Michigan Online Gambling Laws

Are you a Michigander and want to know what Michigan online gambling laws permit? Whether you like to gamble online sporadically or every week, it’s good to know what the law says. On December 20, 2019, Governor Whitmer signed the Lawful Internet Gaming Act or HB 4311 into law. 

HB 4311 legalizes online gambling within the state of Michigan. Online casinos, online sports competitions involving bets, online poker games, and fantasy sports with betting are legal under specific circumstances. Gamblers must be at least 21 and be physically within Michigan’s borders. 

In other words, someone in Colorado cannot legally place a bet through one of Michigan’s online casinos. Below we’ll look at the most important details of Michigan’s Lawful Internet Gaming Act and what Michiganders who love to gamble should keep in mind.

The Ins and Outs of Michigan Online Gambling Laws

Michigan state representative Brandt Iden was responsible for introducing the Lawful Internet Gaming Act. Under the law, Michigan casinos can operate online with one brand for interactive poker and one for casino games. This stipulation also applies to casinos located on the state’s tribal lands.

Each brand must be distinct. In addition, each tribe recognized by the federal government can only provide one poker and one casino game brand. The Michigan Gaming Control Board oversees online gambling sites, including registration and licenses. Each online gambling site must establish a partnership with a brick-and-mortar or physical site within the state.

Another requirement for licensing and registration is the payment of a $50,000 to $100,000 application fee. Starting an online gaming site in Michigan isn’t for fly-by-night operations or business models looking to make a quick buck. While the authorities cannot stop Michigan residents from playing on international sites, state law views these as illegal.

Summary of Stipulations for Online Gaming Sites

Once an online gaming site obtains a license, it will last five years. After that, gaming sites must renew their licenses to stay in business. Online gaming sites have to also provide proof that they have the proper age verification procedures in place.

State law requires gambling sites to verify the gambler’s location and that the control board doesn’t have their name in a database. That database is known as the responsible gaming database. Online gambling sites have to showcase evidence of their licensure on their web pages.

The state does require monthly reports from online gambling sites. These reports show how many wages came from internet slots, poker games, and casino games. Besides wages, the monthly reports break down deductions, free plays, payouts, wagers, and adjusted gross receipts.

What Fees and Taxes Do Online Sites Pay?

Operating an online gambling site is the same as running a business in the eyes of Michigan online gambling laws. That means these sites pay additional taxes and fees besides licensing costs. Similar to other tax systems, Michigan operates a tiered structure for online gaming sites.

The taxes and fees for online gaming sites in Michigan are as follows:

  • 20% tax rate for proceeds that are less than $4 million
  • 28% tax rate for adjusted gross receipts that exceed $12 million
  • Sites in Detroit city limits pay an additional 1.25% in taxes to the municipal government.
  • Digital casinos can reduce their gross receipts by 10% of free plays during the first three years of operation. 
  • The deduction of free plays from gross receipts climbs to 6% in the fourth year and goes back to 4% in the fifth year.
  • Renewal fees for licenses are $50,000
  • Internet gaming suppliers pay $5000 to apply for licensing, another $5000 for the license, and $2500 to renew.

Most of these taxes and fees go toward Michigan’s School Aid Fund and policing and public safety departments. The majority of Michigan’s legal sites launched in 2021, so any initial five-year licenses should still be in effect.

What About Social Gambling Games and Sites?

Michigan online gambling laws allow residents to play certain games on social gambling sites for cash. These games include casino games, poker, and slots. While social sites usually involve buying gold and sweeps coins, players can exchange them for cash prizes.

Legal social gambling games and sites are additional choices Michigan residents have. That being said, the most popular social gambling games among Michiganders are located in the state. Betting on online horse races and fantasy sports sites are choices residents have because of the passing of HB 4311.

Taxes and licensing fees vary for online horse races and fantasy sports sites. Fantasy sports fall under the state’s legal definition of fantasy contests. Consequently, the state collects an 8.4% tax on a site’s monthly adjusted revenues. If a fantasy sports site doesn’t pay its taxes on time, the state can charge a 25% penalty on top of the initial tax.

Online horse racing sites pay a $1000 application fee and a $500 renewal charge. However, the applicant must also submit to a background check. The state can charge penalties for non-compliance.

Final Thoughts

Michigan online gambling laws make gambling on the internet legal for Michigan residents. However, like most laws, there are stipulations and compliance issues operators must follow. Anyone under the age of 21, for instance, cannot legally participate in online poker, slot, or casino games. This varies from most state laws that permit in-person gambling at 18. 

Furthermore, legal online gambling in Michigan is relatively new. Although the bill passed in 2019, most online sites didn’t set up shop until 2021. As the implications of legal online gambling become known in Michigan, the laws are sure to evolve. The stipulation that only Michigan residents can play may be one of them. 

Under the state’s gambling laws, online sites must have ties to a physical location and set up strict identity verification procedures. Initial and ongoing fees are also nothing to sneeze at, creating a potential barrier to entry. Nonetheless, Michiganders are free to enjoy the perks of online horse bets, fantasy sports, and casino-style games under certain circumstances.