00:00Let's check in on the state of Michigan, and Michigan is a state that has a lot of sports betting
00:06going on, of course, very popular with Detroit and some of the other major cities that have professional sports teams,
00:12college sports teams as well.
00:14Looks like another team in their area, or excuse me, another state in their area, Illinois, who imposed a bigger
00:20sports tax, seems like they could be following suit, Sam.
00:24Do they have a chance of just basically mimicking exactly what Illinois did last year?
00:29Yeah, there's definitely a chance, especially when the proposal comes from the governor of the state, Governor Gretchen Whitmer, proposing
00:37to do pretty much exactly what Illinois did this past year, which was, hey, we have a sports betting tax
00:42rate, but let's generate more money from this industry by keeping that rate the same and then adding a 25
00:49cent per bet fee onto every bet.
00:52So basically a 25 cent tax that every operator has to pay on their first 20 million bets, and then
00:57after that, let's up the fee to 50 cents per bet.
01:00So lawmakers or operators in Illinois have been really upset about that.
01:05They've been having to pay a lot more money to the state, and the way they've handled that was passing
01:09the cost down to the customers.
01:11There's now a per bet fee surcharge in Illinois, which we've seen implemented, and reports kind of signal that betting
01:17may be a little bit down in Illinois since that was implemented, not at a huge rate where, you know,
01:23the industry, everything is moving offshore like everyone was threatening.
01:26But there are some signs there that betting behavior has changed a little bit with that being passed down to
01:30the customer.
01:31The Michigan proposal, you know, one of the reasons that the Illinois tax was such a big deal wasn't because
01:37it was an isolated incident in Illinois.
01:40It's because you can have other states neighboring, like you mentioned, Craig, now look to Illinois and say, hey, they
01:45were able to do it.
01:45Why don't we do the same thing?
01:46Why are we letting sports books not pay the same that they do here?
01:50Michigan has historically had a pretty easy tax rate for sports books, about 8%.
01:53So this would make it not so easy.
01:56They would also change the online gaming tax from about 24% to 36%.
02:01And it comes as the state is facing a budget shortfall from a gap in federal funding.
02:07You had pandemic relief.
02:08You had Medicaid relief from the federal government, which is now kind of falling off.
02:12And I wouldn't be surprised as more governors look to their budgets when they, you know, start the negotiation process
02:18this year.
02:19They say, hey, we have a big gap in federal funding.
02:22What's an easy way we can raise taxes without, you know, nobody likes to raise taxes, but how can we
02:27do it without pissing off most of our constituents?
02:30Online gaming companies, sports books are always an easy target, especially when you have other states like Illinois.
02:36They were able to do it successfully so they can, you know, the governor is probably thinking, why don't we
02:40just do that here?
02:41See if we can raise the money.
02:42Now, it'll definitely face pushback from the sports books themselves.
02:45But, you know, you have to wonder how much sway they're having legislatures these days when, you know, these things
02:50are passing so easily.
02:51Of course, prediction markets won't be paying this rate.
02:53But, you know, that's another story entirely.
02:55So we'll follow along what happens in Michigan.
02:57But wouldn't be surprised if this was the last state considering a sports betting tax increase this year.
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