Leaders and Best are two words often associated with Michigan.
Now take it easy Michigan State fans, in this case I’m not talking about the Wolverines.
The state of Michigan has set a great example for other states in the country when it comes to successfully operate online sports betting and online casinos.
While legalized sports betting is flourishing across the country, internet gambling remains legal in only six states. Of these states, Michigan provided a nice blueprint on how this can be done.
Lots of study and preparation
When Michigan lawmakers passed a bill to legalize online gambling and sports betting on December 20, 2019they really made sure to get the job done by the time things got rolling just over two years later.
The plan still called for online sports betting and online casinos to go live on the same day. It happened January 22, 2021.
According Michigan Gaming Control Commission Deputy director david murleythe work was an open discussion with operators and industry decision makers when establishing rules and regulations.
“We made a point of consulting the industry before enacting rules. I mean, we sent out draft rules multiple times for feedback and made changes multiple times based on requests or discussions,” Murley said.
One of the first things the MGCB recognized was that everything they knew about retail casinos did not necessarily apply when setting rules for internet gambling.
“We were used to regulating land-based casinos. When that’s what you know and you apply it to something like internet gambling regulation… I consider it night and day, especially now that I’ve been doing this for a while,” said Murray. “But, sometimes you have to talk to the industry and start learning how it really works.”
Michigan also had a few examples to work with, with Pennsylvania and New Jersey having already launched both platforms in their states. However, neither had done so at the exact same time.
Everyone on the bridge
There are a lot of moving parts for both industries to be operational in the state. One of the most important is a consensus between casino operators and state tribal operations.
Michigan has 12 different federally recognized Native American tribes that operate 23 land-based casinos around the state.
Combine this with the three retail operations in Detroitand many clashes could have taken place over regulations, or even starting the business to begin with.
It didn’t happen in Michigan. It was a lawsuit supported by everyone involved.
“Our tribes, they wanted that. So they were on the same page with the casinos in Detroit,” Murley said. “They didn’t disagree. Everyone saw that they could take advantage of it. The tribes, on the other hand, actually receive a percentage of the tax money from iGaming which goes directly to the tribes. I think our political dynamic was such that everything aligned. The people who often disagree, or the parties who often disagree, all kind of agreed.
Getting all casino operators on board, especially within tribal communities, is a big challenge for other states that are pursuing the legalization of Internet gambling.
Ready for launch
After years of preparation, while also working through the COVID pandemic, launch day arrived on January 22, 2021.
That day, a total of 10 online sports betting platforms and eight online casinos were operational.
Murley said the MGCB had put the liability of operators be ready on launch day by establishing what was needed and giving them a deadline to meet in order to be part of the initial boom.
“I think we’ve also tried to really work with the industry saying, ‘Look, if this is what we need, in terms of licensing, this is what we need. And if you get it then, you will be part of the first group that launches. Then we tried to get the industry to supply their products and to talk to us to solve these problems. Knowing then that if they did that, they weren’t going to be left behind,” Murley said. “I think it was very successful. It allowed us to get these things through the rules and everything else with the licensing, and get Internet gaming into Michigan very, very quickly.
Within a month from launch day, 12 sports betting apps and 11 online gaming apps were available. Currently, a total of 15 are operational for both industries, which means that each tribe and the Detroit casino have an online platform for sports betting and iGaming.
Like any thriving industry, it’s not easy to find many qualified workers. Things are still so new and fresh.
This is especially true when it comes to compliance and enforcement of rules and regulations.
“I’m sure everyone has the problem that we’re trying to hire people. So the people we need to properly regulate this are just very hard to find right now,” Murley said.
For this reason, the MGCB relies again on the operators as the first line of defense to monitor themselves and stay current with specific Michigan rules and policies.
“I think we take the approach that it’s so big and so different from land-based casinos, that the licensee itself has to be the main regulator. I mean, they have to regulate themselves and make sure they follow the law and the rules. If they don’t, I think we view it as, we probably have to treat that a little differently than we would with a land-based casino, where we had a large number of employees and all sorts of rules in place , and a routine that has been down for 25 years,” Murley said. “So we see it as, ‘Hey, you’re on your own, ask us if you need any help. But, if you don’t, if you’re just going to ignore things, we can’t accept that, because we don’t have the resources to hunt you down and find these things.
One of the big differences between land-based and online casinos is that operators of land-based casinos don’t have to think about anything other than operating in accordance with the Michigan Code of Policies.
When dealing with an online operator, especially those with platforms in multiple states across the country, those operators have to sort different rules for different states. This can result in failures to ensure that their product still meets all of the requirements for a state like Michigan.
“It is surprising that some of the licensees seem to simply ignore some of the requirements that are in the law and/or the rule. It’s frustrating because ignoring it means either you’re deliberately ignoring it, or you’ve read it and don’t understand it for some reason. Some of the things that shouldn’t be hard to do, some licensees just don’t do them,” Murley said. “They don’t always seem to focus on what Michigan needs. This is what happens when you flee from a headquarters that is responsible for multiple jurisdictions. You can’t focus on all of them.
What can other Michigan states learn?
Michigan is not a perfect machine at this point. However, it has always been a great example that other states can learn from.
Online sports betting and Internet gambling continue to generate significant tax revenue for the state. Operator revenues have also shown consistent growth, especially when comparing the months of 2021 to 2022.
While many states have already launched online sports betting, new states continue to appear. Others are also trying to get online casinos off the ground.
From 2023, Ohio will join the mix of online sports betting and the operators hope that the state can start off on the right foot.
For operators, overly complicated rules can make launching difficult.
Ontario launched sports betting in April, but convoluted rules and policies caused some major operators to delay their debut until several weeks after being given the green flag.
“I would say three-quarters of the rules could be similar or exactly the same from state to state and not deal with politics, just deal with day-to-day operations and things that aren’t politically driven,” he said. said Andrew Winchell. , Director of Government Affairs at FanDuel. “Working with regulators ahead of time helps prevent these issues before they actually become an issue. I appreciate states like Virginia and Michigan, which have done a great job with this.
High tax rates on carriers are also a problem in some states. New York launched legalized sports betting earlier this year, but imposes a 51% tax on income from sports betting. Ontario has a 20% tax rate. Michigan is only 8.4%.
Ohio will require ten%which is among the lowest rates in the country.