Michigan Governor Now Willing to Negotiate on Online Gambling
There may still be hope for legalizing online gambling in Michigan this year. According to recent reports, parties on both sides are beginning to hold meaningful talks towards regulating online gambling.
The reason behind the recent change? Bill supporters Rep. Brandt Iden has come up with a tax compromise that could meet the demands from both sides.
Governor’s Office Now Willing to Negotiate
For months now, lawmakers have been at somewhat of a standoff with the Governor’s office regarding online gambling. Governor Gretchen Whitmer has made it known that she would veto the presently proposed bill the way it was originally drafted.
However, the Governor’s office now appears ready to negotiate after recent developments. The first is that the Michigan House of Representatives passed H 4331 on October 30th. However, that bill included a bit of a compromise regarding the tax structure.
The Governor supports a tax structure that starts at 8 percent and goes up to 40 percent. That figure was deemed completely outrageous. Also, the Governor was asking that online slots not be included in any legislation.
Slots were kept in the bill but a new tiered structure was included in the bill. For the structure proposed in the bill, the starting tax rate is 4 percent with a top tier tax of 19 percent on revenue over $12 million. This structure would allow smaller casinos and operators to compete and force more successful operations to fork over more in taxes.
School Funding Clause Could Help Alleviate Concerns
Another point of contention from the Governor was school funding. Presently, over 25 percent of all revenue from the Michigan State Lottery goes to the School Aid Fund. The Governor was concerned that online gambling would impact lottery sales and reduce education funding.
Rep. Iden addressed these concerns in the bill. Under the newest draft, if the lottery is unable to give at least $70 million to the School Aid Fund, the iGaming fund will make up the difference. For example, if the Michigan Lottery can only give $64 million, then the iGaming fund will fork over $6 million to cover the shortage.
Senator Hertel Negotiating With Governor
Rep. Iden has been unable to get the Governor to negotiate over the last few months, so he turned to Sen. Curtis Hentel, Jr. Hentel has been in talks with the Governor’s office and has stated that the office has backed down from some of their demands.
The biggest being the no slots demand. Slot games are the #1 money maker for online casinos in the United States. Without them, online casino sites would not be feasible for some Michigan casino operators. The Governor has backed off of that demand, likely because stakeholders are willing to negotiate on taxes.
According to Hertel, “She has concerns about the School Aid Fund. As legislators, we should all be worried about that. But that doesn’t stop these bills from being done. I think there’s a reasonable way to solve the bills. I’m absolutely confident we can get this done.”
Give and Take Could Be What Brings Bill Over Finish Line
Back in July, we predicted that taxes would have to be raised and slots dropped for the bill to have a chance to move forward. Fortunately, we were only half right on that prediction. It appears that lawmakers’ willingness to negotiate on taxes and secure the School Aid Fund is enough to get the Governor to listen.
Now, it all becomes a game of give and take. How much do both sides want to give up in order to get what they want? We still expect that tax rates may be further adjusted to meet the Governor’s approval. There’s also a chance we could see the Governor’s office request additional School Aid funding to help guarantee the fund for the future.
With the year winding down, one has to wonder if both parties will be willing to bring things to a conclusion by the end of the year. If so, Michigan citizens may get a Christmas gift in the form of online gambling regulation.