Michigan’s Senate is expected to pass bills to legalise sports wagering and online gaming later today (December 11), after the Regulatory Reform Committee gave its approval to a number of amendments to each piece of legislation.
As changes have been made to the bills, following expected Senate approval, they will both be sent to the House for concurrence. If the House agrees to the amendments, the bills will then progress forward to Governor Gretchen Whitmer for signature.
House Bill 4916, also known as the Lawful Sports Betting Act, has been amended so operators that secure a licence in the state would be subject to lower tax rates than initially proposed.
The amended sports wagering bill states that Michigan would place an 8.4% tax on gross revenue from sports bets, down from the 8.75% previously stated.
Meanwhile, House Bill 4311, which addresses online gaming, has been changed to address concerns previously flagged by Governor Whitmer. As Michigan is only one of six states with an online lottery, these issues were primarily related to the potential impact on the state lottery.
In terms of wider tax measures, the bill sets out a tiered system as to how much operators will pay. Those with revenue under $4m will be subject to a tax rate of 20%, while those between $4m and $8m will pay 22% tax.
Operators posting between $8m and $10 in revenue will pay a rate of 24%, with those between $10m and $12m paying at 26% and any of $12m at 28%.
These rates are significantly higher than original rates proposed earlier in the year. The lowest tax rate has increased 12%, while the highest rate is 5% more than initially proposed.
However, casinos were given a slight break in that online gaming operators will be able to deduct free-play money given to customers through bonus promotions for a limited time.
For the first year through to year three, deductions cannot exceed 10% of gross receipts from online gaming. In year four, this will be capped at 6% and year five at 4%, while for year six and beyond, no deductions will be permitted.
Meanwhile, the House also agreed for a tax rate on slots to be set at 40%, due to concerns that such games would be too similar to online lottery products already available in the state.
In addition, it has been agreed than $2m a year from online gaming tax revenue will be put towards the First Responder Presumed Coverage Fund in order to help support firefighters undergoing cancer treatment.
Other aspects of the bill remain unchanged, including license fees being priced at $50,000 for application, $100,000 for the initial licence and a $50,000 renewal fee each year after. Michigan had previously proposed a licence fee of $1m, as well as a renewal fee of $500,000 for larger casinos.