Michigan House Gives Green Light To Loosen Restrictions On Casino Licensees

On Wednesday evening, the Michigan House voted overwhelmingly to approve a bill loosening restrictions on the three casinos in Detroit as lawmakers seek to expand the state’s gambling options.

The legislation was part of a larger gaming programme regulating online gaming, online fantasy sports tournaments, sports betting, and horse racing advance deposit wagering. The package is going to the next Senate for ratification.

The bill would exclude more casino licensees from background checks, allow individuals with criminal convictions to be eligible for licences after a certain period of time, and mandate distributor annual audits rather than quarterly audits.

Rep. Brandt Iden’s bill, R-Oshtemo Township, would also lift a ban on political contributions by casino licensees and their employees, part of a ballot initiative passed by the referendum in 1996.

House Bill 4307 was not enacted with the larger package in October because it required three-quarters of the chamber support to overturn the portion of the vote-approved bill to lift the political contribution ban. In the Senate Regulatory Reform Committee on Tuesday, bills including the legalisation of sports betting and online gaming were heard, with no action being taken.

The bill gained on Wednesday night’s super majority support after both parties emerged from a meeting at night. The legislation passed 89-16 with both party members ‘ support and opposition.

Rep. Bill Sowerby, D-Clinton Township, opposed the bill because he said it lacked accountability and paved the way for the political process to infuse more cash, reports The Detroit News.

“Millionaire and billionaire casino owners will now be allowed to give money to state legislators,” Sowerby said in a statement. “Even worse, casino owners will no longer have to disclose to the public their past felony crime convictions, their financial failures — including bankruptcies — or their failures to pay their taxes. Michiganders expect and deserve more transparency and accountability from those who have such incredible responsibility, and this legislation severely diminishes that standard.”

Detroit’s three casinos, MGM Grand, Greektown, and MotorCity, as well as Detroit City and the Michigan Chamber of Commerce have expressed support for the bill.

The larger package of bills has met opposition from the administration of Democratic Gov. Gretchen Whitmer, who wants the taxes from the new gambling activities to compensate for any revenue loss that the School Aid Fund may experience as a result of an expected decline in existing brick-and-mortar gambling operations.

In response to the concerns of Whitmer, Iden increased the tax rates associated with the operations. The revised proposed sports betting tax rate would be 8.75% for the state’s 23 tribal casinos and 12% for the three Detroit casinos, a figure reflecting the city’s 3.25% tax.

The proposed online gaming tax rates would be imposed at a tiered or progressive level varying from 4% to 23% based on revenue, with higher rates being paid by higher earners. Due to the 3.25% city tax, the high mark would increase to 26.25% for Detroit casinos. Iden originally proposed an online gaming tax of 8 percent. He said Whitmer called for a sports betting tax of 15 percent and an online gaming tax of 40 percent.

In a hearing on Tuesday’s Senate, Iden said legislative leaders made progress in negotiating with the governor and expressed hope that the bill would be in place by the end of the year. He also said the Indian tribes of Michigan are largely on board with regulations on sports betting. But he warned against too high a rise in tax rates. “If we don’t do this in a methodical measured way, if we overtax this, if we do something that heaven forbid pushes us out of the market place, we will get zero,” Iden said.

Wednesday’s bill would require Michigan Gaming Control Board members to pay $1,000 to attend a meeting. The president would get $1,250 per meeting. The board of five usually meets six times a year.

The bill would ban a board member one year before and two years after serving on the gaming control board from having an interest in a casino. Currently, waiting periods are three years before and four years after.

The law would require a casino operator to report stockholders to the state if they had 5% or more interest in the gaming location instead of the existing 1% limit. A request or licensee would be allowed to label certain information as confidential and not subject to a request for public records, including interviews, reports, statements, documents, records or correspondence.

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