House OKs bill loosening restrictions on Detroit's casinos

Beth LeBlanc
The Detroit News

Lansing — The Michigan House voted overwhelmingly Wednesday evening to approve a bill loosening restrictions on Detroit’s three casinos as lawmakers seek to expand gambling options in the state.

The legislation would exempt more casino licensees from background checks, allow individuals with criminal convictions to be eligible for licenses after a certain time period, and require annual audits of suppliers instead of quarterly ones. 

The Michigan House voted overwhelmingly Wednesday evening to approve a bill loosening restrictions on Detroit’s three casinos as lawmakers seek to expand gambling options in the state.

The legislation from Rep. Brandt Iden, R-Oshtemo Township, would also lift a ban on political contributions from casino licensees and their employees, a part of a 1996 voter-approved ballot initiative. 

The bill is part of a larger gaming package that legalizes online gaming, online fantasy sports contests, sports betting and advance-deposit wagering in horse racing. The package moves to the Senate next for possible approval.

House Bill 4307 wasn’t passed with the larger package in October because the provision repealing the political contribution ban needed support from three-quarters of the chamber to overturn that part of the voter-approved proposal. 

The bill captured that super majority support Wednesday evening after both parties emerged from an evening caucus. The legislation passed 89-16 with support and opposition from members of both parties. 

Rep. Bill Sowerby, D-Clinton Township, opposed the bill because he said it lacked transparency and paved the way to infusing more money into the political process.

“…Millionaire and billionaire casino owners will now be allowed to give money to state legislators,” Sowerby said in a statement. “Even worse, casino owners will no longer have to disclose to the public their past felony crime convictions, their financial failures — including bankruptcies — or their failures to pay their taxes. Michiganders expect and deserve more transparency and accountability from those who have such incredible responsibility, and this legislation severely diminishes that standard.”

Detroit’s three casinos — MGM Grand, Greektown and MotorCity — have indicated support for the bill, as have the city of Detroit and the Michigan Chamber of Commerce. 

The larger package of bills has encountered opposition from Democratic Gov. Gretchen Whitmer’s administration, 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 brick-and-mortar gambling operations.

Iden increased the tax rates associated with the activities in response to Whitmer's concerns.

The revised 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. 

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 had originally proposed an 8% tax for internet gaming. Iden said Whitmer asked for a 15% percent tax on sports betting and a 40% percent tax on internet gaming.

In a Tuesday Senate hearing, Iden said legislative leaders have made progress in negotiations with the governor and he expressed hope the legislation would be in place by the end of the year. 

But he cautioned against raising tax rates too high. 

“If we don’t do this in a methodical measured way, if we overtax this, if we do something that heaven forbid pushes us out of the market place, we will get zero,” Iden said. 

The bill passed Wednesday would require members of the Michigan Gaming Control Board to be paid $1,000 for attending a meeting. The chairperson would receive $1,250 per meeting. The five-member board typically meets six times a year. 

The bill would ban a board member from having an interest in a casino one year prior to and two years after serving on the gaming control board. The wait periods are currently three years prior and four years after.  

The legislation would require a casino licensee to disclose stockholders to the state if they had 5% or more interest in the gambling location rather than the current threshold of 1%. 

It would allow an application or licensee to label certain information as confidential and not subject to a public records request, including interviews, report, statements, documents, records or correspondence.