Michigan has made significant progress in recent weeks towards the legalisation of sports betting and online gambling and it looks like it now just a matter of time before residents will be able to place legalised sports bets and gamble online. Gov. Gretchen Whitmer and state legislators are finally on the same page and final votes on the bill could come in this week.
Michigan currently has three traditional casinos in Detroit and 24 tribal casinos in its western and northern regions, in addition to the state lottery which is also available online. The gaming market is going to expand significantly once sports betting and online gambling gets the green light.
Some industry observers fear that online gambling could result in fiercer competition, especially for the state’s iLottery, which provided almost $1 billion to Michigan’s school fund in the previous fiscal year. Stats show that nearly 7 percent of this revenue came from online lottery players.
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There are fears that these customers may move away from iLottery as more online games vie for their attention thanks to the legalisation of online gambling. This could have dire financial consequences for the state due to the different tax structures that are imposed on different types betting. For instance, in the iLottery, a net win of $1,000 gives Michigan schools $700; while a slot machine at a Detroit casino slot machine, will give schools just $81 on the same net win.
School Funds a Priority for Gov. Whitmer
Both Republicans and Democrats in Michigan agree that online gambling must be legalised in the state to protect consumers from unaccountable gambling firms operating outside the U.S., while ensuring that the state does not inadvertently harm existing gambling operations, whose revenues fill the state’s various funds.
Rep. Brandt Iden, one of the bill’s main backers, warned that time was of the essence, due to competition from other states, such as Illinois, which already legalised sports gambling and Indiana, which is in the process of legalising sports betting.
Michigan legislators were not too concerned about online gambling and sports betting eating into the existing gambling industry. Their bigger concern was finding the right balance on the tax rate to ensure the school fund did not suffer in the process.
Gov. Whitmer has publicly stated that her administration’s priority is to maintain a strong revenue stream to state schools, and has proposed a 10-12 percent tax on sports bets after winnings. The House supported an 8.75% tax, with an additional 3.25% tax collected in Detroit. Based on the House measures, a significant portion of sports betting and iGaming revenue will go towards the school fund.