Senate panel OKs sports betting, online gaming package

Beth LeBlanc
The Detroit News

Lansing — A Senate panel Tuesday passed a package of bills with nearly unanimous support that would shake up the state’s gaming landscape.

If it gains the needed support from the full Senate and House, the package could move to the governor's desk this week, according to Sen. Curtis Hertel, an East Lansing Democrat who's been involved in negotiations on the package. 

The full Senate on Tuesday afternoon gave final approval to one of the 10 bills in the gaming package, a bill that would rewrite the rules for Detroit's three casinos.

The Senate, which required support from three-quarters of the chamber to pass the bill, voted 34-4 in favor of the measure. The chamber is expected to vote on the rest of the package Wednesday. 

The overall package loosens some restrictions on Detroit’s three casinos and legalizes online gaming, online fantasy sports contests, sports betting and advance-deposit wagering in horse racing.

"We'd love if it was ready for the Super Bowl," Hertel said. "I doubt because of the rules process that it actually will be, but certainly by March Madness."

Employees at Rivers Casino and Resort prepare for the opening of its sports betting lounge in Schenectady, N.Y. on July 16, 2019. New York joined the growing list of states allowing wagering on sports.

The package was initially opposed by Democratic Gov. Gretchen Whitmer’s administration because of the potential impact on the state’s school aid fund, but lawmakers appeared to have reached terms more amenable to the governor Tuesday.

Whitmer's office said she was pleased with the new version of bills, and thanked Democrats Hertel and Rep. Rebekah Warren for addressing concerns about the school aid fund during negotiations. 

"This is a good, bipartisan solution made possible by working together on a complex issue, and the governor looks forward to closely reviewing this package once it hits her desk," Whitmer spokeswoman Tiffany Brown said. 

Under the bills referred Tuesday, new tax revenue from online gaming activities would go to the cost of regulating the activities, the compulsive gaming fund, a fund benefiting first responders with cancer and the School Aid Fund.

"The reality is right now sports betting is happening in Michigan, millions of dollars is being bet in Michigan every single day," Hertel said. "Organized crime is the one that actually is winning right now. By providing a legal, safe and regulated system, you're actually taking a big hit to organized crime." 

Whitmer wanted 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.

The bill’s sponsor, Rep. Brandt Iden, increased the tax rates associated with the activities in response to Whitmer's concerns in the package passed by the House last month. That tax rate was raised further still in the package referred Tuesday. 

"This is the big revision that Sen. Hertel and the administration. I think, worked on and found a landing spot," said Sen. Aric Nesbitt, the Lawton Republican who chairs the Regulatory Reform Committee. 

The revised proposed tax rate for sports betting and fantasy under the bills referred Tuesday would be 8.4% at the state's 23 tribal casinos and 11.75% 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 20% to 28% based on revenue, with higher earners assessed higher rates. The high mark would increase to 31.25% for Detroit casinos because of the 3.25% city tax.

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

Besides the legalization of sports betting, online gaming and fantasy sports contests, the legislation also lifts several restrictions on Detroit casinos, including a ban on political contributions on casino licensees. 

Because the Michigan Gaming Control and Revenue Act was put in place via a ballot initiative in 1996, both chambers need support from a three-quarters majority to change it. 

The House obtained that support last week and the Senate did so Tuesday evening, Hertel said. 

Lifting the prohibition on state contributions is expected to allow owners like Dan Gilbert, who is selling his interest in Greektown Casino, to make political contributions.

Gilbert and his wife made $1.9 million in contributions at the federal level over 2015 and 2016, according to Michigan Campaign Finance Network tracking. 

The bill repealing the ban was one of the only ones to lack unanimous support in the Senate committee Tuesday, with Republican Sens. Dan Lauwers of Brockway Township and Ruth Johnson of Holly in opposition. 

"The people voted for this in 1996 under Prop E," Johnson said. "Because of that proposal passed by the people, with that language in it that did eliminate it, I won't be able to vote for the bill."

But Hertel argued larger corporations that own casinos already are contributing to candidates, but through less transparent means. And the ban, as it stands, is "blatantly unconstitutional," since it prohibits certain people from participating in the political process through means such as contributions, Hertel said. 

"What it affects is small mom-and-pop shops in the city of Detroit that have casino comps," Hertel said.