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.
The Gaming Control and Revenue Act
The Michigan Penal Code
The Indian Gaming Regulatory Act (IGRA)
The 1972 Lottery Act
The Gaming Control and Revenue Act
Commercial casino gambling arrived in Michigan in late 1996 when residents ratified Proposal E during a referendum in early November. The proposal gained the approval of 51.5% of the voters and came into effect as the Michigan Gaming Control and Revenue Act one month later. The legislation authorized the operation of non-tribal casinos in major cities with a population of 800,000 residents or more.
It allowed for the issuance of up to three gaming licenses within any one major city. Another requirement stipulated commercial casinos cannot be situated on federally recognized tribal land. Additionally, such casinos can only operate in cities where most voters had approved commercial gaming.
The legislation provides a legal definition of gambling games, describing them as games whose conduct requires the use of dice, cards, electronic, mechanical, or electromechanical devices. Some of the examples provided in the Gaming Control and Revenue Act include slots, keno, roulette, blackjack, poker, baccarat, craps, and wheel of fortune.
Card games carried out privately in residents’ homes are excluded from the scope of the law provided they do not bring in any profits to the persons organizing them. The legislation also excludes pari-mutuel betting on horse races, bingo games, lotteries, and tribal gambling.
State legislature amended the law shortly after its passage via Public Act 69 of 1997, which led to the creation of the Michigan Gaming Control Board (MGCB), the local regulatory agency. Other than that, the Gaming Control and Revenue Act outlines all the requirements operators must meet to obtain commercial gaming licenses and describes the application process in detail.
The Michigan Penal Code
Chapter 750 of the Michigan Penal Code contains several provisions related to illegal gambling in sections 301 to 315(a). It defines common gambling houses and outlines the penalties imposed on those who operate or frequent them. The owners or operators of such illicit establishments face imprisonment or fines.
Those who engage in gambling activities at such places are committing a common misdemeanor. Card games played recreationally in retirement homes do not constitute illegal gambling provided that participants do not wager more than ¢25 and winnings do not exceed $5 per hand.
The Indian Gaming Regulatory Act (IGRA)
Gambling activities on tribal lands are regulated separately under the Indian Gaming Regulatory Act, signed into law by President Ronald Reagan in October 1988. This legislation was monumental because it granted federally recognized tribes the exclusive right to operate and regulate gambling within their reservations in states where such activities are not expressly prohibited.
IGRA distinguishes between three major classes of gambling. Class I consists of social games played for nominal prizes along with traditional games related to Native American festivities and ceremonies. The tribes have the sole responsibility to regulate activities of this kind.
The Class II category comprises bingo games that involve monetary prizes. Card games also belong to this class provided they are not illegal under the laws of the respective state. The IGRA text contains a provision that disqualifies chemin de fer, blackjack, and baccarat from this category.
With that in mind, there is an additional provision that states Class II covers card games that were played in Washington, North Dakota, South Dakota, and Michigan before May 1988. Blackjack and other similar games were available in the card rooms operated by tribal nations in the Great Lakes State before IGRA came into effect. Blackjack and craps were also on offer at non-profit events organized by the Charitable Gaming Division of the Michigan Lottery, which allowed local tribes to incorporate them into their gaming catalogs.
Finally, there is the Class III category that covers all games that do not belong to the Class I and Class II groups. Examples of Class III games include video poker, slots, roulette, and keno, among other chance-based games. The tribes must negotiate compacts with the state authorities to offer any of these gambling products.
Michigan has entered into such compacts with a dozen or so local tribes, including the Saginaw Chippewa, the Little River Band of Ottawa Indians, and the Keweenaw Bay Indian Community. Most compacts have an initial duration of twenty years with the option for extension.
The 1972 Lottery Act
Michigan residents gained access to state-operated lotteries after the passage of Public Act 239 of 1972, also known as the McCauley-Traxler-Law-Bowman-McNeely Lottery Act. The name of the legislation is a bit of a mouthful but it made a broad range of lottery-style games available to Michiganians.
Some of the products the Michigan Lottery offers include scratch cards, pull-tabs, keno, and terminal-based games. Locals also have access to multi-state products like Mega Millions, Lucky for Life, and Powerball. Players have the option to purchase their tickets online as long as they are at least 18 years old and physically present within state borders.
The proceeds go toward funding the local public school system. According to Section 432.12, at least 45% of the gross revenue generated by the state lottery should be used for public education programs. Winners can receive larger lotto prizes in increments or as a single payment.
Individuals under 18 do not qualify for participation but gifting tickets to persons below this age is not prohibited. If a minor happens to win, a parent or a legal guardian must collect their prize. Winning lottery players must redeem their payouts within one year of winning.
Those who miss this deadline will have their winnings forfeited in favor of the public school fund. Distributing counterfeit or forged lottery tickets is a felony punishable by up to five years in prison and/or fines of up to $1,000.
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.
Ineligible Applicants for Commercial Gaming Licenses
Public Hearings and Validity
Occupational Licenses for Casino Employees
Tribal Casino Compacts
Ineligible Applicants for Commercial Gaming Licenses
Candidates are not eligible for commercial gaming permits if they had been convicted of a felony in Michigan or any other US state. With that said, the MGCB might choose to disregard this rule if the conviction dates back to more than ten years before the application.
Also ineligible are candidates with convictions for gambling-related misdemeanors, fraudulent activities, or theft. Depending on the severity of the misdemeanor, the regulatory agency again has the right to waive this requirement in case the conviction took place over five years prior to the application.
Either way, the MGCB must establish previously convicted applicants do not constitute a threat to the industry’s integrity. State and federal officials in the cities where the commercial gaming venue is to be located are also disqualified. Candidates who have repeatedly failed to comply with the regulatory and licensing requirements in other jurisdictions are very likely to have their applications rejected.
Public Hearings and Validity
Businesses interested in obtaining commercial permits must submit the photographs and fingerprints of their key management employees and shareholders with financial interest over 5% in the gaming enterprise. The MGCB evaluates the applications and holds a public hearing before it pronounces its final decision.
Applicants get the chance to prove their license suitability during the public hearings. Approved candidates receive commercial casino licenses with a validity of one year. Respectively, the permits are subject to annual renewal provided the gaming businesses pay their licensing fees.
Each licensee must submit an annual report detailing their operations so that the MGCB can determine whether they are suitable for renewal. Violations of the licensing terms might result in revocation or suspension of the permits. No more than three commercial casino licenses can be granted by the MGCB.
Occupational Licenses for Casino Employees
Employees who are directly or indirectly involved in the gaming process must obtain occupational permits before they can legally work on the casino floor. Prospective employees must also pay a non-refundable fee upon application. The applicants must prove they have the necessary experience and probity to occupy their corresponding positions.
Individuals must be at least 21 years old to perform gambling-related functions on the casino floor. Those who are not directly involved in the gaming process should be 18 years of age or older. Three types of occupational licenses are available, depending on the position of the employees.
Level 1 permits are necessary for casino pit bosses, casino managers, poker shift supervisors, slot shift managers, surveillance supervisors, cage managers, and counting room supervisors, among others. Level 2 permits are required for dealers, boxpersons, and floorpersons. Waiters who handle food and beverages on the gaming floor require Level 3 licenses.
Another important thing about occupational licenses is that they require a biennial renewal, i.e. holders must renew their permits every two years. Employees should pay the renewal fees and submit their documents at least thirty days before their occupational licenses expire. The costs associated with obtaining and renewing the occupational licenses are as follows – $500 for Level I, $100 for Level II, and $50 for Level III.
Tribal Casino Compacts
At the time of publication, there are a total of twelve gaming compacts between tribal nations and state authorities. In essence, these are written agreements between the state government and the sovereign tribes that carry the governor’s signature. Michigan reached agreements for the first seven compacts in 1993. The following sovereign nations offer Class III gambling services under 1993 compacts:
The seven compacts agreed upon in 1993 originally had a validity of twenty years and were extended for five years after this period elapsed. State authorities have started negotiations with the sovereign nations for new Class III gaming compacts.
Michigan reached agreements on four more gaming compacts in 1998 whose duration was again twenty years. Three of the agreements were then prolonged until 2028, while the validity of the fourth one was extended until 2030. The four sovereign nations in question include:
In 2007, Michigan’s government made yet another compact with the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, commonly referred to as the Gun Lake Tribe. Similarly to the 1993 batch of tribal compacts, this one also has an initial validity of twenty years and will be extended for five more after this period elapses.
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.
Regulated Online Poker and Casino Games
Regulated Sports Betting
Regulated Online Poker and Casino Games
The terms of the Lawful Internet Gaming Act enable each gambling operator in Michigan to provide remote poker and casino-style gaming. The same goes for the sovereign tribal nations with compacts in the state.
Players from the Mitten now have legal access to a broad range of casino games, including slots, blackjack, video poker, roulette, and live dealer tables. Over a dozen online casino sites are already in business under licenses granted by the MGCB. Licensees must renew their interactive gaming permits once every five years.
Applying costs $50,000, while the initial licensing fee stands at $100,000. The initial permits for online suppliers cost $5,000 but the amount drops to $2,500 for subsequent years. Online gaming operators are subject to progressive taxes that range from 20% to 28%, based on their annual adjusted gross receipts. Geolocation mechanisms are in place to detect players’ whereabouts as only persons who are physically present in the Mitten can wager on MGCB-licensed websites.
Regulated Sports Betting
Regulated sports betting made its way to the Great Lakes State thanks to the passage of the Lawful Sports Betting Act. It allows licensed terrestrial casinos to provide sports betting services to Michiganians over the internet, via mobile applications, or at retail locations. Each landbased casino, commercial or tribal, can operate no more than one online sportsbook.
The legislation does not cover pari-mutuel wagering on horse races. It also disallows betting on sports events that involve high school players unless the majority of them are aged 18 or older. The application and licensing fees coincide with those for online poker and casino gaming.
The tax rates that apply to sports betting businesses in Michigan stand at 9.65% for online sportsbooks operated by commercial casinos and 8.4% for retail and online tribal sportsbooks. Sports betting licenses are valid for five years.
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.
Conclusion
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.
