Through a series of state bills, Michigan now offers numerous gambling options in the state. This combination of gambling laws laid the groundwork for legal online gambling, sports betting, Daily Fantasy Sports, and more in the state of Michigan.
Michigan Gambling Laws
Michigan authorized a state lottery under the Lottery Act passed in 1972. Two decades later, a new casino built in Ontario, Canada, just across from Detroit, encouraged legislators to think about permitting retail casinos in the state. As a result, the Michigan Gaming and Control Act of 1996 legalized casinos on non-tribal land. Over several decades, the state maintained the status quo, which permitted retail casinos and a lottery.
Over the last few years, though, state legislators in Michigan passed a series of bills that now make online gambling legal in the state. Once Governor Gretchen Whitmer signed these bills into law, the online gambling landscape changed drastically in Michigan.
Governor Whitmer signed House Bill No. 4916 into law in December of 2019. House Bill No. 4916 legalized sports betting in Michigan. Governor Whitmer also signed House Bill No. 4311, known as the Lawful Internet Gaming Act (the “LIGA”). The LIGA authorized internet gambling, including online poker.
The state further passed the Fantasy Contests Consumer Protection Act in 2019, which regulates the state’s fantasy sports contests. The state also authorized online horse race betting through advance deposit wagering.
State-Regulated Online Gambling in Michigan
State-Regulated Online Gambling Products
Michigan recently legalized different types of online gambling. Specifically, the state legalized online poker, sports betting, casino-style games, and even fantasy sports contests. Michigan also recently authorized online betting for horse racing.
The Michigan Gaming Control Board (MGCB) regulates online gambling. However, the industry is still in its nascent stage. The specific rules for casino and sports gambling are being formulated, because the bills that legalized them only recently passed.
Michigan also allows the online purchase of lottery tickets. The Michigan Bureau of State Lottery regulates the lottery.
The Gambling Laws That Brought Online Gaming To Michigan
In the years leading up to December 2019, Michigan made great strides to authorize online gambling through a series of laws. Although it will take time to see online gaming officially launch in Michigan, these gambling laws lay the groundwork.
Governor Whitmer signed the Lawful Internet Gaming Act into law on December 20, 2019. The Act authorizes the MGCB to issue licenses to internet gaming operators. This includes poker, blackjack, slots, cards, and other games. It does not permit any kind of pick number games or other lotteries.
The LIGA also instituted a graduated tax on adjusted gross receipts for revenue from online gambling. The graduated tax ranges from 20% on revenues of up to $4 million to 28% on revenues over $12 million. The LIGA authorizes many casino-style games.
The governor of Michigan also signed House Bill 4916, known as the Lawful Sports Betting Act (the “LSBA”), into law in December of 2019. The LSBA authorizes the MCGB to administer, regulate, and enforce all sports betting in the state. The sports betting bill further grants the MCGB the right to enter agreements with other jurisdictions for multijurisdictional sports betting.
The LSBA enacted criminal penalties for offering sports betting in the state without a license. Criminal penalties include both felonies and misdemeanors.
Daily Fantasy Sports
Further, Michigan enacted House Bill 3408 in 2019. The Fantasy Contests Consumer Protection Act (FCCPA) requires anyone offering fantasy contests in the state to be licensed as a fantasy contest operator. The MGCB approves applications for such licenses.
The FCCPA places several conditions on the licensure. The conditions include provisions on preventing employees or family members of employees from manipulating the contest, requirements for cash reserves, and identifying experienced fantasy contest participants.
The FCCPA even requires licensed fantasy contest operators to hire a licensed CPA to perform an annual independent audit. Licensed operators must submit the results of the annual audits to the MGCB. These regulations serve to protect participants in fantasy contests.
Michigan State-Regulated Online Gambling Facts
|Minimum Age To Gamble Online In Michigan||The minimum age for online gambling in Michigan is 21. The minimum age to buy lottery tickets online is 18.|
|What Types of Online Gambling Are Legal In Michigan?||Casino games like poker, slots, cards. Sports betting, horse racing, and the purchase of lottery tickets are also legal.|
|When Did Online Gambling Become Legal?||The Stated Legislature passed several bills in 2019 that authorized online gambling and sports betting, as well as enacting regulations for fantasy sports contests.|
|Who Regulates Online Gambling In Michigan?||The Michigan Gaming Control Board regulates online gambling in Michigan.|
Legal Online Sports Betting In Michigan
In 2019, Michigan legalized online sports betting with the passage of the LSBA. The LSBA defines who is eligible to apply for a license. The Act permits two types of entities to apply for a permit to offer sports betting in the state.
First, an entity that already holds a casino license under the Michigan Gaming Control and Revenue Act can apply for a online sports betting license. The second is an Indian tribe conducting gambling operations under a facility license granted by the National Indian Gaming Commission.
The LSBA authorizes the MGCB to issue the licenses to these two eligible entities. The MGCB issues the licenses for a five-year term before being subject to a renewal process. The scope of who can apply for a license is quite narrow. The LSBA requires sports betting operators to pay $100,000 for the initial application and then $50,000 per year.
In addition, the LSBA allows the MGCB to develop responsible gaming measures. This includes the creation of a responsible gaming database. The database would prohibit certain individuals from creating an account to place sports bets.
Taxation And Revenue From Sports Betting In Michigan
The LSBA established a tax of 8.4% on adjusted gross revenues in addition to the annual licensing fee requirement. An analysis of the bill notes that this tax rate is lower than the tax on other types of gambling in the state. This may create an incentive for casinos to direct betting activity towards sports betting. An unintended consequence may be that Michigan cannibalizes the tax revenue it is currently receiving from other types of gambling. It is unclear how this will play out.
The government will deposit the revenues from sports gambling into an Internet Sports Betting Fund with the state treasury. The LSBA dictates how the state treasury will spend the funds. The LSBA mandates that the treasury deposit $500,000 per year into a compulsive gambling prevention fund. The treasury will allocate the next $2 million to the First Responder Presumed Coverage Fund. The LSBA allocates the remaining funds to the state school aid fund.
The tax on adjusted gross revenue does not apply to bets placed at a physical tribal casino. Instead, it only applies to internet sports betting performed through a platform operated by a tribal casino.
To learn more, see our comprehensive Guide To Online Sports Betting in Michigan.
Legal Online Casinos In Michigan
The LIGA authorized legal online casino gambling. This includes poker, blackjack, cards, slots, and other games typically offered at a casino. Once again, the LIGA authorizes the MGCB to regulate online casino gambling in Michigan.
Licenses For New Online Casinos
The LIGA allows only two classes of applicants for a license. The first class is for those who already hold a casino license under the Michigan Gaming Control and Revenue Act. These are commercial casinos already operating retail casinos in Michigan. The second class is a tribal casino conducting Class III gaming through an ordinance approved by the National Indian Gaming Commission. Each party in a class is eligible for only one internet gaming license.
The MGCB may request specific information from applicants for licenses. This includes financial information to determine whether the applicant has sufficient ability to operate an internet gaming platform. This will be used by the MGCB to determine if the applicant has enough capital to pay its secured and unsecured debts, provide a surety bond, and maintain adequate liability and casualty insurance. The MGCB can further request information on whether the applicant has any sort of criminal history.
The initial application fee is $50,000. When the MGCB issues the license, the applicant needs to pay an additional fee of $100,000 plus a $50,000 fee per year after that. The LIGA specifically does not apply to lottery or pick number games.
Protecting Gamers From Fraud
According to the LIGA, any internet gaming operator must include mechanisms designed to prevent various types of fraud.
Internet gambling platforms must consist of tools to verify that participants are over the age of 21. The LIGA also requires a responsible gaming database that lists individuals who are not allowed to engage in online wagering, similar to the LSBA. An internet gaming operator shall offer responsible gaming services and controls. Controls include temporary and permanent self-exclusion for all games provided. The LIGA also requires platforms to offer self-imposed wagering limits and maximum playing times.
The LIGA does not apply to some gaming conducted at tribal casinos under a license approved by the National Indian Gaming Commission. For example, the regulations do not apply to poker played in person at a tribal casino.
Taxation And Revenue
The LIGA also sets forth a graduated tax for adjusted gross receipts. The graduated tax ranges from 20% for gross receipts under $4 million to 28% for gross receipts over $12 million.
The LIGA directs how tax revenues are to be used. The first 30% is allocated to the city where the licensee’s casino is located. The revenue will be used for a variety of purposes, which run the gamut from the hiring and training of police officers to road repairs. The next 65% is allocated to the state of Michigan for deposit into the internet gaming fund. The remaining 5% supports the Michigan agricultural and equine industry development fund.
Legal Online Poker Sites In Michigan
The LIGA also authorized internet poker. Thus, the same regulatory regime includes both casino-style games and poker played online. The MGCB is therefore tasked with regulating online poker in Michigan.
As noted previously, the LIGA does not apply to some gaming conducted at tribal casinos under a license approved by the National Indian Gaming Commission. This includes both Class II and Class III gaming. This means that some of the rules and regulations applied to online gaming won’t apply to certain types of gambling conducted at tribal casinos.
Under Michigan law, games fall into one of three classes. Class I games include social games played for prizes of minimal value. They also include games played in connection with tribal ceremonies or celebrations. Class II games generally include bingo and card games played at tribal casinos. Last, Class III games include all games not defined as Class I or II. This includes slots, craps, roulette, and other traditional casino games.
Class II games include poker because it is played against other players, rather than against the house. According to the LIGA, this exception only applies to gambling taking place physically on tribal property. It does not include internet gaming.
However, the LIGA automatically adds online versions of casino games under the existing compact between the tribe and the state. Thus, the state of Michigan will automatically grant a license to a tribe if it is already authorized to conduct Class III gaming under a compact. The tribe need only request the license.
Online Lottery Games In Michigan
People can buy lottery tickets online in Michigan. According to rules enacted in 2018, the Michigan Lottery allows players to create online accounts to purchase tickets. Players purchase tickets through the Michigan lottery app or online at michiganlottery.com. To buy tickets online, a person must meet the following requirements:
- Be at least 18 years old
- Have an account
- Have sufficient funds in the account to buy a ticket
- Be a Michigan resident
- Be located in Michigan at the time of deposit and purchase
- Comply with federal, state, and local laws
The rules contain prohibitions on allowing third parties to use the player’s account, impersonating another person or IP address, purchasing a ticket while not physically in the state, and engaging in any kind of money laundering, among other things. Any ticket purchased outside of Michigan is void, and the player will forfeit any prize. Geolocation technology will be used to help determine the location of players.
Are Online Sweepstakes Sites Allowed Under Michigan Gambling Law?
Sweepstakes sites offer players an opportunity to play slots, poker, and other casino games online for cash prizes. These sites are quite popular in states without legal online gambling. They’ve been permitted in Michigan, as they are in 49 states. They will remain an option for players in Michigan even when online casinos launch in the state.
Some of the most popular sweepstakes sites are Chumba Casino, LuckyLand, and Global Poker. Each of these sites operates in Michigan. Players in Michigan can purchase Gold Coins packages to play sweepstakes games on this site. Gold Coins packages come with a handful of Sweeps Coins. Players can redeem these sweepstakes credits for cash prizes.
Daily Fantasy Sports Sites In Michigan
The major fantasy sports sites like DraftKings and FanDuel operate fantasy contests in Michigan. Even MonkeyKnifeFight, a lesser-known DFS site, operates in the state. As noted previously, Michigan directly regulates fantasy contests through the FCCPA. The FCCPA requires that anyone who offers fantasy contests in the state be licensed as a fantasy contest operator.
In addition to requiring licensing, the law also sets out specific rules regarding the operation of DFS in Michigan. First, the FCCPA prohibits offering fantasy contests from kiosks or machines located in retail or other commercial establishments, except for commercial and tribal casinos. This means DFS must be played online and cannot be offered in retail establishments. The FCCPA also bans anyone under the age of 18 from participating in contests.
The Act imposes a tax of 8.4% on monthly adjusted revenues from fantasy contests. This revenue must be submitted to the fantasy contest fund created by the state. The failure to timely pay the required taxes can result in penalties of up to 25% of the amounts due. The FCCPA requires any penalties be paid to the state school aid fund.
Betting On Horse Races In Michigan
Michigan started to allow horse race betting over 25 years ago. With this history backing it up, it’s only natural that the recent spate of online gambling laws would also permit online horse race betting as well.
Horse racing in Michigan is governed by the Horse Racing Law of 1995. This law legalized pari-mutuel wagering on live and simulcast races. It also regulates the conduct of horse racing events. Once again, the MGCB is responsible for regulating horse racing in the state.
Betting Legally Online
The state amended The Horse Racing Law of 1995 in 2019. The amendment allowed licensed third-party operators to take bets over the internet for live and simulcast racing. This amendment directed the MGCB to establish the terms and fees for issuing these third-party facilitator licenses. In May 2020, the MGCB issued an order that allows legal online betting for horse racing and set forth the rules that apply.
A third-party facilitator must have a joint contract with all race meeting licensees and certified horseman organizations in Michigan before applying for a license. The initial application fee is $1,000, with a renewal fee of $500. The order requires a background check for an application license. The MGCB can issue a fine against a third-party facilitator for failure to abide by applicable laws and the terms of the order.
How Do Tribal Casinos Work In Michigan?
There are several tribal casinos in Michigan. Because tribes are independent sovereign nations under a case decided by the US Supreme Court, the state does not have regulatory authority over tribal casinos. Instead, the National Indian Gaming Commission and the governments of each tribe govern the tribal casinos in the state.
What Games Can Tribes Offer At Casinos?
The Indian Gaming Regulatory Act (IGRA) passed by Congress in 1988 allows tribal casinos to offer various types of games according to different classes. Class I games have minimal value and the tribes regulate the games directly. Class II games include games where the participants compete against each other, as opposed to the house. These include bingo, lotto, and poker. States cannot regulate Class II games at tribal casinos.
The IGRA also authorizes Class III games. Class III games include slot machines, electronic games of chance, and many card games such as blackjack. Tribes must enter into compact agreements with the states to allow these types of games. The governor and tribes enter into these compact agreements. The governor then authorizes the MGCB the ensure compliance with the compact agreements.
Are All Casinos In Michigan Tribal Casinos?
Not all casinos in Michigan are tribal casinos. There are also three commercial casinos located in the Detroit area.
How Do Commercial Casinos Work?
As stated previously, The Michigan Gaming Control and Control Act of 1996 (the “MGCCA”) allowed for commercial casinos on non-tribal land. The MGCCA essentially permitted three casinos in the Detroit area. The MGCB governs the three casinos.
See our complete Guide To Michigan Casinos for more information.
What Games Do Michigan Casinos Offer?
Michigan casinos offer many Vegas-style games. The MGCCA defines the term gambling game to include everything from poker to keno to roulette games. This also includes dice games. The MGCCA does prohibit any specific games, other than horse racing, lottery, and tribal games. Other statutes regulate these games.
Who Can Operate A Casino In Michigan?
The MGCB issues licenses to applicants authorized to operate commercial casinos in the state. The MGCB has the power to regulate the licensees operating under a casino license. The commercial casinos are only in the Detroit area.
Who Regulates Legal Gambling In Michigan?
The MGCB is the main body responsible for regulating commercial casinos, sports betting, fantasy contests, and horse racing in the state. In addition, the MGCB ensures compliance with the tribal casino compacts. The MGCB does not regulate the lottery. Instead, the Michigan State Lottery Bureau operates the state lottery.
The MGCCA created the MGCB. The MGCB includes five members who the governor appoints and the Michigan Senate approves. There is also an executive director.
FAQs – Michigan Gambling Laws
Is It Safe To Gamble At Casinos In Michigan?
Yes, it is safe to gamble at casinos in the state. The MGCB regulates commercial casinos in the state. This includes audit compliance with the tribal casino compacts. The state granted MGCB extensive powers and regulatory authority under The Michigan Gaming and Control Act of 1996. These powers include everything from the ability to investigate applicants to adopting standards for electronic gaming equipment. These strict rules and guidelines mean that it is safe for players to gamble at casinos in Michigan.
Do I Have To Pay State Taxes On Winnings In Michigan?
Yes, you have to pay state taxes on gambling winnings in Michigan. All gambling winnings must be declared on a Michigan tax return. This includes any casino and racetrack winnings. They must be declared even if below the reportable federal level. Michigan levels a tax of 4.25% on all income.
When Did Michigan Officially Legalize Casinos?
Michigan legalized commercial casinos in 1996. The Michigan Gaming and Control Act of 1996 authorized the three commercial casinos operating in the Detroit Area. The MGCB started to permit the commercial casinos to accept sports wagering in March 2020. The Supreme Court authorized legal tribal casinos in a 1987 decision.
What Sports Can I Bet On In Michigan?
Players can bet on both amateur and professional sports in Michigan. You cannot bet on high school sports in the state. To ensure the integrity of sports betting, Michigan requires the use of official league data to determine the outcome of wagers.