Michigan Online Gambling Hearing Live Blog March 8

March 8, 2017
Michigan Online Gambling Hearing Live Blog March 8

US Poker will post continuous updates of today’s hearing in Michigan where, among other things, a Senate committee will discuss online gambling legalization in the state. According to reports, the committee will likely pass the bill, sending it to the full Senate for consideration.

The hearing will be take place the Senate Regulatory Reform Committee, at 1 p.m. local time, and will feature several expert witnesses. However, it will be nowhere near as long as the four-hour marathon hearing that took place in Pennsylvania yesterday.

The committee

The Regulatory Reform is a nine-person committee chaired by Republican Sen. Tory Rocca. Six of the nine members of the committee are sponsors of the state’s recently introduced online gambling bill, SB 203, including the bill’s primary sponsor Senator Mike Kowall.

You can find an overview of Michigan’s current online gambling bill here.

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How Michigan got to this point

Even though the state had already legalized online lottery sales, Michigan burst onto the online gambling scene last year when Kowall first introduced legislation to legalize online gambling.

A similar hearing was held to discuss last year’s bill and a month later the Regulatory Reform Committee passed a slightly amended version of the original bill.

Kowall remained bullish on its chances throughout the year, but the bill was left untouched when the legislative session ended in December.

The Hearing

The hearing began on time with seven of the nine committee members in attendance (giving them a quorum). There are several non-gaming bills on the agenda before online gambling legislation is broached.

A few minutes into the hearing all nine members are now present.

Senator Kowall testimony

Senator Kowall now stating the case for the legalization and regulation of online gambling in Michigan. Kowall is focusing on consumer protections, thwarting illegal online gambling, and generating revenue for the state.

Kowall makes specific mention of the capability of online websites to identify problem gambling behavior, since, “every bet” can be tracked and monitored.

The bill provides two paths for tribes to get involved in online gambling:

  1. If a tribe already operates a casino in the state they must submit to a limited waiver of tribal sovereignty when it comes to online gambling.
  2. A tribe can enter into a compact with the state (essentially agreeing to a separate online gambling contract with the state) – Kowall notes that this may be challenged in court.

The coexistence of tribal gaming and commercial casinos in Michigan makes legislation extremely complicated, and is expected to be one of the biggest stumbling blocks for the bill.

Senator Peter MacGregor is asking about protecting citizens from “bad actors” clearly speaking of PokerStars, which has been the driving force behind Michigan’s efforts to pass an online gambling bill.

Kowall notes that online gambling is already available and often in unscrupulous fashion: “there’s a website that uses the University of Michigan logo and its an offshore site” masquerading as if its affiliated with the University. That puts the people of Michigan at risk,” Kowall said.

CSIG testimony = more of the same

A representative from the Coalition to Stop Internet Gambling, Bill Jackson, is now testifying against the bill. “CSIG is strongly opposed to the bills before you today,” Jackson states. His tesitmony is nearly precisely the same as David Cookson, who represented CSIG at yesterday’s Pennsylvania hearing.

PPA testimony makes case for consumer protections

John Pappas from the PPA is the next witness, who states that his group’s members want to play online poker and want to do so in a safe, regulated environment.

“We know a good bill when we see it, and we think this bill is appropriate to protect consumers,” Pappas tell the committee. Calls legalization and regulation “common sense.”

Pappas jumps into the same demonstration he used very effectively in Pennsylvania yesterday, showing the committee how easy it is to gamble online now, and how these offshore sites are muddying the waters to make it seem like online gambling is already legal in Michigan.

Pappas segues right into the registration process, noting that the know your customer checks in place are the same ones used by online banking and other highly regulated industries.

Pappas also says its intellectually dishonest for CSIG to say they oppose online gambling in Michigan when one of their key supporters (Sheldon Adelson) offers online gambling in Nevada – through a sports betting app available statewide.

Amaya testimony

Amaya representative is now disputing CSIG claim that the current federal legality is questionable and subject to change. He notes the DOJ has only overturned just over 2 percent of OLC opinions in its history. He’s now making the case against tribal casino concerns, and that the bill will not impact existing compacts with tribes, noting that when it comes to four of the five tribes there isn’t an exclusivity provision in their compacts or tied to physical casinos with 85 slots.

An analyst from the Innovation Group is now giving some baseline projections (which are quite bullish but not out of whack, in my opinion) where the company has come up with a $320 million estimate for online gambling in Michigan by 2019.

Innovation Group’s analysis, and the situation on the ground in New Jersey (from the operators) is there is no threat of cannibalization, as the two groups – online and land-based gamblers – have little crossover with one another. From my own research it appears what crossover there is increases land-based visitation.

Nick Menas, who also spoke at yesterday’s hearing in Pennsylvania, is up next, and is continuing the theme that online gambling is already taking place and you can’t just stop it.

“When you take the online platform and marry it to the brick and mortar casino” the black market sites simply can’t compete, Menas tells the committee. “And I can assure the black market sites are operating that site John Pappas pulled up earlier.”  Menas is essentially saying that the black market sites that have pulled out of New Jersey are still active in Michigan, and will be until the casinos launch their own licensed and regulated online gambling sites.

Menas, “working with companies like us,” your brick and mortar casinos can maximize consumer protections and revenue.

Ending with a vote

The hearing ends with a Gaming Control agent explaining how the state is not authorized to tax the tribes (this is where the complications start to appear), “just so everyone’s clear, we don’t get to tax the tribes.”

Chairman Tory Rocca is now reading submitted cards where several tribes oppose the bill, while two casinos, Greektown and MGM are neutral.

The bill passes the committee 7-1.

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