Michigan House Approves DFS Measure

The Michigan House approved the Lawful Internet Gaming Act, which would regulate daily fantasy sports and allow online gambling. The measure now goes to the Senate, which may not review it before the session ends December 20. The bill's sponsor, state Rep. Brandt Iden (l.), also is working on sports betting legislation for 2019.

A comprehensive gambling measure that passed the Michigan House now awaits action in the Senate, though it’s unclear whether that will happen before the session ends on December 20. H 4926, the Lawful Internet Gaming Act, would establish rules and a regulatory framework for daily fantasy sports contests and online gambling including poker.

Sponsor state Rep. Brandt Iden, who narrowly won re-election, said, “We’re close to the finish line and it’s a top priority of mine to see it come through to the end. We know companies like FanDuel and DraftKings currently operate in this space, and these companies have come to us and said, like other states, Michigan should be regulated.”

Under Iden’s measure, DFS would be regulated by the Michigan Gaming Control Board and be exempt from the state’s ban on gambling. The Fantasy Contests Consumer Protection Act also would be created. In addition, fantasy sports companies would pay a licensing fee of $50,000 with an annual renewal of $20,000. Iden said, “I don’t believe that excludes anybody from the marketplace. We want serious actors who can come in and operate these games and make sure they are benefitting players in the state of Michigan. These fees are consistent with other states and I’m happy with where we’re at.”

No license would be required for smaller DFS contests if they’re limited to a maximum of 15 participants with a cap of $10,000 in total entry fees in a year. Also, players must be at least 18 years old.

Iden emphasized, “This is not sports betting. This is not gambling. This is a game of skill, not a game of chance, and that’s why we’ve set it up differently” from proposed sports betting and online gambling legislation.

H 4926 also would legalize both online casino games and online poker. Iden said the bill would protect Michigan residents and hopefully lure them away from illegal offshore gambling sites. The state’s three commercial casinos and nearly two dozen tribal casinos could offer online gambling after paying a license application fee of $200,000 and $100,000 a year after that. Revenue would be taxed at 8 percent, with proceeds going to the host city, a special internet gaming fund and schools and transportation. Supporters said the move could generate $45-$60 million annually from the Detroit casinos alone. Indian tribes could offer online gambling after renegotiating their state compacts.

Iden noted, “Senator Mike Kowall is still floor leader in the Senate for the remainder of the lame duck. Even though he’s not coming back to the legislature because of term limits, he’s still very supported in the Senate. He’s still an advocate for the bill, and I’ll work with him to get it to the finish line. There is urgency because if the bill doesn’t pass it will need to be reintroduced, starting the process over.”

Iden also is working on comprehensive sports betting legislation to introduce in the next session. A few weeks ago he said Michigan could be the first state to approve an integrity fee promoted to major sports leagues, but more recently stated, “I did originally start from a position that there was no place for integrity fees in my mind, but since then I’ve had conversations with the leagues and I do feel there’s reason to continue discussion on the issue. That doesn’t mean there’s any determination of what a fee would be. My comment is specific to that I haven’t closed the door on integrity fees. I’m open to discussing it.”