State Sen. Mike Kowall introduced a new online gambling bill in Michigan’s legislature last week. Senate Bill 0203 is the second attempt this year to pass Michigan online gaming regulations.
Sen. Kowall, the Michigan Senate Majority Floor Leader, introduced a similar bill in March 2017. The previous iteration of the bill passed through the Senate Regulatory Reform Committee, but met with enough problems that Mike Kowall let the bill die without a floor vote.
Michigan Land-Based Casinos
Michigan’s brick-and-mortar gambling industry is complex, due to a variety of tribal and commercial gaming operators. Those familiar with online gambling legislation in California and Pennsylvania know that land-based tribal interests (in California) and commercial interests (in Pennsylvania) sometimes hinder iGaming initiatives. SB 203 is one more attempt to craft a bill that all sides can support.
Unlike the previous bill, SB 203 sets no limit on the number of online gaming licenses. The removal of limitations means the various tribal and commercial gaming venues will not have to calculate whether they’ll receive a license or not, before they support such a bill.
Michigan Online Gambling Licensing
SB 203 allows licensed Michigan casinos to apply for an Internet gambling license. Sen. Kowell added language which would allow tribal casinos to self-regulate their online business, though they would need to comply with the age verification, responsible gaming, and consumer protection regulations of the state.
The Saginaw Chippewa Indian Tribe of Michigan and the Nottawaseppi Huron Band of the Potawatomi Indians opposed the previous bill, because it failed to recognize their right to conduct Class II and Class III Internet gambling operations, according to their interpretation of the gaming compact.
In March, the Saginaw Chippewa Tribe and Nottawaseppi Huran Brand sent a letter to the Tory Rocca, chairperson of the Michigan Senate Regulatory Reform Committee, expressing their concerns. S 203 amends the state compact to allow the tribes to self-regulate as sovereign governments. They would not have the right to launch sites as commercial operators, though.
Michigan Gaming Regulators Make the Rules
A key passage in Senate Bill 203 gives the Michigan Gaming Commission one year to develop regulations for the online gambling industry. In fact, commercial operators would have a 1-year moratorium on launching online gambling sites at all.
The bill requires the state to act on tribal iGaming applications within 90 days, allowing the tribes to launch sites before commercial casinos. The ability of the commercial operators to gain first-mover advantages was a major concern of the Michigan tribal casinos with Kowall’s March proposals.
First-Launch Rights Go to the Tribes
In the letter sent by the tribes to Chairperson Rocca, the tribes complained that “a multitude of internal inconsistencies within its provisions threaten to erode tribal sovereignty and provide unfair advantage to competitor licensees.”
The decision to set a moratorium and leave policymaking to the Michigan Gaming Commission alleviates those concerns and gives the tribes the chance to seize a first-mover advantage. The clause has another hidden advantage: Michigan State Legislature would not get bogged down in the lawmaking process. If lawmakers spend months deciding on the new regulations, lobbyists are likely to add “bad actor” concerns to the deliberations.
Support for Senate Bill 203
Whether the new clauses give SB 203 a chance to succeed is another matter. Gambling Compliance sounded pessimistic about the bill’s chances of passing. While it cited Kowall probably has enough support in the Michigan Senate to pass the bill, Gambling Compliance also noted that it would need to pass muster with the Michigan House of Representatives, Gov. Rick Snyder, the tribal interests, and the 3 commercial gaming interests.
Those three commercial casinos — MGM Grand Detroit, MotorCity, and Greektown — were placed in the neutral category at the moment. None have expressed support for the bill. MGM Resorts International, which owns MGM Grand Detroit (pictured above), is pro-online gambling from its experiences with Borgata Online in New Jersey. At the same time, MGM Resorts has given no indication whether it supports the Michigan online gambling bill, especially since SB203 offers the tribes a head-start.
PokerStars Supports the Bill
The only potential operator which has given vocal support is Amaya, the parent company of PokerStars. As the leading online poker operator, PokerStars would try to make a business deal to one of the Michigan license holders to act as their software supplier. That partnership likely would be the leading online poker operator in the state, due to PokerStars’ brand recognition and player liquidity.
PokerStars has a deal with Resorts Casino in New Jersey and the PokerStars/Resorts online cardroom is the leader in the market. In California and New York, legislators insisted on “bad actor” language inserted into the bill, to bar PokerStars or set a moratorium of 5 to 10 years on its participation. Because PokerStars accepted real money American poker players on its site in violation of the UIGEA ban on online poker from January 2007 to April 2011, some lawmakers in the United States have labeled the company a bad actor.
Senate Bill 0203 Sponsors
Senate Bill 0203 has bipartisan support in the Michigan Senate. Three co-sponsors of the bill — Sen. Mike Kowall, Sen. Rick Jones, and Sen. Marty Knollenberg — are Republicans. Three co-sponsors of the bill — Sen. Rebekah Warren, Sen. Bert Johnson, and Sr. Curtis Hertel Jr. — are Democrats.
