Regulated gambling has been an important contributor to Michigan’s economy since the early 1980s when the first tribal casinos opened doors to customers. The local gambling industry has gone from strength to strength over the years, with Michiganians currently having a broad choice of legal wagering options.
Casino gaming, betting on horse races, retail sports wagering, and lotteries all enjoy legal status in the Great Lakes State. Detroit, the biggest city in the state, is home to three commercial casinos, whose gross gaming revenue surpassed $1.2 billion in 2021. Native American gaming is also thriving here as over two dozen tribal casinos operate throughout the state.
The local industry expanded further a couple of years ago after the state legislature approved online wagering on sports and online casino gaming. The remote segment was a huge success from the get-go. Michigan joined the ranks of Pennsylvania and New Jersey, becoming the third high-population state to record online gaming revenue exceeding $1 billion in 2021.
With over a dozen betting and gaming websites, the lack of legal options is the last thing local online players can complain of. Various measures are in place to maintain probity within the sector and promote socially responsible behavior among the population. The Michigan Gaming Control Board has the responsibility of overseeing the local gambling industry and enforces draconian measures to protect both players and industry participants.
Laws That Govern the Michigan Gambling Industry
Several important pieces of legislation govern the landbased segment of Michigan’s gambling industry, starting with the Michigan Gaming Control and Revenue Act, which paved the way for the development of non-tribal commercial gaming. The Mitten presently has three commercial casinos based in Detroit and the vicinities, namely Greektown Casino Hotel, MotorCity Casino Hotel, and MGM Grand Detroit.
Licensing Process and Requirements
The Michigan Gaming Control and Revenue Act outlines the licensing process and requirements for obtaining operational permits for commercial casinos. According to Section 432.206, candidates must pay a non-refundable fee upon application.
Gambling Fees and Taxes in Michigan
As is the case in all US states with regulated gaming, Michigan levies taxes on the licensed casinos that operate within its borders. Different tax rates are in place for commercial and tribal gaming operations, however. Operators must also pay application and license fees.
2License Fees for Commercial Casinos
Applicants for commercial licenses must contribute a $50,000 fee upon submitting their documents for approval. The fee is not refundable and aims to cover the expenses associated with the applicant’s background checks and investigation. In other words, candidates will not get their money back even if the regulator rejects their applications. If the investigation expenses exceed this amount, the MGCB will charge the applicant additionally to cover the full cost.
Approved candidates must then pay $25,000 upon receiving their licenses. The MGCB charges this sum annually when renewing the commercial licenses. Since gaming equipment suppliers also need permits, they must settle up a $2,500 non-refundable application fee along with a $5,000 fee for license issuance.
3Taxes Imposed on Commercial Casinos
A 19% tax rate is applicable to the net gaming revenue of the commercial casinos. The state collects 8.1% from this percentage to invest into the School Aid Fund, which uses it to financially aid K-12 classroom education across Michigan. The city of Detroit collects the remaining 10.9%, which goes toward the funding of various development programs, the local police force, road infrastructure improvements, and public safety programs, among other initiatives.
4Taxes on Players’ Winnings
The winnings of gamblers are considered taxable income in the United States. Therefore, they must be reported to the Internal Revenue Service (IRS) via Form W-2G if they exceed the following thresholds – $1,500 for keno, $1,200 for slots and bingo, and $5,000 for poker tournaments. Winners based in the Great Lakes State have their gaming profits withheld at a rate of 4.25%.
5Taxes Imposed on Tribal Casinos
Sovereign nations that operate casinos within tribal lands must share some of their revenue with the state under the terms of their compacts. The rates are compact-specific, however. Only two tribal nations under the first compact from 1993 allocate a portion of their gaming profits to Michigan – the Keweenaw Bay Indian Community pays 8% and the Hannahville Indian Community shares 2% to 7%.
The tribes bound by the terms of the 1998 compact must share between 4% and 8%, depending on how much gross gaming revenue they have generated. The Gun Lake Tribe, which operates casino games under the 2007 compact, also has its taxes calculated on a sliding scale, with rates ranging from 8% (for GGR of up to $150 million) to 12% (for GGR exceeding $300 million). No withholding taxes are imposed on the winnings players generate in Michigan tribal casinos.
Responsible Gaming Policies
Commercial casino operators in Michigan can legally offer their products to patrons who meet the minimum age requirement of 21 years. In the interest of responsible gaming, the casinos must post information about problem gambling programs at the entrances and exits as well as on all electronic payment terminals on their premises.
Under Section 432.212a of the Gaming Control and Revenue Act, $2 million should go toward funding the Compulsive Gaming Prevention Fund. The MGCB maintains a register of Disassociated Persons that contains the names of all local players who have self-excluded from gaming participation.
Until recently, gambling addicts who applied for exclusion faced a lifetime prohibition from entering the local commercial casinos. However, state authorities relaxed their stance a couple of years ago, allowing such individuals to get themselves removed from the list after a five-year period.
As for the responsible gaming policies at Native American casinos, most compacts do not contain express provisions on self-exclusion. Nonetheless, some tribal nations have chosen to offer this option to their patrons. The minimum gambling age is 21 in most tribal casinos, although persons aged 18 and above can participate in Class III gaming under the terms of some 1998 compacts.
Online Gambling Regulations in Michigan
Michigan’s history with interactive gambling dates back to the late 1990s when the state legislature approved Senate Bill 562 in 1999. The legislation prohibited using the internet for the purpose of contravening the state’s anti-gambling provisions. It was heavily backed by local landbased commercial and tribal operators, but lawmakers repealed it the next year.
Remote gambling went unregulated until current Governor Gretchen Whitmer approved the Lawful Internet Gaming Act and the Lawful Sports Betting Act in late 2019. Local lawmakers finally recognized the economic and social benefits of regulated remote betting activities.
Who Regulates Gambling in Michigan?
The Michigan Gaming Control Board (MGCB) is the primary regulatory agency that oversees commercial gambling businesses in the Mitten. The MGCB consists of a governor-appointed executive director, a chairperson, three board members, and four deputy directors responsible for each of the agency’s four divisions (casino operations, administration, licensing and investigations, and online gaming and legal affairs).
Apart from licensing and oversight functions, the MGCB also has the remit to audit the revenue tribal casinos generate from the operation of Class III games. The Board supervises commercial casino gaming and horse race betting, while the Michigan Bureau of State Lottery oversees charitable raffles and bingo.
Tribal gambling operators in Michigan are subject to the oversight of the National Indian Gaming Commission (NIGC), founded in 1988 after the passage of the Indian Gaming Regulatory Act (IGRA). The NIGC is an independent supervision entity but it still works with the US Departments of the Interior and Justice.
It consists of a chairperson and two associate commissioners. The chairperson is appointed by the president of the United States with the approval of the Senate. The secretary of the interior selects the associate commissioners. At least two NIGC members should come from federally recognized tribal nations.
Compared to gambling hubs like Nevada and New Jersey, Michigan is a relatively late arrival on the US gambling scene. However, the Mitten quickly caught up and presently has one of the most developed and lucrative gambling industries in the country. Nearly all forms of betting are legal and adequately regulated here in retail and digital format. The sector has an enormous contribution to the state coffers. As of 2021, Michigan collected $209 million in taxes from online gambling sites alone.