Michigan wants in on net gambling

Michigan is making moves to become the next US state to legalize online gambling.

Last week, bill SB 889 was introduced  by senators Kowall, Hertel, Warren, Johnson and Knollenberg. If passed, it will pave the way for locally licensed online casinos and poker rooms, playable by Michigan residents and subject to agreement with external regulators, players in other US states and other countries.

Interestingly, the Bill preamble references the Department of Justice’s green light opinion on online gambling…as if to remind the anti-online gambling lobby in Washington that a federal ban is not on (or convince state politicians considering the law that it won’t be a waste of time)…

In an opinion dated September 20, 2011, the United States Department of Justice reversed its previous interpretation of 18 USC 1084, commonly referred to as the federal wire act, allowing states, subject to certain restrictions, to legalize and regulate Internet gaming

The proposed law makes provision for 8 locally licensed online casinos with licenses running for a 5 year term. To be in the running, applicants must either be:

• …a casino licensee under the Michigan gaming control and revenue act, 1996 (ie existing bricks and mortar casino), or
• …a federally recognized Michigan Indian tribe

They don’t come cheap either. There’s a $100,000 nonrefundable application fee, a one off fee of $5,000,000 plus a 10% tax on gross gaming revenue.

Given the unspectacular numbers online casinos in Delaware and New Jersey have been doing since launch, these fees may dissuade potential applicants.

On the upside, while the Delaware and New Jersey regimes are strictly intra-state affairs, Michigan is showing clear intent to chase blue sky outside state limits.

Section 5. (3) provides:

The division may enter into agreements with other gaming entities, including foreign entities, to facilitate, administer, and regulate multi-jurisdiction Internet gaming to the extent consistent with state and federal laws…