House chair ready to throw dice on online gaming, sports betting bills

Lansing — A key state House committee chairman plans to push for the legalization of online gaming and sports betting in Michigan after negotiating higher-than-proposed tax rates and other issues with vendors, operators and sports leagues.

Rep. Brandt Iden, R-Oshtemo Township, said he is determined to advance amended legislation in hopes of getting these betting practices in place before neighboring Ohio — by year's end. Attempts to negotiate with Gov. Gretchen Whitmer's administration were unsuccessful, he said. 

The Whitmer administration remains willing to discuss the legislation but continues to worry it would hurt revenues for public education, Whitmer spokeswoman Tiffany Brown said Monday.

"The administration has taken every meeting we’ve been invited to regarding this legislation, and we have continue to work closely with the bill sponsor, tribal leadership and stakeholders to attempt to address our concerns," Brown said.  

Bill substitutes reflecting the changes were expected to be completed Monday and the bills are scheduled for consideration on Tuesday in the House Ways and Means Committee, which Iden chairs. 

The proposed changes would increase the online and sports betting tax rates higher than the 8% rate proposed in the initial legislation, Iden said. But they but fall short of the 40% for online gaming and 15% for sports betting that Whitmer proposed.

Agreements were reached with professional sports leagues such as Major League Baseball and the National Football League, Iden said.

The tax rates have been an obstacle for the governor's office, which wants the taxes from the new gambling activities to make up for any loss in revenue the School Aid Fund may experience due to an expected decrease in existing gambling operations.

Iden said he's reached out several times to Whitmer's administration to negotiate a new rate but said he was told they were too busy. 

"It's too bad that the folks have been too busy to engage, but we have to move forward with the minimal amount of session days left," Iden said. 

The proposed tax rate for sports betting would be 8.75% at the state's 23 tribal casinos and 12% at the three Detroit casinos, a figure that reflects the 3.25% tax imposed by the city, Iden said. 

The proposed tax rates for internet gaming would be levied at a tiered or progressive rate ranging from 4% to 23% based on revenue, with higher earners assessed higher rates. The high mark would increase to 26.25% for Detroit casinos because of the 3.25% city tax. 

Iden's substitute also would clarify non-tax-related regulatory details, such as sports betting rules requiring a data component for leagues and the availability of licenses for FanDuel and DraftKing.

Four years after its first introduction, the package continues to have bipartisan support, Iden said. And the urgency to pass package is pressing as neighboring states such as Ohio move to legalize.

"I think it's imperative that we move quickly before the end of the year," he said.

Five states have legalized iGaming or online gaming — Delaware, Nevada, New Jersey, Pennsylvania and West Virginia, according to the American Gaming Association. 

Thirteen states, including Indiana, Pennsylvania and New York, have legalized single game sports betting and five others have legal sports betting that is not yet operating, including Illinois, according to the American Gaming Association. Six states have active sports betting legislation or ballot initiatives, including Ohio, Colorado and California.

Michigan's internet gaming package — which would allow and regulate online casino games, online fantasy sports contests and advance-deposit wagering in horse racing — was vetoed last year by Republican former Gov. Rick Snyder because of concerns regarding potential tax revenue losses among current gaming halls.

This session's version of the internet gaming legislation includes a repeal of a 21-year-old ban on casino licensees and their employees from making political contributions. It also includes the legalization of sports betting.

Whitmer’s administration has expressed concerns similar to Snyder's, worrying the additional gaming options would pull from existing operations — such as the Michigan Lottery and brick-and-mortar casino operations — that pay a higher tax rate benefiting Michigan’s public schools.

The budget office estimated the current proposal would lead to a $28 million annual projected loss to Michigan public schools.

Existing gambling operations will experience negligible losses because some studies show the individuals who participate in online gaming are a separate demographic from current legal gamblers, Iden said.  

Iden continues to disagree with the Whitmer administration's premise, but said the new tax rates should accommodate "the governor’s request as it relates to ensuring the School Aid Fund be protected."

eleblanc@detroitnews.com