Legal online poker is expected to become the law of the land in the state of Michigan as the state legislature passed a gambling expansion package on Wednesday that now awaits final signoff by Governor Gretchen Whitmer.
Included in the bills that are now awaiting the governor’s signature is authorization to offer online poker, online casino games, online sports betting and fantasy sports contests.
HB 4311, the Lawful Internet Gaming Act, passed the Senate 35-6, a margin wide enough to override a governor’s veto if needed. However, with her administration working with lawmakers to address the her concerns prior to the final version haven been taken up by the Senate, Governor Whitmer is fully expected to sign the bill into law.
Doing so will be quite the departure from efforts to legalize online poker in Michigan in 2018 when then-Governor surprised lawmakers and industry pundits by vetoing online gaming just before the year and his tenure as governor ended.
Will Shared Liquidity be Allowed in Michigan?
The House version of HB 4311 included a provision that allowed the Michigan Gaming Control Board to “enter into agreements with other jurisdictions […] to facilitate, administer and regulate multijurisdictional internet gaming,” as long as doing so did not violate state or federal laws.
However, the version that went to the governor had that provision removed. Former Executive Director of the now-defunct Poker Players Alliance confirmed the removal on Twitter of the clause that would have eventually allowed Michigan to join New Jersey, Nevada, Delaware and potentially Pennsylvania in the MultiState Internet Gaming Agreement once the Wire Act case is settled.
But he also clarified that though the multijurisdictional language was removed, the bill did not explicitly prohibit the sharing of liquidity with other states.
Michigan Online Poker Taxes Adjusted Upward
In order to get the approval needed for the bill to proceed, modifications to the tax structure for online gaming were necessary. The tax scheme included in the House version of the bill, which passed at the end of October, would likely have meant online poker operators would have been taxed at a considerably lower rate than the last two states to legalize online poker.
New Jersey and Pennsylvania tax online poker at rates of 17.5% and 16% respectively. The tax rate in Michigan is based on a sliding scale according to an operator’s Adjusted Gross Receipts and range between 20% and 28%.
Online gaming operators in Michigan will be required to partner with a land-based casino or tribal gaming provider. And while the tax rates for those that partner with an Indian tribe in the state will have their tax rates determined by the compact that the tribe has with the state, those that partner with one of the three land-based casinos in the city of Detroit will be assessed an additional 1.25%.
When Will Online Poker Be Available in Michigan?
The next step for online poker to become law in the state of Michigan is Governor Whitmer putting her signature on the proposed legislation.
From there, state regulators will have a number of tasks to complete before online poker can go live in the state including, drafting regulations and issuing licenses. Depending if the Board approaches online gaming more like New jersey regulators or those in Pennsylvania, the process could be completed anywhere between 9 months and two years.
And while it seems more likely that Michigan will more closely follow New Jersey, it is likely that online sports betting will be a higher priority for both the state and online gaming operators due to its potential to produce greater revenues.