Michigan Online Poker Bill Clears First Committee Hurdle

Updated: March 12th, 2017 by Dev Ops

The growing push for additional US states to legalize online poker in 2017 continues gaining ground, with Michigan among the latest states to actively consider the topic.  This week, Michigan’s State Senate Regulatory Reform Committee passed Senate Bill 203 on Thursday following a brief hearing.  The bill’s 7-1 approval by the committee was something of a given, since six of the seven “aye” votes came from state senators who had previously signed on as co-sponsors of the bill.

SB 203 has already been passed on to the Senate’s Committee of the Whole, an intermediate step allowing discussion and possible amendments before a full Senate vote occurs.  The bill, or a similar offering, would also need to pass through the Michigan State Assembly before final approval.

Per the bill’s overview, Senate Bill 203 would create the “Lawful Internet Gaming Act” to do the following:

  • Allow internet gaming to the extent that it was carried out in accordance with the proposed Act.
  • Create the Division of Internet Gaming in the Michigan Gaming Control Board, and prescribe its responsibilities.
  • Allow the Division to issue applicants an internet gaming license if they met certain criteria.
  • Prescribe a $100,000 application fee, a $200,000 initial license fee, and a $100,000 annual fee for an internet gaming license.
  • Allow an internet gaming license to be issued only to a casino licensee or, under certain conditions, to a Michigan Indian tribe that operates a casino in the State.
  • Allow internet gaming licensees to conduct internet gaming.
  • Allow the Division to license internet gaming vendors to provide goods, software, or services to internet gaming licensees.
  • Prescribe a maximum $5,000 application fee, a $5,000 initial license fee, and a $2,500 annual fee for an internet gaming vendor.
  • Require an internet gaming platform provider to pay an initial license fee of $100,000, and $50,000 each year after the initial license was issued.
  • Provide that a license would be valid for five years and could be renewed for additional five-year periods.
  • Impose a tax of 10% on the gross gaming revenue received by an internet gaming licensee from internet gaming, but provide for the tax rate to be reduced to a rate equivalent to that provided in a compact, amendment to a compact, or other agreement negotiated with the State.
  • Require an internet gaming licensee to have adequate gaming participant verification measures, including mechanisms to detect and prevent the unauthorized use of internet wagering accounts and to detect and prevent fraud, money laundering, and collusion.
  • Allow the Division to develop responsible gaming measures, including a statewide responsible gaming database identifying individuals who were prohibited from establishing an internet wagering account or participating in internet gaming offered by an internet gaming licensee.
  • Allow the Division to enter into agreements with other jurisdictions to facilitate, administer, and regulate multijurisdictional internet gaming by internet gaming licensees to the extent that entering into an agreement was consistent with State and Federal laws and if the gaming under the agreement were conducted only in the United States.
  • Create the “Internet Gaming Fund” and require fees and taxes to be deposited into the Fund.
  • Allow the Michigan Gaming Control Board to spend money from the Fund, on appropriation, for the First Responder Presumed Coverage Fund and the Board’s costs of regulating and enforcing internet gaming.
  • Prescribe a felony penalty of imprisonment for up to 10 years and/or a maximum fine of $100,000, for a person who committed an action prohibited by the Act.  [The listed prohibitions within the bill’s summary apply only to unlicensed providers of online gambling services to Michigan residents, but do not appear to be aimed at any of the state’s online players who currently participant on offshore sites.]

SB 203 would go into effect 90 days after enacted, should that eventuality occur.  Two other related bills are tie-barred to the measure.  According to the bill’s language, Senate Bill 204 (SB 204) would amend Michigan’s gambling laws to exclude gaming conducted under the scope of SB 203, which would otherwise fall under the state’s list of illegal gambling activities.  And Senate Bill 205 (SB 205) would add to Michigan’s penal codes the offense proposed by Senate Bill 203 (operating an unlicensed online gambling service) as a Class D felony “against public order.”

Despite the quick passage of SB 203, however, its prospects aren’t that rosy.  According to OPR’s beat writer, Dave Palermo, several of Michigan’s tribal nations are already on record as opposing the bill.  Like America’s most populous state, California, Michigan has a number of large casino-destination complexes operated by a handful of the tribes located within the state.  A group of hardline California tribes has succeeded in stonewalling online-gambling legalization efforts for nearly a decade, seeking a virtual monopoly over most online gambling conducted in the state.

Some of Michigan’s tribal nation appear to have similar aspirations, which translates to Michigan falling farther down the “likely to legalize in the near future” list regarding online poker.  However, several of Michigan’s tribal nations have already played a powerful card in their relations with the state, having previously withheld compact-agreed tax revenue over other gambling disputes.  That makes such threats less effective should they be raised again, in the effect SB 203 gains additional traction.

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