The answer to the question of daily fantasy sports’ (DFS) legality in the state of Michigan was settled last year. The regulation and taxation of fantasy contests were included in expanded gambling bills that were signed into law by Gov. Gretchen Whitmer on Dec. 20, 2019.
Daily fantasy sports regulation in Michigan
Daily fantasy sports operators pay an 8.4% tax on adjusted revenues to the state of Michigan.
Law put end to long daily fantasy sports debate
The move came after years of legal wrangling on both sides. Up until then, the DFS industry’s largest operators believed DFS was legal, and continued to accept customers from inside the state. Meanwhile, Michigan Gaming Control Board Executive Director Rick Kalm said in 2015 that he believed DFS is not legal at all.
This opinion came in the wake of state Senate introducing legislation which would amend the Michigan penal code to specify DFS is a game of skill. While this would have legalized the activity, it wasn’t necessarily an attempt to regulate DFS operators in the state. Actually, it was more of a clarification. Regardless, the bill, and any efforts concerning DFS legislation died out in Michigan in subsequent years.
Another bill, which would have challenged the federal ban on sports betting, surfaced in the Michigan legislature in January 2017. The bill had a hearing in front of the House Regulatory Reform Committee, but no vote.
Gov. Snyder vetoed 2018 bill at end of term
Previously, there was an effort to legalize DFS by amending the Michigan penal code to specify fantasy sports as a game of skill. However, the bill went nowhere, and never included regulations or taxes for operators.
In 2017, Michigan lawmakers were considering online gambling legislation. Though the state’s online gambling bill failed to move in 2017, it carried over to 2018.
The bill, H 4926, would authorize several forms of online gambling, including online sports betting should the federal sports betting ban fall. The Lawful Internet Gaming Act passed the Michigan House of Representatives 68-40.
The Michigan Senate passed the bill on Dec. 20, 2018, by a 33-5 vote, sending it back to the House for concurrence where it passed 71-35.
However, on Dec. 31, 2018, former Gov. Rick Snyder vetoed the bill.
In the meantime, the largest DFS operators in the country continue to operate in the state.
Hall, Iden get law signed by Gov. Whitmer
Representatives Brandt Iden and Matt Hall sponsored a series of gambling expansion bills that were eventually signed in December 2019 by Whitmer, who was sworn in on Jan. 1, 2019.
Hall introduced the bill, H 4917, which allowed sports betting, on Sept. 4, 2019. It passed the House on Oct. 30, 2019 by a 65-43 vote.
The Senate passed it on Dec. 11 by a 35-3 vote, with the House approving amended changes, 98-10.
A bill that was part of the House’s original package, H 4307, was only approved by the House later on Dec. 4 because it needed a supermajority, as it contained a provision repealing a voter-approved ban from 1996 on political contributions from casino licensees and their employers.
The package legalized online gaming, online fantasy sports contests, sports betting and advance deposit wagering in horse racing.
Michigan’s biggest daily fantasy sports sites
The two companies entered into a merger agreement in November 2016. However, it fell apart in the wake of federal anti-trust investigations regarding whether or not it constitutes a monopoly.
SportsHub Games Network, Fantasy Football Players Championship, FullTime Fantasy Sports Network and Yahoo Fantasy Sports are also active and taxed by the state now.
How popular is daily fantasy sports in Michigan?
Michigan is the 10th-most populous state in America, with more than 10 million residents. As a result, it is a rather large market for DFS.
It is estimated that DFS sites earn as much as $6.7 million annually from Michigan players. In fact, the state is responsible for almost 4 percent of all DFS contest entry fees across the US.
Estimates suggest Michigan has more than 37,000 active DFS players. Those players are responsible for almost $70 million in annual entry fees, the 10th-most of any state.
In the first quarter of 2020, DFS sites had adjusted revenues of $3.1 million in Michigan with the state collecting $263,642.84 in taxes.