Michigan Governor Likely to Veto iGaming Bill in Present Form

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Michigan nearly passed online gambling in 2018, but the bill was eventually vetoed by outgoing Governor Rick Snyder. This year, several bills have been filed to try and regulate online gambling in Michigan and some felt that new Governor Gretchen Whitmer would support the measure.

However, that does not appear to be the case, at least according to state officials that testified at a Thursday hearing on several iGaming measures. The ultimate concern is that online gambling will result in reduced revenue to the state, including the School Aid Fund.

Whitmer Likely to Veto Present Legislation

Eric Ramsey of Online Poker Report reported on the Thursday hearing and revealed that State Budget Office official Bethany Wicksall claims that Gov. Whitmer will veto any bill that reached her desk, at least in the current form.

According to Wicksall, “Our main concern, obviously, is the potential reduction in state revenue. As the bill is written — given the tax rate, the distribution of the additional new online gaming revenue to the state, as well as the potential impact to the state lottery — even under an optimistic scenario, Treasury estimates that there would be a potential reduction in overall state revenue.”

One area that would expect to suffer as a result of the perceived reduced revenue is the state’s School Aid Fund. Over 25% of all money collected on the lottery goes to the fund. Chief Deputy Treasurer Jeff Guilfoyle spoke and revealed that the iLottery would be a direct competitor of online gambling and that if iGaming replaced iLottery in any capacity, it would have a “significant impact on state revenue.”

Officials are worried that iGaming will begin to be substituted for iLottery by gamblers. Under a bill championed by Rep. Brandt Iden, iGaming revenue would only be taxed at 10% and only 5% of that would go to the School Aid Fund. Guilfoyle believes that due to the lower tax rate, the state would come out behind in terms of taxes collected.

Guilfoyle also testified that the Michigan Treasury predicts that land-based casino gaming will decrease because of iGaming. The lost gaming would result in a shortfall of $35.5 million from iGaming.

New Jersey Success Does Little to Persuade Lawmakers

Representatives for FanDuel, GeoComply, and even Detroit casinos turned up to support Iden’s bill, and there was a lot of focus put on iGaming successes in New Jersey. New Jersey is enjoying record revenues for nearly all forms of iGaming and live gaming is has trended slightly upward in the last five years.

However, Guilfoyle wasn’t buying what supporters were selling. He believes that the present structure of the bill will make Michigan different from New Jersey. Since online gambling would be taxed lower than retail gambling, he believes that Michigan operators would have different incentives.

Expect the Tax Rate to Be Increased

While Iden or other lawmakers have yet to make any concrete statements regarding the future of present iGaming legislation, it is safe to assume that there will be changes in the near future to try and sway Gov. Whitmer.

The most obvious change you can expect is a raise in the tax rate. While Michigan is looking to make it easy for casinos to launch iGaming, the low tax rate seems to be a hurdle that will guarantee a Gubernatorial veto.

Of course, don’t expect the insane tax rates like in PA where they tax slots at 54% and sports betting at 36%. However, expect the tax rate to be raised to be more in-line with retail gambling. As always, we will keep you informed on any new developments on iGaming legislation in Michigan.