Michigan Sports Betting Bill Stalled Due To Proposed Tax Rate

• MI HB 4916 would legalize both retail and state-wide mobile sports betting apps.
• The current tax rate set on the bill calls for 8% of sports betting revenue to be paid to the state. Other state officials believe it should be closer to 15%.
• The bill is tied to an online casino bill, which means both will have to be signed into law in order to bring legal sports wagering in Michigan.

LANSING, Mich. – Tuesday marked the very first hearing for the much-anticipated Michigan sports betting bill.

Led by Michigan Rep. Brandt Iden, MI HB 4916 would legalize sports betting at the state’s 23 tribal casinos as well as the three commercial casinos in Detroit. Sports betting apps in Michigan would also be available state-wide.

The hearing was conducted in front of the Regulatory Reform Committee and only lasted about 20 minutes. Iden spoke about his weekend trip to Indiana in order to place a legal sports bet. His personal story was used to depict the current situation for Michigan sports bettors.

“I use this as an example. I decided to go there, because like many people interested in gaming, I go where the options are,” said Iden.

His proposed bill would give potential bettors just as many sports betting options in Michigan as there are in Indiana. The Hoosier State legalized both mobile and retail sportsbooks in May and opened their first casino sportsbooks in September.

Areas of Concern for the Sports Betting Bill

One area that other state legislators and potential license holders may have an issue with is the fact that MI HB 4916 requires sportsbook operators to use official league data for in-game wagers.

Tennessee was the first to make this a requirement and Illinois has since been the only other state to mandate this as well. Those who oppose the requirement often claim that it will cut too deep into a sportsbook’s retained revenue, which is often only 5-10% of the total handle.

However, the main issue state officials have with the current structure of the bill is the tax rate that would be assessed on sportsbooks in Michigan. Iden put in a tax rate of only 8% of sports betting revenue to be paid to the state. Other officials are looking for more.

LegalSportsBetting got a chance to speak with Iden before the summer recess and he said at that time Michigan Governor Gretchen Whitmer was looking at a tax rate of upwards of 40%.

The number currently desired by the administration is much lower than the amount asked before the summer recess. However, it is still not to Iden’s liking.

“I haven’t talked with the administration since before the summer break and they proposed 15%, plus the additional 3.25% for the city of Detroit,” said Iden to the Detroit Free press. “That’s an astronomical rate which will just not work – that number has to be somewhere closer to 9% or 9.5%.”

Indiana imposes a tax rate of 9.5% onto their sportsbook operators. However, other states such as Pennsylvania have a tax rate as high as 36%. Some states such as New Jersey have varying tax requirements depending on which method of sports betting is conducted.

Committee Chairman Rep. Michael Webber told the Detroit Free Press that he foresees a committee vote on MI HB 4916 along with other bills next week.

“More likely, [tax rate] changes will be made at the next committee level,” he said. “I want us to be competitive.. we have to be cognizant of what these other states around us are doing with it.”

Another area of concern comes on behalf of strictly sports bettors. The Michigan sports betting bill is tied with the online casino gambling bill MI HB 4311. This means that the online casino bill has to pass in order for the sports betting bill to pass.

This may cause issues with state lawmakers down the line, but the first step will be securing an agreed upon tax rate between bill sponsor Brandt Iden and the administration.

“It’s disappointing that it’s stalled out at this point in time, and I won’t advance this until we find some resolution,” said Iden.

News tags: Bandt Iden | Gretchen Whitmer | Indiana | MI HB 4311 | MI HB 4916 | Michael Webber | Michigan | Regulatory Reform Committee | Tennessee