State Rep. Brandt Iden today emphasized Michigan must focus on consumer protections while modernizing gaming regulations to reflect current online technology.

Iden focused on protecting and benefiting Michigan residents during Ways and Means Committee testimony today, while noting some stakeholders are more interested in monopolizing gaming revenue for the state and counterproductive tax rates that hinder business growth.

“Make no mistake – hundreds of thousands of Michigan residents are already gaming online, but they’re doing it illegally with no protections for their sensitive personal and financial information or their funds,” Iden, of Oshtemo Township, said after the committee hearing. “We have an obligation to protect our residents and move gaming out of the black market and into a more safe, regulated environment. Other states are already moving to protect their citizens and Michigan should do the same.”

Iden chairs the Ways and Means Committee where the bills were discussed today, and he is also the lead sponsor of legislation to update Michigan’s gaming regulations. His plan would create a unit within the Michigan Gaming Control Board to legalize and regulate internet gaming with built-in safety features and strict state oversight – including age verification systems and protections against fraud. Internet gaming would be allowed only for those 21 and older through casinos already operating in Michigan, including Detroit’s three casinos and tribal casinos.

The legislative package deals with casino-style gaming as well as other gaming options such as fantasy sports, charitable gaming, and horse racing.

Concerns raised about online gaming’s impact on lottery revenue aren’t supported by evidence from other states. New Jersey legalized internet gaming in 2013, yet the state continued to set annual records for lottery sales each year, topping $3.2 billion in the 2016 fiscal year. Distributions of lottery revenue to support education and other services also continued to reach record highs.

Michigan has allowed casino gaming for decades, yet lottery revenue continues to climb. Sales reached a record of nearly $3.6 billion in the 2018 fiscal year, with a record $941 million contribution to public schools. Online lottery sales in Michigan – called iLottery – is a significant and expanding contributor to the overall growth, including growth within in-store sales.

Online gaming in other states has been complementary to many land-based casinos and poker rooms. In Nevada and New Jersey, casino operators have said online gaming benefits their brick-and-mortar operations by introducing new players and attracting new audiences. Many casino operations report annual growth in both their land-based locations and on the internet.

In Michigan, Iden’s legislation has won support from operators of existing casinos – including tribes with gaming operations.

“Internet gaming sites and brick-and-mortar facilities often serve different audiences seeking different experiences,” Iden said.  “It’s complementary, not cannibalistic – but only if it’s done legally. It’s the illegal, unregulated sites that hurt both Michigan casinos and the state lottery by drawing business away, which in turn hurts our state budget and our citizens.”

Iden’s legislation calls for a portion of gross gaming revenue – translating into millions of dollars – to improve schools, roads and other essential public services without asking Michigan taxpayers to pay more at the gas pump or grocery store. But he warns that setting the tax rate too high could backfire because fewer casinos would pursue offering internet gaming.

Several other states — including Delaware, Nevada, New Jersey and Pennsylvania — already have legalized “igaming” and many other states are rushing to join them.

“The internet and mobile devices have changed how consumers do everything – from shopping to banking to signing up for services,” Iden said “Michigan residents are demanding safe, secure and convenient access – and access to gaming shouldn’t be any different.

“We have been working on these important reforms for more than two years, and we can’t afford to remain on the sidelines. Michigan loses out on important consumer protections and revenue for public services the longer we delay.”

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The legislation: House Bills 4307-12; 4323; 4173.