Of All Things, The FBI Might Slow Down Michigan’s Online Gambling Launch

Michigan’s implementation of online sports betting may face an obstacle from the federal level, despite its nationwide legalization in 2018.

Executive Director Richard Kalm, in the regular meeting of the Michigan Gaming Control Board (MGCB) on Tuesday, outlined the potential obstruction posed by the FBI that could impede the scheduled 2020 launch of online gambling in Michigan.

The MGCB is still waiting for FBI approval regarding a specific section of the online gaming statute that pertains to fingerprinting individuals applying for licenses, he stated.

Despite an overall positive report to the board, the regulator maintained its confidence in launching mobile sports betting, online casinos, and online poker by 2020.

Kalm: FBI currently not accepting MGCB fingerprints

Kalm mentioned that the MGCB has been conducting nationwide fingerprint checks for several years, but the recent statement from the FBI indicated that the board’s statute did not provide the necessary support for this practice.

Last year, Michigan implemented the Lawful Internet Gaming Act which was modified as per the instructions of the FBI, according to Kalm. However, as of now, the new language has not yet been granted approval by the FBI.

Kalm stated that even without approval, the MGCB is able to access state records but not federal records during background checks.

Kalm mentioned that it might affect our schedule. He informed us about our ongoing collaborations with the FBI and mentioned a specific group in Missouri responsible for approvals. We are currently waiting for the FBI attorneys to provide us with the necessary language and give us the final approval.

According to Kalm, the MGCB is currently collaborating with the Michigan State Police, who have decided to temporarily withhold sending prints to the FBI.

Kalm explained that they are approaching the matter from various angles, aiming to prioritize their work in order to overcome the significant slowdown caused by COVID and secure a top spot in their priorities.

Kalm still expects online gambling launch this year

Retail sportsbooks in Michigan began operating in March, marking the initiation of sports betting in the state. There were optimistic expectations for online gambling to commence in October, but Kalm’s remarks on Tuesday indicated a more cautious approach.

Kalm expressed his hope of getting these things started before the beginning of the year.

The introduction of online gambling is set to provide much-needed support to a state revenue stream that has been severely impacted by the COVID-19 pandemic.

After being closed on March 16, Detroit’s three casinos remained shut until last week. From January to July, the collective revenue of these casinos witnessed a significant decline of 65% compared to the previous year’s figures.

Kalm mentioned that the decrease in revenue might have an impact on the staffing levels for online gambling enforcement in the upcoming fiscal year.

Operators, suppliers, vendors turning in applications

Online gambling in Michigan is currently accepting applications on a rolling basis.

Applications from suppliers were accepted by the MGCB starting on May 15, while applications from operators and vendors were accepted starting on June 30.

As of Monday, Kalm announced that applications had been submitted by 11 operators, 15 suppliers, and eight vendors. In the state, a total of fifteen operators, twelve Native American tribes, and three casinos in Detroit are eligible to apply for licenses.

The applications are being processed by MGCB staff members who are working remotely.

Kalm expressed his belief that the rule process would not be the obstacle. Instead, the challenge lies in obtaining licensing suppliers and operators, which could be more complicated due to travel restrictions.

The MGCB spokesperson has stated that the organization will not reveal the identity of the applicants until their approval has been granted.

In April, the MGCB provided stakeholders with initial draft rules. Following feedback, an updated version of the draft rules was later released by the state legislature as part of the rulemaking process.

Steps in rules process can be skipped, hurried

It is highly improbable for a rule to be implemented by 2020, given that the state’s rulemaking process typically requires 133 days of steps following the public hearing.

Nevertheless, certain legislative procedures can be sidestepped or hastened to facilitate a launch in 2020.

During the state’s stay-at-home orders, Kalm commended the board staff and Deputy Director David Murley for their efficient work. Kalm expressed that the process has been characterized by complete cooperation and promptness.

I believe there haven’t been many positive outcomes from COVID, but one notable realization is that the earlier availability of online gaming is indeed beneficial.

Due to the COVID-19 pandemic, both tribes and commercial casinos in Detroit have faced significant challenges resulting in suffering. Consequently, there has emerged a renewed sense of collaboration, considering the unpaid taxes and the hardships experienced by all parties involved.

As regulators, we are aware that our presence may not always be welcomed wherever we go. While I don’t claim that we are currently adored, it is worth noting that people have become more receptive to comprehending our perspective and offering us rational feedback regarding how the rules apply to their specific circumstances.

The process is progressing smoothly and efficiently, enabling us to expedite and initiate this thing more quickly.