It’s been over a year since the Supreme Court ended the federal prohibition of sports betting, overturning two-and-a-half decades old Professional and Amateur Sports Protection Act. Now, the legal obstacle was cleared, giving the states free hands in regulating the issue.
By September 2019, you could legally wager on sports in 13 states plus the District of Columbia. However, the Michigan gaming proponents face the delays of regulation once again.
The Trials and Denials of Michigan Sports Betting
While gambling in the State of Michigan is not illegal, it is restricted to land-based casinos, the majority of which (a total of 26) are localized in the Native American Reservations. There are another three parlors in Detroit and a pari-mutuel horse racing track. Online betting, however, is more restricted and reserved for lotteries, skill games (and they mean scrabble, not poker!), fantasy sports, and hound and horse races.
Former Michigan governor Richard Snyder rejected the latest legal proposition that intended to legalize online betting activities at the end of 2018. Recent developments saw another attempt and another stall in the issue. However, one of the loudest proponents of legalization, Rep. Brandt Iden, still expects the legislature on both online sports and casino wagering to pass before the Super Bowl.
To showcase the downside of the continuous rejection of regulation, he recently took a trip to Indiana to place his sports bets in a local casino. His performance was to signal the fact that Michigan State is losing potential revenue to both illegal and neighboring activities because it continually fails to compromise on the issue.
And the apple of discord in this one is the tax percentage to be taken from the gambling businesses. While many officials tend to put higher rates and go from the proposed 15% to a high 40%, Iden wishes to stay competitive and keep it as low as 8%. The lower percentage would still bring millions in revenues for the state, he claims, and the higher taxes would make the industry unprofitable.
The Losses of Unregulated Betting
Previous suggestions on expanding the laws on gaming in Michigan only mentioned sports betting. But it was drafted before PASPA was declared unconstitutional. The new package refers to both sports and casino betting. It is going to allow gaming businesses to have two skins for online activities — one for casino and the other for sports wagering.
It’s no wonder that the effort to push legislation on sports wagering goes hand in hand with the debate on the decriminalization of online gambling. Iden’s proposals emphasize the fact that the state is losing revenue to illegal and offshore businesses, with many websites catering to Michiganders despite the laws banning such operations.
The fact is the online industry is growing, and the legislation doesn’t seem to catch up. While the lawmakers dispute over the taxes, the business is developing ways to reach customers anywhere, anytime, with things like downloadable casino clients and real-money slot apps for android and iOS platforms. In other words, betting is already available to people, but it’s unregulated and thus, potentially harmful because players are unprotected.
The Official Concerns
Previous Michigan administration was opposed to online gaming legalization because they feared it would affect the $913 million of revenues collected from the state lottery. The problem was that this money was used to support state education financing. The slots were the primary source of dread, and the officials were afraid the popular online games would lead the money away.
But Iden reassured them that slots and lottery players do not necessarily mingle in the same crowd. And even if they did, the laws could arrange the state tax income to flow to the desired fund.
When it comes to sports wagering, the concerns are the same as the ones that worried the officials back in 1992 when PASPA was installed. They were afraid that the expected revenue from sports gambling would not substitute for the waste it created. Legalization would only give rise to problem gambling and cause harm to professional and college sports leagues.
That is why Iden’s bills included a section that would allow sports leagues to request prohibition on some types of wagers or betting on specific sports events. As for the morals of it, statistics show that keeping betting illegal does not diminish the problem but only keeps it out of the state’s reach.
What Happens Next?
In September, the sports betting bills went further through Michigan administration when the House Committee on Regulatory Reform approved them. But there are still several more steps to take, being that Governor Gretchen Whitmer is still not convinced about the tax rates. It remains to be seen how the situation will unravel.
In the meantime, there have been some loud voices asking for the federal legality of sports betting, mainly because the estimates show the nationwide losses rise to an astonishing $150 billion annually. So until the legislature cuts that Gordian knot, the unregulated offshore websites will keep profiting from the situation.