gaming Act, was set to sail through all the required steps. Republican Mike Kowell supported the bill in the Senate and it passed 33-5. Brandt Iden saw the bill pass in the House with 71-35 in favor of it passing.
Governor Snyder Refused to Sign Michigan Gambling Bill Into Law
Governor Synder’s signature was required to sign the bill into law and thus legalizing online poker in Michigan. Instead of waving the bill through, Governor Synder slammed the door shut on legalized gambling.
He cited concerns about expanding gambling.
“I do not think I is appropriate to sign legislation that will effectively result in more gambling,” said Governor Snyder.
Bill Could Be Signed This Week
Senator Curtis Hertel Jr. was involved in negotiations with the bill and is pleased with the progress made. “This was a very difficult process, so I’m really happy to be able to get it this far and excited for the voting in the next two days,” he said last week.
New Michigan Governor Gretchen Whitmer will sign the bill into law once both house pass it. Industry experts are more optimistic than last year that online gambling is coming to Michigan.
Tiffany Brown, the spokesperson for Governor Whitmer, said key issues have been resolved in full. She also stated the Governor is looking forward to closely reviewing the package.
The Cost of Offering Gambling in Michigan
The state is set the 10th most-populous so the potential for huge revenues exist. Money raised through taxing online poker, casino, and sports betting will bring much-needed funds into Great Lakes State.
A non-refundable $50,000 up front payment is required from each casino applying for a license. $100 is the first-year cost with subsequent years priced at $50,000. Suppliers have to pay licensing fees too, $5,000 initially and a $2,500 bill every year.
Costs continue with a tiered tax structure ranging from 20-28% of revenue for online poker and casino games.
- 20% on revenue less than $4 million
- 22% on revenue from $4-8 million
- 24% on revenue from $8-10 million
- 26% on revenue from $10-$12 million
- 28% on revenue of $12 million+
These rates are higher than the original bill showed last year, although they are much less than in Pennsylvania. The Keystone State levies a whopping 54% tax rate on online operators.
Online poker sites and casinos cannot deduct free-play and promotions in their entirety from revenues. They can, however, claim a 10% deduction during the first three years. A further 6% deduction is allowed in the fourth year. This allows operators to attract customers with welcome bonus and similar in the early stages.
The Michigan lawmakers suggest an 8.4% tax for online sports betting and daily fantasy sports. Up to three live casino licenses will be granted and these venues will be hit with an additional 1.25% municipal tax.
The Five States Where Legalized Online Poker Exists
Legalized online poker exists in New Jersey, Nevada, Delaware and Pennsylvania. West Virginia passed a law earlier this year.
New Jersey posted record revenue figures in November 2019, recording $306 million. This is an increase of 18.9% compared to November 2018 and the 18th straight monthly rise. The online revenue captured the imagination of other states with Internet Gaming Win totaling $49.1 million. This represents an increase of almost $4 million from October and 82.4% more than in 2018.
The ability to place sports wagers online had a major impact in the figures recorded in New Jersey. Michigan won’t post such impressive financials during its first few year, but the potential is there. Michigan has a population of 10,003,000 compared to New Jersey’s 8,908,520.