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Michigan Department of Treasury Makes Requests Involving iGaming Legislation

Earlier this week, the Department of Treasury issued a request via the governor’s office regarding online gambling legislation currently being considered in the state of Michigan. Representative Brandt Iden has stated that the department has asked for slots to be removed from legislation, with fees and taxes increased for other games. Iden is calling the request a non-starter.

Not Going to Happen

In May, a committee meeting took place where state officials announced that Governor Gretchen Whitmer was not in support of the bill based on an issue of possible cannibalization of online lottery and land-based gambling.

During the meeting, Rep. Iden stated that he would address these concerns by increasing the tax rate and providing a higher percentage of revenues towards the School Aid Fund. The changes were to be introduced on Tuesday to H 4311 and H 4307 within the House Ways and Means committee.

Iden is a chairman of the committee and was going to bring the changes in legislation to a vote. Iden stated that all along, the goal was to increase the tax rate so that slots could remain. Increasing the rates and removing the slot games is apparently not going to happen according to the Rep.

Now, Iden has decided to place the bills on hold within his committee. He was hoping to move them forward but now it seems another month or two will pass before he can do so.

Governor’s Proposal

Without slots, the state would be missing out on over 50% of potential revenues from online gaming. The governor’s proposal would place a tiered tax rate on tribal and commercial casinos based on revenue they can generate. An 8% rate would be placed on earnings below the $2.5 million mark.

From $2.5 million and $4 million will see a doubled rate of 16%. From $4 million to $8 million would jump even higher to 32% and $8 million in revenues would be taxed at 40%. It has been estimated by the treasury that as much as $27.8 million would be generated from annual tax revenues for the state. As much as $10.8 million would go to Detroit and $600,000 to the School Aid Fund.

Iden had proposed a base tax rate of 8% and then another 1.25% for a local share tax paid by commercial casinos in Detroit. Iden is standing his ground and trying to get the governor and others to see that the lottery will not lose out on money dur to online gambling.

Iden feels that online gambling will bring in new players and it is what is happening in marketplaces around the United States.

The position that the governor holds could spell trouble for the state. Casino groups are not happy with the governor’s proposal and they may fight back. Some argue that the online lottery in the state is operating illegally as they did not receive statutory authorization from Legislature to function. Stakeholders have been trying to work with the state instead of starting a legal battle but that might change if they are short-changed during the legalization of online gambling.