Last Thursday, 14 April 2016, Michigan State Senator, Mike Kowall, backed by four other members of the Senate, Curtis Hertel Jr., Rebekah Warren, Bert Johnson and Marty Knollenberg in introducing the Senate Bill – SB 889, The Lawful Internet Gaming Act.
The Senate Bill, SB 889, seeks to “regulate and legalise online gambling.” The main objective of the bill is to “protect residents of this state who wager on games of chance and skill through the internet and to capture revenues and create jobs generated from internet gaming.”
Kowall and his team hope to issue strict rules that would ensure that that online gambling is conducted in a secure, fair and regulated fashion; the new bill also suggests that only players who are 21 years of age or older with authorised player accounts, will be allowed to partake in online gaming activities in the state.
The state of Michigan has decided to introduce new, online casino and poker legislation, for their residents, almost five years after the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) went into effect.
The UIGEA is a United States legislation that regulates online gambling. It “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law;” thus, prohibited online gambling sites from performing transactions with financial institutions in the USA, shutting down all such online gaming activities. The act specifically excludes fantasy sports that meet certain criteria; as well as, games of skill and legal intrastate and intertribal gaming. There is no clear mention of state lotteries or explicit notation about inter-state wagering on horse racing, therefore leaving consumers and providers partially confused about their legalities, under this act, leaving room for several interpretations to emerge.
A wide range of games, seemingly, will be permitted under the new law in Michigan; the full list of vetted provider will be disclosed at a future date. It has, however, been clarified that in order to avoid any conflicts with the federal Professional and Amateur Sports Protection Act (PASPA) sports betting prohibition, no sports betting will be offered after passage of this bill.
“Sports betting will not be among the list of legally permitted online games,” said CalvinAyre.
The Professional and Amateur Sports Protection Act (PASPA), also knowns as the Bradley Act which has been in effect since the early 1990’s, aims to stop the spread of sports betting in the USA. Under PASPA, the four states, where sports betting had already been written into the law at the time- Nevada, Oregon, Delaware and Montana, could continue with their practices but any new states wanting to legalising sports betting, would be restricted.
The bill, SB 889, states that only eight separate gambling licenses will be issued in Michigan; and vendors would have to either be a state-licensed private casino operator or a federally recognized tribes, who already have existing casino operations in the state, to qualify for them. However, it has also been mentioned, to the discord of many tribal governments that for the tribal casinos to qualify, they would also have to waive their sovereign immunity and pay the same relevant taxes and fees as the private casinos. Many Tribal casino and government members have claimed that the bill violates several of their tribal-state gaming compacts.
In order to obtain a license, each vendor would have to pay an initial sum of USD 5 million; while USD 100,000 of that would be non-refundable; the remaining balance can be used as a deposit against their taxes, which are to be collected monthly. Taxes have been set at the rate of 10% of gross revenues, which includes all funds collected by the casino less only the amounts paid out in cash and other prizes to patrons.
Each of these licenses will last for five year periods, after which, they can either be renewed or cancelled. Vendor licenses for online gaming technology will also be issued and renewed in the same format; however, one detail that seems to be amiss amongst the language of the bill is which vendors would qualify for these licenses. This ambiguity may make room for operators from other states and international companies to enter into business deals with Michigan State.
The bill states, “Notwithstanding anything else in this act, a wager may be accepted from an individual who is not physically present in this state if the division determines that the wager is not inconsistent with federal law or the law of the jurisdiction, including any foreign nation, in which the individual is located or that the wagering is conducted under a multijurisdictional agreement to which this state is a party that is not inconsistent with federal law.”
Michigan is one of the only three states in the country that already allow some forms on online lottery sales and only one of two that permits instant win online games. Therefore, given their experience with online gambling, already existent in Michigan pols, it could prove beneficial for Kowall in moving the legislature along.