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Michigan Senate Bill Legalizing Online Gambling

By: Joan Peppin, Tuesday April 19th 2016
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Another state in America has taken the first step to legalize intrastate online gambling. If the proposal ultimately goes through residents of Michigan would be joining those in Nevada, New Jersey and Delaware in engaging in this activity that has become contentious.
Michigan already permits limited forms on online lottery activity. Now, state Senator Mike Kowall and four others have introduced a bill this week that is referred to as Senate Bill 889, the "Lawful Internet Gaming Act." The new bill seeks to legalize online gambling verticals but does not specify at this stage which ones will be permitted. Experts feel that the legislators do not want to get the bill embroiled in this controversy before the larger issues are sorted out.

The bill envisages the issue of eight online gambling licenses for a period of five years to existing state licensed operators or tribal groups within the state. Kowall and his team of senators have realized the need for player liquidity based on the problems faced in the other states. Therefore they have provided for the state to negotiate compacts with other like-minded American states and even international operators subject to such compacts meeting state and federal laws.

Each license will require an upfront payment of $5 million. This is partly an advance payment that will be offset against future gambling taxes. These are proposed to be collected at a rate of 10% of gross gaming revenue on a monthly basis from operators. The initial licensees will have the option to renew for a further five years. The licence applicants will be required to deposit a non-refundable fee of $100,000.

Oversight of the online gambling activity will be assigned to the state gaming commission, which will develop the detailed provisions on fraud prevention, problem gambling protection, money laundering precautions and fair gaming. 21 years has been set as the minimum gambling age. The bill is currently with the Senate Committee on Regulatory Reform.

Senator Kowall pointed out that the Internet is now integrated with all forms of entertainment such as gambling and therefore these should be properly regulated and licensed to the benefit of state tax revenues. Kowall is a member of the Committee on Regulatory Reform and vice chair of the Senate Oversight and Commerce Committee, the Joint Committee on Administrative Rules, and the Government Operations Committee. There are the usual oppositions that the bill is likely to face. The minefields include conservative, tribal and religious lobbies.

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