The year started off on a bittersweet note for those wanting regulated online poker in Michigan.
Supporters, led by Michigan State Representative Brandt Iden, were frustrated and disappointed by the veto of the Lawful Internet Gaming Act. Iden and now-former State Senator Mike Kowall worked hard to pass the bill through both houses of the legislature at the end of 2018, only to see it vetoed on December 28 by then-outgoing Governor Rick Snyder.
But hope lived. Iden was confident he would pass the law again, this time with State Senator Curtis Hertel Jr. Lawmakers saw the benefits of the industry and would support it again.
The stumbling block was going to be new Governor Gretchen Whitmer.
Little did they know how much of an obstacle she would be.
Short-Lived Positive Start to 2019
With an updated 2019 Lawful Internet Gaming Act in place, Iden introduced it in the form of HB.4311 in the House, and Hertel took it up as SB.2186 in the Senate.
But before the bills could be pushed through their respective committees and on to the floor for votes, the Michigan Department of the Treasury came to a May 2 hearing in the House Ways and Means Committee with concerns.
Those concerns trickled over to Whitmer, who began to publicly express her own misgivings about online gaming. Her primary issue was the assertion that online casino games – not poker – would cut into the revenue from state lottery games, thus hurting the School Aid Fund that benefits from the lottery.
No matter how Iden disputed the speculative figures from the Treasury and focused on the additional revenue the state would receive from online gambling, Whitmer and the Treasury were unconvinced.
Iden Willing to Talk
While Iden had made no apologies for his bills or the claims of revenue, he did eventually agree that some tax rate changes could be on the table.
However, Whitmer and the Treasury came back with massive tax and licensing fee increases that would make a profitable online gaming industry unfeasible.
The proposed tiered tax structure was:
--Under $2.5 million in revenue: 8% tax--$2.5 million to $4 million: 16% tax--$4 million to $8 million: 32% tax--Over $8 million: 40% tax
The tiered structure for licensing fees was:
--Up to 1,200 slot games: $200K application fee--1,201 slots to 1,999 slots: $700K application fee--2,000 slots or more: $1 million application fee
And even annual licensing renewal fees would be tiered:
--Up to $2 million: $175K--$2 million to $5 million: $350K--Over $5 million: $500K
Iden said the proposed changes were non-starters and not meaningful solutions.
No Conversations
A recent interview with Iden by Online Poker Report at the National Council of Legislators from Gaming States shows that no progress has been made. Further, Whitmer won’t speak to Iden about the issue of online gaming.
“I’d love to have a direct conversation with her about this,” Iden said. “She refuses to engage with me directly. I’ve been talking to her staff. I welcome the opportunity, for the record, to sit down with the governor any time and talk about this issue.”
He also noted that the aforementioned proposed tax rates from Whitmer demonstrate that she has “no knowledge of what’s happening in the industry.”
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Iden went on to say that since online slot games seem to be the problem for Whitmer and the Treasury, he would be willing to talk about legalizing only online poker and table games, though that would remove the majority of revenue that online gaming could produce.
With that, Iden noted that the administration should “better educate themselves” on the entire online gaming proposal and its success in other states like New Jersey. “The fact that the governor’s office is ignoring the experts and simply listening to Treasury, who is not an expert in this issue and has very little knowledge, is problematic.”
Plan to Revisit Later
At the present time, there are a number of contentious issues standing between the Democrats and Republicans in the Michigan political realm. Iden is afraid that online gaming could get caught in the mess and not receive a fair shake.
Iden told OPR that Hertel is talking to Democrats on the Senate side of the legislature and Representative Rebekah Warren is speaking to Whitmer on behalf of Iden and in support of online gaming.
Ultimately, Iden wants to revisit the issue in the fall months, after the budget is decided and other key issues are settled or off the table. He plans to continue requesting a meeting with Whitmer and hopes it will be possible in the coming months.
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