Niyo: Clock is ticking as Michigan waits on legal sports betting
Brandt Iden is a betting man. So keep that in mind when you consider the short odds he’s giving himself when it comes to passing legislation to legalize sports betting in Michigan.
Iden, the third-term Republican state representative from the Kalamazoo area, also is a Lions fan, he admits with a laugh, “so optimism is in my nature.”
And while his original timetable no longer is feasible — he hoped to have sports books up and running online and in local casinos before the opening kickoff this fall — he still thinks he can hammer out a deal with Gov. Gretchen Whitmer’s office and make it happen in time for the Super Bowl.
“That, to me, is still this season,” Iden said. “And that, to me, would still be success.”
“Especially,” he adds, laughing again, “if the Lions are in it, right?”
Right, well, let’s just set aside the punchlines for now, and try to explain where we’re at here in Michigan.
Iden, a key gambling proponent for most of his four-plus years in state legislature, will be the first to tell you he’s not where he thought he’d be last May, when a U.S. Supreme Court ruling struck down the Professional and Amateur Sports Protection Act of 1992 (PASPA) and effectively lifted the federal law prohibiting sports betting.
At that point, the way Iden and others saw it, “Michigan was out in front of this,” and seemed poised to be one of the first states to capitalize on a new revenue stream.
New Jersey was at the front of the line, after a decade-long push led by former Gov. Chris Christie culminated in that Supreme Court victory, and also having already passed an internet gaming law in 2013. A month after the PASPA ruling, New Jersey’s sports betting windows were open.
Other states weren’t that prepared, but by last Christmas, Iden, working with then-Senate Majority Leader Mike Kowall and others, thought Michigan was all set. They’d satisfied the various stakeholders, including more than tribal casinos and the three in Detroit, and passed a package of internet gaming bills — including language permitting online sports wagers — with bipartisan support in both the House and Senate.
But then came a last-minute veto from then-Gov. Rick Snyder, citing concerns about encouraging more gambling and cannibalizing the state’s own online lottery, which directs revenue to the School Aid Fund. And that sent the 36-year-old Iden back to the drawing board, admittedly “disappointed” but not defeated — hopeful that a new administration would see things a bit differently.
The revised Lawful Internet Gaming Act now sits parked in the House Ways and Means committee, which Iden chairs, waiting for the green light from the governor’s office. (There's also a matching Senate bill sponsored by Curtis Hertel Jr., D-East Lansing.)
But as the wait drags on, Iden sounds ready to hedge his bet, preparing to unveil in the next month or so a standalone sports betting bill that would authorize both online and brick-and-mortar sports wagering.
That’s because after what Iden described as “some good conversations” initially with the administration about the online gaming bill, momentum has stalled. It's partly due to the ongoing fights over the state budget and infrastructure, with the debate over how to “fix the damn roads” sucking most of the oxygen out of the room, especially with a Sept. 1 budget deadline looming. But Whitmer also has expressed some of the same concerns Snyder did in issuing that veto last winter, namely the potential for lost revenue from the lottery.
“I know that there’s been some robust debates,” Whitmer said last month, “and I’ve said very clearly, over and over again, that protecting the School Aid Fund and ensuring we get every dollar back into the education of our kids is my top priority. So I’m going to have a hard time supporting anything that doesn’t protect that goal.”
Later, she added, “I’m not going to increase gambling in our state at the expense of our school kids.”
Iden, for his part, says it’s the administration, which has objected to online slots in the bills and proposed higher tax rates and licensing fees, that needs a better education on the subject matter.
“It’s difficult to negotiate with a party who doesn’t quite understand everything that’s going on in the marketplace,” he said.
He points specifically to what has gone on in New Jersey, where the sports gambling business is booming — with more than $3.2 billion wagered in the first 12 months — and the privately-run state lottery shows few ill effects.
“What they will find is that the lottery player is not a sports bettor, and a sports bettor is not a lottery player,” Iden said. “And if there is any crossover, people will do both.”
As for the revenue issue, “If the governor’s office wants to earmark it all to education, I’m 100 percent in support of that. If that’s all that’s gonna take to get it done, then great.”
Iden also is open to negotiating the 8-percent tax rate proposed in his iGaming bill, but finding a number the administration will accept won’t be easy. Whitmer's office pitched a 15-percent rate on sports wagering revenue, but potentially much higher rates (up to 40 percent) on other online games. Other states are all over the map with respect to tax rates on gaming revenue, from Iowa (6.5 percent) to Pennsylvania (36 percent). And Michigan's a rather unique case to begin with, considering all its invested parties.
“I’m willing to come up on the number and I continue to say that,” Iden said, “but it cannot be at an unreasonable number.”
He’s also not willing to compromise on the necessity for including an online piece to any new sports betting legislation, as a few other states have in the last year. Because of the consumer protections it provides, he says, as well as the way the market is trending. Nearly 80 percent of the sports bets in New Jersey are made on mobile devices, for example.
“And it’s more and more apparent every day, as more states come online, that mobile is going to be where the action really is,” Iden said.
Therein lies the concern, though. More states are coming online, and some of them share a border with Michigan.
Back in May, Indiana’s governor signed a sports betting bill into law, and the proposed start date is Sept. 1, just in time for football season. Last month, Illinois followed suit with a more restrictive legislative package that allows online and in-person sports wagering, though neither is expected to launch until next year. Same goes for Ohio, which is lagging further behind and has yet to pass any legislation. Across the Canadian border, where only parlay sports wagering is currently allowed, there’s now a renewed push to legalize single-sports betting in Ontario.
“The good news is if we come online before the end of the year, which I anticipate we probably will, we’ll be OK,” Iden said. “But if we don’t and Ohio gets online and Canada comes online, Detroit will start losing players.”
Much like New York, which began allowing sports betting this week, but only via in-person wagers at upstate casinos for now. Which means bettors in the Big Apple will continue to take the train or an Uber across the bridge to New Jersey just long enough to log into a mobile app and place their bets.
Time will tell what kind of incentive that interstate traffic might provide here.
“But I have the votes in both the House and the Senate to pass all the bills,” Iden reiterated. “What I don’t want to do is get another veto. So I am trying to continue the dialogue with the administration about finding an agreeable tax rate that everybody can live with to be able to bring this to a resolution. We can go very quickly once I get sign-off from the governor’s office.”
And assuming he can, at some point, well, “God bless me, I still love the Lions. And I’d love to be able to go down to a game on Sunday and put a wager on it.”