Michigan Online Casinos Legal

Table of content

    Michigan Online Casinos started to emerge as an advocate for online betting around the time New Jersey raised its signal as a contender, but it took a few years for efforts to become a reality. The legislation was the result of a year-long push by iGaming proponents to bring the activity out of the background of the unregulated market, which would help Michigan capture additional tax revenue. Consumer protections are also in place to protect player funds and those with problematic gambling behavior.

    When it became legal

    Michigan launched online casinos in January 2021. With an array of legal iGaming products in the state that includes mobile casino apps from Golden Nugget, FanDuel, WynnBET, BetRivers, BetMGM, DraftKings, and William Hill. BetMGM Casino fared the best at nearly $11.1 million, with DraftKings Casino trailing in a distant second with $6.2 revenue during January 2021. Specifically, the state legalized online poker, sports betting, casino-style games, and even fantasy sports contests. They have also recently authorized online betting for horse racing.

    Online sports betting in Michigan launched on Jan. 22, 2021. Online casinos went live on the same day, and the state’s synchronized approach to the debut of online gaming made Michigan’s iGaming launch the most successful in US history. During January 2021 alone, Michigan sports betting apps took in a whopping $115.1 million, coming in second place to Tennessee’s launch-month record of $131.4 million.

    FanDuel Sportsbook, operating in partnership with MotorCity Casino Resort Hotel, came out on top with more than $32.5 million in revenue for the month. DraftKings Sportsbook came in a close second with slightly over $28 million in earnings.

    Legislation

    The Michigan Gaming Control Board (MGCB) regulates Michigan online gambling and leading up to December 2019, Michigan made great strides to authorize online gambling through a series of laws. Although it took some time to see online gaming officially launch in Michigan, these gambling laws lay the groundwork.

    Michigan Online Gambling

    Governor Whitmer signed the Lawful Internet Gaming Act into law on December 20, 2019. The Act authorized the MGCB to issue licenses to internet gaming operators.

    This includes poker, blackjack, slots, cards, and other games. It does not permit any kind of pick number games or other lotteries. The LIGA also instituted a graduated tax on adjusted gross receipts for revenue from Michigan online gambling. The graduated tax ranges from 20% on revenues of up to $4 million to 28% on revenues over $12 million. The LIGA authorizes many casino-style games.

    Sports Betting

    The governor also signed House Bill 4916, known as the Lawful Sports Betting Act (the “LSBA”), into law in December of 2019. The LSBA authorizes the MCGB to administer, regulate, and enforce all sports betting in the state. The sports betting bill further grants the MCGB the right to enter agreements with other jurisdictions for multijurisdictional sports betting.

    The LSBA enacted criminal penalties for offering sports betting in the state without a license. Criminal penalties include both felonies and misdemeanors.

    Daily Fantasy Sports

    Further, Michigan enacted House Bill 4308 in 2019. The Fantasy Contests Consumer Protection Act (FCCPA) requires anyone offering fantasy contests in the state to be licensed as a fantasy contest operator. The MGCB approves applications for such licenses and the FCCPA places several conditions on the licensure. The conditions include provisions on preventing employees or family members of employees from manipulating the contest, requirements for cash reserves, and identifying experienced fantasy contest participants.

    The FCCPA also requires licensed fantasy contest operators to hire a licensed CPA to perform an annual independent audit. Licensed operators must submit the results of the annual audits to the MGCB and these regulations serve to protect participants in fantasy contests.

    Laws

    House Bill 4311

    The Lawful Internet Gaming Act authorized a wide array of online casino games for the casinos in the state. It was a much-needed accelerator for the industry, spelling out the following:

    • Wagering is available to anyone 21 or older within Michigan borders
    • Commercial and tribal casinos can offer online poker, slots, and table games
    • A casino operator can have one “skin” or online brand for online poker and one skin for an online casino

    Taxes and fees on operators:

    • A tiered tax structure is created for internet gaming
    • There’s a graduated tax rate of 20% for adjusted gross receipts less than $4 million, up to 28% for AGR greater than $12 million; Detroit casinos also pay 1.25% to the city of Detroit
    • Costs include a $50,000 application fee, $100,000 for a five-year license, and $50,000 to renew
    • For an internet gaming supplier, costs are $5,000 for an application fee, $5,000 for a license, and $2,500 for annual renewal
    • 65% of tax revenue is allocated to a newly created Internet Gaming Fund, with the bulk going to the Michigan School Aid Fund, a major sticking point for the governor; another 30% will go to policing and other public safety programs in the state and the remaining 5% will be used to prop up the horse-racing industry
    • Online casinos can deduct 10% worth of free play from their gross receipts for the first three years, and then 6% in year number four and 4% in the fifth year

    House Bill 4916

    The Lawful Sports Betting Act technically wasn’t needed in Michigan for brick-and-mortar sportsbooks to exist. However, the Detroit casinos didn’t want to pay close to 20% tax on sports wagering revenue, like they do for slots and table games. So the decision was to wait for a new law with a lower tax.

    The new law also allowed for online/mobile sports betting as another key component. Online betting could not have taken place without the Lawful Sports Betting Act. Among the other provisions:

    • Anyone 21 or older within Michigan borders may set up an online sports betting account
    • Collegiate and professional sports are legal for betting after MGCB approval
    • Commercial and tribal casinos can offer online/mobile sports betting under regulation of the Michigan Gaming Control Board, a novel setup and “compromise” in the nascent non-Nevada U.S. market, bringing both federally-recognized tribes and commercial entities together under one regulatory body
    • Both tribal and commercial casinos can open retail (physical) sportsbooks/lounges
    • One sports betting skin is available per casino operator

    Taxes and fees on operators:

    • The state tax is 8.4% on sports betting revenue, plus 1.25% to Detroit for the city’s commercial casinos; the more than 20 tribal casinos will not pay the additional 1.25%
    • An Internet Sports Betting Fund is created
    • Costs are $50,000 for an application fee, $100,000 for a one-year license, and $50,000 annually to renew
    • It requires “official league data” for in-game wagers

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