The Michigan House of Representatives passed sweeping legislation Wednesday that legalizes sports betting, internet gaming and gambling on fantasy sports, even though lawmakers haven’t reached a consensus with Gov. Gretchen Whitmer.
The main bill, which legalizes sports betting, passed on a bipartisan vote of 63-45.
The bill calls for an 8.75% tax on sports betting, plus a 3.25% tax for Detroit casinos. The tax on online betting would be phased in starting at 4% and eventually increasing to 23%. The sports betting tax would generate up to $30 million in revenues based on a projected $225 million betting market, said Rep. Brandt Iden, R-Kalamazoo, the lead sponsor of the bills.
“More than a dozen states, including some of our neighbors in the Midwest, have already legalized sports betting and have reaped the benefits,” said Rep. Michael Webber, R-Rochester Hills. “If Michigan follows suit, we could generate another revenue source for vital public services and improving our school systems.”
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But Whitmer said the 8.75% tax rate is too low.
“We continue to have revenue concerns regarding the bills’ negative impacts on the School Aid Fund,” said Tiffany Brown, spokeswoman for Whitmer. “The administration has taken every meeting we’ve been invited to regarding this legislation and will continue to work closely with the bill sponsor, tribal leadership and stakeholders to attempt to address our concerns.”
The governor fears that the increased opportunities for gambling in the state would result in fewer dollars going into the state lottery that help support the School Aid Fund. She has proposed a tax rate of 12% on both sports betting and gambling on fantasy sports..Taxes on online gaming would range from 2% to 19%, depending on the games and the amount that is being gambled.
Iden said he was disappointed with Whitmer’s efforts to kill the bill.
“We’ve been working on this for 10 months and time and again we’ve offered the governor an opportunity to provide feedback and she told us she was too busy to engage with us,” he said. “We had the votes today and we wanted to move the package forward … And you know what they say in the old adage, ‘The House always wins.'”
The tax rates in other states that have legalized sports betting range from a low of 6.75% in Nevada to 51% in Rhode Island. If Michigan stuck with an 8.75% rate, it would be the second-lowest rate behind Nevada. In other nearby states, Indiana has a 9.5% tax rate while Illinois will have a 30% tax rate when sports betting takes effect early next year.
Thirteen states and the District of Columbia have approved sports betting since the U.S. Supreme Court paved the way for expanded gambling across the nation in 2018.
Iden has been the driving force behind expanding legalized gambling in Michigan. He ushered through bills last session that would legalize betting on fantasy sports and online gambling through the states 23 tribal and three Detroit casinos.
Even though the bills had widespread support in the Legislature, they were vetoed by former Gov. Rick Snyder, who opposed expansion of gambling in the state and also feared a loss of revenue to the state lottery.
Under the bills, people would be able to bet on both the traditional outcome of games and do live betting on things such as whether a baseball pitch will be a ball or a strike or whether a field goal in a football game will be good or flubbed.
The bills — the main one is HB 4916 — now move to the state Senate for consideration.
Contact Kathleen Gray: 313-223-4430, [email protected] or on Twitter @michpoligal.
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