Michigan bill opens door to online gambling, sports bets

Bills that have cleared an initial legislative hurdle would legalise online gambling in Michigan and start the process towards possibly also allowing sports betting in the wake of a US Supreme Court decision.

The state House late Tuesday voted 68-40 in favour of the legislation, which is not expected to be considered by the Senate until September at the earliest after lawmakers adjourned for a summer break. An eight per cent tax would be collected from wagers, minus winnings paid out - which would be less than a 19 per cent tax now paid by Detroit's three casinos.

Those casinos could seek an internet gambling licence. The state's 23 tribal casinos could conduct online gambling if they secure authorisation from the state through a compact.

Bill sponsor, Republican Brandt Iden, the Michigan Gaming Control Board believes it has the parameters to authorise sports betting but wants the Legislature to "take the initial step". Establishing a tax for online gambling, including internet sports wagering, is a first move, he said. He plans to next introduce legislation to set an 8 per cent tax for sports betting inside casinos.

The Supreme Court last month paved the way for all 50 states to allow sports gambling. The main House bill would create a new Division of Internet Gaming to regulate online gambling. It could enter into agreements for "multijurisdictional" internet gambling if is conducted only in the US and is consistent with state and federal law. The division could permit internet sports wagering.

An analysis of the House bills from the non-partisan House Fiscal Agency says state and local governments likely would collect less in gambling taxes. That's mainly because casinos would have an incentive to promote online gambling - with a lower proposed tax rate - at the expense of brick-and-mortar wagering, which is taxed at a higher rate.

The report notes that the fiscal impact would depend on whether internet gambling would have a "substitution, neutral or stimulative effect" on other forms of gambling, and it adds that online gambling presumably would reduce Lottery sales - mainly by diverting participants from the iLottery system.

The analysis does not examine the revenue impact, however, of legalising sports bets. Americans wager about US$150 billion on sports each year illegally, according to the American Gaming Association. The group in 2017 estimated a minimum US$23 million tax windfall to Michigan from legal sports betting.