Michigan To Legalise Online Gambling

Viktor Vangelov | Published 21 Dec 2018, 10:03 a.m.

It appears that Michigan might become the next US state to legalise online gambling in a historic move. Yesterday the State Senate approved a piece of legislation that would enable online gambling in the state, as well as the opening of tribal land-based casinos. The Senate passed the bill following a set of votes on the last night when the Senate was in session. The bill got bipartisan support, which shows how the attitude towards online gambling has changed. Local governments now see it as a viable source of income. 

And it is easy to see the appeal of the decision from a government perspective. The plan is to receive about $180 million in tax revenue, even if the number of visitors in the land-based casinos decreases. Currently, there are three land-based casinos that operate in Detroit. And considering that Detroit declared bankruptcy in 2013, and the city is still struggling in terms of finance, it’s easy to see why the local government would be interested in extra income.  

Tax Rate And Distribution

The bill is quite detailed in terms of taxing and revenue, so the state already knows how much they’d be taxing each game and each type of service. Online games will be charged with an 8% tax, which is significantly higher than the rate at which land-based gambling is charged. The current tax rate for land-based casinos is 19%. 

When it comes to distribution, it appears that Detroit’s local authorities will receive the lion’s share. Namely, 30 percent of all tax revenue goes to Detroit, whereas 55% to the state gambling fund. The remaining funds will be used to fund local schools, roads, and horse racing. 

However, for online gambling revenue that goes through land-based tribal casinos, there is a different tax distribution rate. Three quarters of all funds go to the gambling fund, whereas the remaining quarter is collected by the Michigan Strategic Fund. This fund is used to promote job creation and economic growth.

Legal Consequences And Implementation

It is important to note that this bill wouldn’t enable casinos to accept online sports bets, but it is merely setting a legal framework for this. The state is supposed to create an online gambling department within the Gaming Control Board and it is this body that will regulate the whole industry. Once this body is created, casinos will be able to accept wagers placed on professional and amateur sport events.

Casinos that operate on Michigan territory will have to apply for a special online gambling licence which will cost $100,000. That’s the just the initial fee, operators would need to pay additional $100,000 annual fee and licences will be renewed on an annual basis. 

Once this bill becomes a law, Michigan will join other US states that have already legalised online gambling, including New Jersey, Pennsylvania, Nevada and Delaware. Experts predict that 2019 will be a very important year for the US online gambling industry. We can expect at least several other states to legalise online gambling next year.

Another thing that is pretty easy to predict is that a lot more Americans will be placing wagers via their mobile devices. This is a global trend and in Europe the proportion is already 50% and we can only expect it to grow further.