Taxation Stands In the Way of Legalizing Sports Gambling

Arkansas & Louisiana Gambling

US states that are thinking about legalizing sports gambling have been grappling with problems related to taxation. However, for Michigan, tax on gambling identities could be a more significant issue. A series of bills in the Lansing feature very low tax rates for gaming-related business. The gambling industry is welcoming the change, but opponents are questioning the impact of these rates on government coffers.

The House Ways and Means Committee met on Thursday to discuss this issue. Representatives from Detroit casinos were present during the meeting and hailed the new series of bills that would create an expansive gaming industry in the state with reasonable taxes. However, representatives from the government treasury department and state education groups said that the new bill could cut revenues and eventually have a negative impact on school funding.

The current series of bills will allow online sports betting, casino gaming, and in-person sports wagering at land-based casinos. The state already permits internet based and commercial lotteries, Native American casinos, pari-mutuel horse racing and three commercial casinos in Detroit. If the bills pass, it will become the only state in the US to permit all of the above-mentioned gambling options.

Opponents of this move suggest that the state treasury will suffer. The iLottery brings 26% of the total revenue in state coffers. Officials suggests that even if a small number of people switched from the iLottery to online casino games, the state would suffer. The tax on these new gaming options winnings is less than 10 percent, which will mean significantly less revenue. The state received $260 in tax by selling $1,000 of lottery tickets but will receive only $4 on every $1,000 spent on online casino gaming.

Interestingly, the chair of Ways and Means Committee Brandt Iden questioned the actual percentage of lottery players who would switch to new forms of gambling. Committee vice-chair Jim Lilly questioned whether the treasury department’s projections had taken the effects of legal gambling into account. He pointed out that people may now want to move away from the black market to government-sanctioned gambling options.

Gaming proponents are suggesting that new laws will create a significant increase in gross gaming contributions and the net effect will be positive. They say that even a low tax rate will be able to offer positive revenue growth to the state. The treasury officials have also acknowledged that there is much left to be determined. The state is planning a huge gambling expansion move and is looking up to New Jersey.