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Michigan Could Score Tax Touchdown With Online Gambling Launch

Michigan’s saving grace is picking up steam.

Back before it became one of the laughing stocks of the political cataclysm that is 2020 America, Michigan – and embattled Governor Gretchen Whitmer (who is now the subject of a recall petition in the state) – passed and signed MI gambling laws legalizing sports betting and online gambling in the state.

While the sports betting legislation was practically a foregone conclusion (as so many states are hopping on board that particular gravy train), the legalizing of online casino gambling and poker were significant longshots.

That’s because, while some 20 or states have formally legalized sports wagering withing their borders since the 2018 overturn of the federal PASPA sports betting ban, nearly no state has given much consideration to online casino gaming or Internet-based card rooms.

To date, only four states have online casino games available to their residents: Delaware, New Jersey, Pennsylvania, and West Virginia. Michigan, joining them, is only the fifth state to legalize the pastime, and its first online gambling sites and apps are scheduled to launch before the end of the year.

Similarly, only six states have legalized online poker: Delaware, Nevada, New Jersey, Pennsylvania, West Virginia, and now Michigan. WV and MI online poker are pending launch, while Internet card rooms are active in the other four states listed.

The tax structure for legal Michigan gambling breaks down as follows:

  • Online/In-Person Sports betting: 8.4% of total revenue
  • Online Poker: 20-28% of total revenue, depending on earnings
  • Online Casino: 20-28% of total revenue, depending on earnings

The tax revenue generated from sports betting and online gambling in the state will go to support the School Aid Fund and the First Responder Presumed Coverage Fund.

The former is industry standard, as seemingly every sin tax is “for the children” in America, ironic as that is.

But the latter is particularly amusing given the recent calls to defund police in the state, which has since become a foundational platform for the current party in power.

Whether or not these funds will be diverted as a result remains to be seen.

Regardless of where the windfall goes, however, a windfall is certainly projected with these new legal betting markets.

Michigan sports betting alone should generate some $33.6 million in tax revenue for the state in its first full year of operation.

When compared against the 2017 AGA-Oxford Economics study on the projected impact of legal sports betting in the United States, that $33.6 million falls far short of the study’s estimated $61.7 million, though this latter number assumes a mature market.

Michigan’s sports betting falls under the study’s outline of “base tax rate” and “convenient availability,” but it will be at least a solid year from launch before all of MI’s sports wagering options are up and running.

Additionally, with an “end of 2020” launch, Michigan sportsbooks will miss nearly the entire NFL season, which routinely accounts for over half of all US sports betting handle.

In this context, the current projections are much closer to the 2017 estimates than they appear.

Meanwhile online casino games and poker rooms could produce up to $60 million in tax revenue for MI, though there is no similar study from which to compare old projections to newer ones.

Still, the number seems about right, given that online casino revenues are typically much higher than those for sports betting.

For Michigan sports betting, gambling, and poker fans, this is obviously extremely welcome news. Unfortunately, for the rest of the country, it doesn’t mean much.

That’s because, as with all states legalizing online gambling, the games and betting lines will only be available to residents and visitors who are physically inside Michigan itself.

In other words, in order to bet real money over the Internet at any MI-based gambling venue, you will have to be inside the state’s borders. This will be ensured by geofencing technology that runs in the background of the online gambling apps and websites employed by the operators.

If you live in a neighboring state, you can technically drive across the border and wager online, but at that point, you may as well go to a casino venue itself and make a night or weekend of it.

Online gambling is only convenient when you can participate conveniently.

To that end, of course, you can still access legal online casinos and sportsbooks that operate outside of US jurisdiction.

These are open to MI residents as well as most US residents, and you only have to be 18 to sign up. If you wish to gamble legally with a domestic online MI service, you’ll have to be at least 21.

Frankly, it’ll be a long time still before Michigan can match the options and benefits of international gambling sites, but if the Wolverine State wishes to claw back some of that precious revenue from its overseas competition, it’s better late than never.

Sources: PR Newswire, Fox 2 Detroit