Optimism is Warranted for Michigan Online Poker Bill

pure-michigan-image_489510_7Back in February, S5302B passed out of committee and surprised most in the online poker industry. As expected, no further movement has happened and the bill is all but dead.

However, another state has recently come on the online poker radar and one that nobody was talking about until a couple of weeks ago. Michigan is now considering the matter of iGaming regulation after State Senator Mike Kowall filed SB 889, the Lawful Internet Gaming Act.

This bill will regulate both iPoker and casino games and could make Michigan the 4th regulated iGaming state in the nation. There are a few reasons to get excited for this bill, including the fact that the state has a successful online lottery business.

Bill is Limited in Scope – But that is a Good Thing

If you look closely at the bill, you will notice a couple of interesting points. First, the bill will only allow for eight iGaming licenses total in the state. Once eight are issued, that is it unless someone drops out.

This immediately tells us the maximum potential for this industry in terms of number of operators, and this is a good thing. We don’t need any unnecessary expectations on the iGaming industry like we have seen in the other three regulated states.

A limited number of licenses will also force potential providers to take a hard look at what they want to offer and will force them to act sooner rather than later. In fact, we wouldn’t be surprised if some casinos are already looking at options despite the bill being in its very early stages.

Licenses are good for five years with options for five-year renewals. Five years is ample time for providers to either make their product work or cut their losses.

International Compacts? It Could Happen

Michigan is attempting something that other states have yet to seriously explore. A clause in the bill will allow wagers to be placed on Michigan iGaming sites from outside of Michigan. Per the provision, if online gambling is legal in a particular area outside of Michigan, then they will be able to gamble on Michigan sites.

For example, players in the UK could technically play on Michigan sites. Of course, the UK Gambling Commission may try to step in but what’s stopping Michigan iGaming sites from getting a UKGC license?

This opens the door for international compacts and for the right providers, maybe international player pool sharing. For example, PokerStars may not have to ring-fence their ROW players from Michigan, or the ring-fencing may be limited to regions where online poker is legal.
Chances are that interstate compacts will be explored first as they have fewer legal strings. New Jersey and Michigan PokerStars would probably be the most likely.

Michigan is Favorable to Online Gambling – The Door is At Least Cracked

Michigan is already offering online lottery services to their citizens and it is insanely popular. Last June, the lottery reported that they were receiving $2.4 million a week from citizens with $2.1 million going back to players. That’s around $124.8 million a year wagered by players with $15.6 going to the state.

According to the SB 889, iGaming will be taxed at 10%. If the industry pulled in $150 million a year, that’s another $15 million going to the state. Naturally that is just an example, but we could see Michigan wanting to double-down on iGaming for tax revenue.

As such, the door for iGaming regulation is at least cracked open in Michigan. The question is whether the door will be opened all the way this year. Another positive for the state is that lawmakers are also considering Daily Fantasy Sports regulation. They aren’t shy at examining the issues. Hopefully they will take the next step and make Michigan the fourth regulated state in the United States.