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Michigan poised to legalize sports, online gambling: What to know

Majority of revenue would go to schools

FILE - This April 3, 2019, file photo shows a tip box is filled with U.S. currency in New York. For millennials who are passionate about contributing to the greater good, there are ways to prioritize charitable giving and make the greatest impact on issues they care about (AP Photo/Mark Lennihan, File)
FILE - This April 3, 2019, file photo shows a tip box is filled with U.S. currency in New York. For millennials who are passionate about contributing to the greater good, there are ways to prioritize charitable giving and make the greatest impact on issues they care about (AP Photo/Mark Lennihan, File) (Copyright 2019 The Associated Press. All rights reserved.)

LANSING, Mich. – Michigan’s Legislature will vote Wednesday to legalize sports betting and internet gambling, expanding options for gamblers in a state with three commercial casinos in Detroit and two-dozen tribal casinos elsewhere.

The bills reflect a compromise with Gov. Gretchen Whitmer after lawmakers agreed to a higher tax on i-gambling than was initially proposed. Michigan will become the 20th state to authorize sports wagers and the fifth to allow casino-style games to be played online.

UPDATE: Whitmer signs bills legalizing sports betting, internet gambling in Michigan

A look at the development:

WHEN MAY SPORTS BETTING BEGIN?

It is unclear. Casinos will need a license from state regulators who will be writing rules. Some lawmakers had hoped sports wagering could start by the Super Bowl, in early February. Sen. Curtis Hertel Jr., an East Lansing Democrat, doubted it could begin by then but said the NCAA basketball tournament, which starts in mid-March, is a realistic goal. A spokeswoman for the Michigan Gaming Control Board declined to comment until the bills are on the governor’s desk.

WHY ALLOW IT?

Supporters said gamblers already are betting on sports and gambling online through illegal bookies or non-U.S. websites. “Frankly you don’t even know if you’re getting your money back if you win,” Hertel said. Legalizing sports and i-gambling will protect consumers and generate new tax revenue for local and state governments, they said.

HOW MUCH REVENUE?

Casinos that open physical or online sports books will pay an 8.4% tax on receipts after winnings are paid out. Those offering online games like poker will pay a tax of between 20% and 28%, depending on their amount of adjusted gross receipts. Projecting i-gambling revenues is difficult because of the potential “substitution effect” — people who play the Lottery online migrating to poker and other internet games offered by the casinos — and a range of other complicating factors. The nonpartisan Senate Fiscal Agency projects that if gambling activity rises by 5%, it would generate nearly $18 million in new taxes or similar tribal payments.

WHO BENEFITS?

Much of that money, up to $14 million, would go to the state’s school aid fund, which covers public schools. That would equate to nearly $10 per student. Some, $4 million a year, would be earmarked to a state fund that compensates first responders for lost wages and medical benefits if they get cancer from fighting fires.