HOUSE BILL NO. 4916
September 04, 2019, Introduced by Rep. Iden and
referred to the Committee on Regulatory Reform.
September 04, 2019, Introduced by Rep. Iden and referred to the Committee on Regulatory Reform.
the people of the state of michigan enact:
(a) "Adjusted gross sports betting receipts" means a sports betting licensee's total gross receipts from sports betting, less all payments to bettors, excise tax payments remitted to the federal government, and voided wagers. Payments to bettors include all payments of cash premiums, merchandise, tokens, redeemable sports betting credits, or any other thing of value.
(b) "Athletic event" means a sports activity that involves the athletic skill of 1 or more players or participants. Athletic event does not include any of the following:
(i) Horse racing.
(ii) A high school sport or high school athletic event.
(iii) Roulette, poker, blackjack, a card game, a dice game, or any other game or contest typically offered in a casino other than sports betting.
(iv) A fantasy contest.
(c) "Authorized participant" means an individual who has a valid internet wagering account with a licensee and is at least 21 years of age.
(d) "Board" means the Michigan gaming control board created under section 4 of the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.204.
(e) "Casino" means a building or buildings in which gaming is conducted under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226, or in which class III gaming is lawfully conducted by an Indian tribe under a facility license issued in accordance with a tribal gaming ordinance approved by the chair of the National Indian Gaming Commission.
(f) "Class III gaming" means that term as defined in 25 USC 2703.
(g) "Division" means the division of sports betting established under section 5.
(h) "Fantasy contest" means a fantasy or simulation sports game or a fantasy contest as that term is defined in section 2 of the fantasy contests consumer protection act.
(i) "Fund" means the sports betting fund created under section 20.
(j) "Gaming equipment" or "sports betting equipment" means any mechanical, electronic, or other device, mechanism, or equipment, and related supplies used or consumed in the operation of sports betting at a licensed gaming facility, including, but not limited to, a kiosk installed to accept sports wagers on the gaming floor within a casino. Gaming equipment does not include an individually owned personal computer or individually owned mobile device.
(k) "High school sport or high school athletic event" means a sport or athletic event offered or sponsored by or played in connection with a public or private institution that offers education services at the secondary level.
(l) "Internet" means the international computer network of interoperable packet-switched data networks, inclusive of additional technological platforms such as mobile, satellite, and other electronic distribution channels approved by the division.
(m) "License" means a license, applied for or issued by the division under this act, including, but not limited to, any of the following:
(i) A license to operate sports betting at a licensed gaming facility.
(ii) A license to supply a sports betting licensee with sports betting equipment or services necessary for the operation of sports betting.
(iii) A license to provide management services under a contract to a sports betting licensee.
(n) "Licensee" means a person that is issued a license from the division.
(o) "Minor" means an individual under the age of 21 years.
(p) "National criminal history background check system" means the criminal history record system maintained by the Federal Bureau of Investigation, based on fingerprint identification or any other method of positive identification.
(q) "Official league data" means statistics, results, outcomes, and other data relating to an athletic event obtained under an agreement with the relevant sports governing body, or an entity expressly authorized by the sports governing body to provide the information described in this subdivision to sports betting licensees, that authorizes the use of the data described in this subdivision for determining the outcome of tier 2 sports bets.
(r) "Person" means an individual, partnership, corporation, association, limited liability company, federally recognized Indian tribe, or other legal entity. Person does not include this state or any department or agency of this state.
(s) "Sports betting" means the business of accepting wagers on athletic events or portions of athletic events, the individual performance statistics of athletes in an athletic event or other events, or a combination of any of the same by a system or method of betting approved by the division, including, but not limited to, mobile applications and other digital platforms that use communications technology to accept wagers. Sports betting includes, but is not limited to, single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange betting, in-game betting, in-play bets, proposition bets, and straight bets. Sports betting does not include a fantasy contest as that term is defined in section 2 of the fantasy contests consumer protection act.
(t) "Sports betting operator" means either of the following:
(i) A casino that is issued a sports betting license from the division to operate sports betting.
(ii) A management services provider that operates sports betting or a sports betting platform on behalf of a casino, or both.
(u) "Sports betting platform" means an integrated system of hardware, software, and servers through which a sports betting operator operates, conducts, or offers sports betting. A casino may contract with suppliers or management service providers, or both, to offer not more than 1 individually branded sports betting platform.
(v) "Sports betting supplier" means a person that provides to a sports betting operator goods, software, or services that directly affect betting, play, and the results of sports betting offered under this act. Sports betting supplier does not include a person that provides to a casino or sports betting operator only the goods, software, or services that it also provides to others for a purpose that does not involve sports betting, including, but not limited to, a payment processor or a geolocation service provider.
(w) "Sports governing body" means the organization that prescribes final rules and enforces codes of conduct with respect to a sporting event and the participants in the sporting event.
(x) "Sports wager" means cash or cash equivalent that is paid by a bettor to a sports betting operator to participate in sports betting.
(y) "Tier 1 sports bet" means a sports wager that is not a tier 2 sports bet.
(z) "Tier 2 sports bet" means a sports wager that meets all of the following conditions:
(i) Is placed after the athletic event has begun.
(ii) Is not determined solely by the final score or final outcome of the athletic event.
(iii) Is not a sports wager made between quarters, halves, or periods of a sporting event where the outcome of the sporting event being wagered on is related only to the quarter, half, or period that has yet to commence.
Sec. 4. (1) If the board authorizes by rule that a person that holds a casino license under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226, may conduct sports betting, sports betting may be conducted only to the extent that it is conducted in accordance with this act. A law that is inconsistent with this act does not apply to sports betting as provided for by this act. This act does not apply to lottery games offered by the bureau of state lottery either through the internet or via its online terminal and network systems.
(2) This act does not apply to a fantasy contest.
Sec. 5. (1) The division of sports betting is established in the board.
(2) The division has jurisdiction over every person licensed by the division and may take enforcement action against a person that is not licensed by the division that offers sports betting in this state.
(3) The division may enter into agreements with other jurisdictions, including Indian tribes, to facilitate, administer, and regulate multijurisdictional sports betting by sports betting operators to the extent that entering into the agreement is consistent with state and federal laws and if the gaming under the agreement is conducted only in the United States.
Sec. 9. (1) Except for sports betting conducted by an Indian tribe under a compact or an amendment to a compact under section 7, the division has jurisdiction over and shall supervise all sports betting operations governed by this act. The division may do anything necessary or desirable to effectuate this act, including, but not limited to, all of the following:
(a) Conduct all hearings pertaining to violations of this act or rules promulgated under this act.
(b) Provide for the establishment and collection of all license fees and taxes imposed by this act and the rules promulgated under this act and the deposit of the fees and taxes into the fund.
(c) Develop and enforce testing and auditing requirements for sports betting and sports betting accounts.
(d) Develop and enforce requirements for responsible gaming and player protection, including privacy and confidentiality standards and duties.
(e) Develop and enforce requirements for accepting internet sports betting.
(f) Develop and administer civil fines for licensees that violate this act or the rules promulgated under this act. A fine imposed under this subdivision must not exceed $5,000.00 per violation.
(g) Audit and inspect, on reasonable notice, books and records relevant to sports betting operations, sports wagers, sports betting accounts, sports betting games, or internet sports betting platforms, including, but not limited to, the books and records regarding financing and accounting materials held by or in the custody of a licensee.
(2) The division may investigate, issue cease and desist orders, and obtain injunctive relief against a person that offers sports betting in this state and is not a licensee.
(3) The division shall keep all information, records, interviews, reports, statements, memoranda, and other data supplied to or used by the division in the course of any investigation of a licensee confidential and shall use that material only for investigative purposes. The materials described in this subsection are exempt from disclosure under section 13 of the freedom of information act, 1976 PA 442, MCL 15.243.
Sec. 10. (1) The division shall promulgate rules governing the administration and conduct of sports betting necessary to carry out this act within 1 year after the effective date of this act. The promulgation of emergency rules does not satisfy the requirement for the promulgation of rules to allow a person to conduct sports betting under this act. The division shall promulgate the rules pursuant to the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. Rules promulgated by the division may include, but are not limited to, the following:
(a) The acceptance of wagers on a sports event, other event, or a series of sports events or other events.
(b) The development and posting of house rules regarding sports betting.
(c) Types of betting tickets that may be used.
(d) Method of issuing tickets.
(e) Method of accounting to be used by sports betting licensees.
(f) Types of records that must be kept.
(g) Type of system for betting.
(h) The ways in which a patron may fund his or her account, that must include, at a minimum, the use of cash, cash equivalents, automated clearing house, debit cards, credit cards, and any other form of payment authorized by the division. As used in this subdivision, "automated clearing house" means a national and governmental organization that has authority to process electronic payments, including, but not limited to, the National Automated Clearing House Association and the federal reserve system.
(i) Protections for patrons placing wagers.
(j) Requirements to ensure responsible gaming.
(k) Procedures for conducting contested case hearings under this act.
(2) The division shall determine the eligibility of a person to hold or continue to hold a license, shall issue all licenses, and shall maintain a record of all licenses issued under this act. The division may accept applications, require the payment of application fees for licenses, evaluate qualifications of applicants, and undertake initial review of licenses before promulgation of emergency rules, if applicable, on the effective date of this act.
(3) The division shall levy and collect all fees, surcharges, civil penalties, and tax on adjusted gross sports betting receipts imposed by this act and shall provide for the deposit of all fees, surcharges, civil penalties, and tax on adjusted gross sports betting receipts imposed by this act into the fund, except as otherwise provided under this act.
(4) The division shall adopt by rule a code of conduct governing division employees that ensures, to the maximum extent possible, that a person subject to this act avoids situations, relationships, or associations that may represent or lead to an actual or perceived conflict of interest.
(5) The division may audit and inspect, on reasonable notice, books and records relating to sports betting operations, sports wagers, sports betting accounts, sports betting games, or internet sports betting platforms, including, but not limited to, the books and records regarding financing and accounting materials held by, or in the custody of, a licensee.
(6) The division shall keep all information, records, interviews, reports, statements, memoranda, and other data supplied to or used by the division in the course of any investigation of a licensee confidential and shall use that material only for investigative purposes. The materials described in this subsection are exempt from disclosure under section 13 of the freedom of information act, 1976 PA 442, MCL 15.243.
(7) The division shall charge the following annual license fees:
(a) For a sports betting license, $100,000.00.
(b) For a management services provider license, $50,000.00.
(c) For a supplier license, $5,000.00.
(8) The division may use information received from a sports governing body to determine whether to allow either of the following:
(a) Betting on a particular event.
(b) Patrons to make wagers of a particular type.
(9) If a sports governing body requests betting information or requests the division to prohibit betting on a particular event or making wagers of a particular type, the division shall grant the request on a demonstration of good cause from the sports governing body. For the purpose of this subsection, "good cause" means the operator has identified suspicious betting activity or the division has begun an investigation regarding suspicious betting activity that, if confirmed, would directly impact the integrity of the sporting event on which the bets are being placed.
(10) The division shall respond to a request from a sports governing body concerning a particular event before the start of the event or, if it is not feasible to respond before the start of the event, as expeditiously as possible.
(11) The division and sports betting licensees shall cooperate with investigations conducted by sports governing bodies or law enforcement agencies, including, but not limited to, providing or facilitating the provision of account-level betting information and audio or video files relating to persons placing bets.
(12) Except as provided in subsection (13), sports betting licensees may use any data source to determine the results of sports bets if the data is not obtained directly or indirectly from live event attendees who collect the data in violation of the terms of admittance to an event or through automated computer programs that compile data from the internet in violation of the terms of service of the relevant website or other internet platform.
(13) A sports governing body may notify the division that it desires to supply official league data to sports betting licensees for determining the results of tier 2 sports bets. A notification under this subsection must be made in the form and manner that is required by the division. Within 30 days after a notification under this subsection by a sports governing body, the division shall determine if official league data is necessary and appropriate to determine the results of tier 2 sports bets. If the division determines that official league data is necessary and appropriate to determine the results of tier 2 sports bets, a licensee shall use only official league data to determine the results of tier 2 sports bets unless the licensee can demonstrate to the division that the sports governing body or an entity that is contracted with the sports governing body cannot provide a feed of official league data to the licensee on commercially reasonable terms.
(a) Offer sports betting for play in this state if the person is not a licensee or a federally recognized Michigan Indian tribe described in section 7.
(b) Knowingly provide false testimony to the board or an authorized representative of the board while under oath.
(2) A person that violates subsection (1) is guilty of a felony punishable by imprisonment for not more than 10 years or a fine of not more than $100,000.00, or both.
(3) The attorney general or a county prosecuting attorney may bring an action to prosecute a violation of subsection (1) in the county in which the violation occurred.
(2) The division shall not grant a license until it determines that each person who has control of the applicant meets all qualifications for licensure. All of the following persons are considered to have control of an applicant:
(a) Each corporate holding company, parent company, or subsidiary company of the applicant and each person who owns 10% or more of the corporate applicant and who has the ability to control the activities of the corporate applicant or elect a majority of the board of directors of that corporation. A bank or other licensed lending institution that holds a mortgage of or other lien on the property of an applicant acquired in the ordinary course of business is not considered to have control of the applicant.
(b) Each person associated with a noncorporate applicant who directly or indirectly holds a beneficial or proprietary interest of 10% or more in the applicant's business operation.
(c) Each person associated with a noncorporate applicant who the division otherwise determines has the ability to control the applicant.
(d) Key personnel of an applicant, including any executive, employee, or agent, that has the power to exercise significant influence over decisions concerning any part of the applicant's sports betting business operation.
(3) An applicant for a license issued under this act shall submit an application to the division in the form the division requires and submit fingerprints for a national criminal records check. The fingerprints must be furnished by key personnel and must be accompanied by a signed authorization for the release of information by the department of state police and the Federal Bureau of Investigation. However, an individual who has submitted to a criminal background check in this or any other state within the previous 12 months is not required to submit to another criminal background check if the individual submits the results of the previous criminal background check. An applicant licensed to offer sports betting by another jurisdiction may submit an abbreviated application in the form the division requires.
(4) A sports betting licensee, licensed management services provider, or licensed supplier shall display the license conspicuously in its place of business or have the license available for inspection by an agent of the division or any law enforcement agency.
(5) A person licensed under this act shall give the division written notice within 30 days after any change to any material information provided in the licensee's application for a license or renewal.
(6) An applicant for a sports betting license or management service provider license that is authorized and in good standing to operate sports betting by another jurisdiction may submit, on a form prescribed by the division, a request to the division for a temporary license allowing for the immediate commencement of sports betting operations. On receiving a request for a temporary license, the division shall review the request. If the division determines that the applicant requesting the temporary license is authorized and in good standing by another jurisdiction to operate sports betting, and has paid any required license fee, the division may authorize the operator to conduct sports betting until a final determination on the sports betting license or management service provider license application is made.
(7) The division shall not issue a license to an employee of the board or the division.
Sec. 15. (1) The division shall grant a sports betting license to a gaming facility that meets the requirements for licensure under this act and the rules of the division including payment of a $200,000.00 initial license fee. This license is valid for 1 year, and may be renewed annually on payment of a $100,000.00 renewal fee, as long as a gaming facility continues to meet all qualification requirements.
(2) A holder of a sports betting license may operate or may contract with a management service provider to operate sports betting at casinos and not more than 1 individually branded digital sports betting platform approved by the division. An authorized participant may create a sports betting account on a sports betting platform without being present on the premises of the casino.
(3) A sports betting licensee shall submit to the division the documentation or information as the division may require demonstrating that the sports betting licensee continues to meet the requirements of this act and the rules promulgated under this act.
(4) On application for a license and annually thereafter, a sports betting licensee shall submit to the division an annual audit of the financial transactions and condition of the licensee's total operations prepared by a certified public accountant in accordance with generally accepted accounting principles and applicable federal and state laws.
(a) The applicant has knowingly made a false statement of a material fact to the division.
(b) The applicant has not paid the appropriate licensing fee.
(c) The applicant has been suspended from operating a gambling game, gaming device, or gaming operation, or had a license revoked by any governmental authority responsible for regulation of gaming activities.
(d) The applicant has been convicted of a gambling-related offense or a fraud offense.
(2) The division may deny a license to an applicant, reprimand a licensee, or suspend or revoke a license if either of the following applies:
(a) The applicant or licensee has not demonstrated to the satisfaction of the division financial responsibility sufficient to adequately meet the requirements of the proposed enterprise.
(b) The applicant or licensee is not the true owner of the business or is not the sole owner and has not disclosed the existence or identity of other persons who are considered to have control of the applicant or licensee under section 14.
(3) For an applicant for a sports betting license, the division may deny a license to an applicant, reprimand a licensee, or suspend or revoke a license if an applicant has not met the requirements of this act.
(a) Employ a monitoring system using software to identify non-normal irregularities in volume or odds swings that could signal suspicious activities which should require further investigation that must be immediately reported and investigated by the division. A monitoring system required under this subdivision must be developed according to sports betting industry standards.
(b) Promptly report to the division any facts or circumstances related to the operation of a sports betting licensee or licensed management service provider that constitute a violation of state or federal law and immediately report to the appropriate state or federal authorities any suspicious betting over a threshold that is set by the licensee and approved by the division.
(c) Conduct all sports betting activities and functions in a manner that does not pose a threat to the public health, safety, or welfare of the citizens of this state.
(d) Keep current in all payments and obligations to the division.
(e) Prevent a person from tampering with or interfering with the operation of any sports betting.
(f) Ensure that sports betting conducted at a building in which gaming is conducted under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226, is within the sight and control of designated employees of the licensee and the betting at the building or otherwise available by the licensee is conducted under continuous observation by security equipment in conformity with specifications and requirements of the division.
(g) Ensure that sports betting occurs only in the specific locations within designated gaming areas approved by the division or using a division-approved mobile application or other digital platform that uses communications technology to accept wagers originating within this state, or originating in a state or jurisdiction with which the division has entered into a sports betting agreement.
(h) Maintain sufficient cash and other supplies to conduct sports betting at all times.
(i) Maintain daily records showing the gross sports betting receipts and adjusted gross sports betting receipts of the licensee and shall timely file with the division any additional reports required by rule or by other provisions of this act.
Sec. 18. (1) A sports betting licensee who also holds a license to conduct internet gaming may offer sports betting via the internet. A sports betting licensee that does not hold a license to conduct internet gaming must apply for and be granted a license as an internet gaming operator, under the lawful internet gaming act, before offering sports betting via the internet.
(2) For purposes of this act, the intermediate routing of a sports wager conducted via the internet, including routing across state lines, does not determine the location or locations in which the wager is initiated, received, or otherwise made.
(3) A sports wager conducted via the internet received by a sports betting operator is considered to be gambling or gaming that is conducted in the sports betting operator's casino located in this state, regardless of the authorized participant's location, within this state, at the time the authorized participant initiates or otherwise places the sports wager.
Sec. 19. (1) A sports betting operator that conducts sports betting at a location other than a casino operated by an Indian tribe is subject to a tax at a rate equal to 8% on the adjusted gross sports betting receipts received by the sports betting operator from sports betting conducted under this act. If adjusted gross receipts for a month is a negative number because the winnings paid to patrons exceeds the licensee's total gross receipts from sports wagering by patrons, the licensee may carry over the negative amount to returns filed for subsequent months.
(2) A sports betting operator that is subject to subsection (1) shall pay the tax under subsection (1) on a monthly basis. The payment for a month is due on the tenth day of the following month.
(3) The tax imposed under subsection (1) must be allocated as follows:
(a) Thirty percent to the city in which the sports betting licensee's casino is located, for use in connection with all of the following:
(i) The hiring, training, and deployment of street patrol officers in that city.
(ii) Neighborhood development programs designed to create jobs in that city with a focus on blighted neighborhoods.
(iii) Public safety programs such as emergency medical services, fire department programs, and street lighting in that city.
(iv) Anti-gang and youth development programs in that city.
(v) Other programs that are designed to contribute to the improvement of the quality of life in that city.
(vi) Relief to the taxpayers of that city from 1 or more taxes or fees imposed by the city.
(vii) The costs of capital improvements in that city.
(viii) Road repairs and improvements in that city.
(b) Fifty-five percent to this state to be deposited in the fund.
(c) Five percent to be deposited in the state school aid fund established under section 11 of article IX of the state constitution of 1963.
(d) Five percent to be deposited in the Michigan transportation fund created under section 10 of 1951 PA 51, MCL 247.660, to be disbursed as provided in section 10(1)(l) of 1951 PA 51, MCL 247.660.
(e) Five percent to the Michigan agriculture equine industry development fund created under section 20 of the horse racing law of 1995, 1995 PA 279, MCL 431.320. However, if the 5% allocated under this subdivision to the Michigan agriculture equine industry development fund created under section 20 of the horse racing law of 1995, 1995 PA 279, MCL 431.320, exceeds $3,000,000.00 in a fiscal year, the amount in excess of $3,000,000.00 must be allocated and deposited in the sports betting fund created under section 20.
(2) The state treasurer may receive money or other assets required to be paid into the fund under this act or from any other source for deposit into the fund. The state treasurer shall direct the investment of the fund. The state treasurer shall credit to the fund interest and earnings from fund investments.
(3) The board is the administrator of the fund for auditing purposes.
(4) The board shall expend money from the fund, on appropriation, for all of the following:
(a) Each year, $1,000,000.00 to the compulsive gaming prevention fund created in section 3 of the compulsive gaming prevention act, 1997 PA 70, MCL 432.253.
(b) The board's costs of regulating and enforcing sports betting under this act.
Enacting section 2. This act does not take effect unless all of the following bills of the 100th Legislature are enacted into law:
(a) House Bill No. 4308.
(b) House Bill No. 4311.