This Rule Means MI Online Casinos Won’t Be Packed With Games At Launch

When online sports betting launches later this year, Michigan residents can expect things to move pretty quickly. The same cannot be said of Michigan’s online casinos.

In sports, operators are lining up, markets are being introduced to the wagering menu regularly, and apps will be just about as robust as they are in other states right at launch.

The clock also will be running out on the NFL season; all the more reason to hit the ground running quickly.

Michigan online casinos, on the other hand, might be a bit of a different story.

Why? It has a lot to do with the Wire Act, servers, and Michigan online gambling rules.

In-state servers and online casino games in Michigan

When putting together online gambling draft rules, Michigan borrowed from states such as Indiana, New Jersey, and Pennsylvania.

In Pennsylvania, there was a back-and-forth during the rules process about the location of servers. For a time, it looked like operators were going to be able to use existing servers in New Jersey. The servers in New Jersey have been around since 2013 and feature hundreds of game titles.

However, because of the ongoing Wire Act federal fight, the Pennsylvania Gaming Control Board instead required servers to be inside the state. One year later, online games in PA are still few and far between.

Michigan has similar language in its proposed Internet Gaming rules. Therefore, Michigan online casinos will essentially have to start from scratch, too.

The proposed rules added a stipulation that the MGCB could allow out-of-state servers with written permission.

Board spokesperson Mary Kay Bean, in an email to Playinmichigan, explained that the qualifier was due to the possibility of multi-state online poker compacts. Proposed legislation in Lansing would allow for the state to join into an interstate player pool.

“The components of the game — the generation of cards, etc. — need to occur in one state, even if five states are participating. This rule would provide some flexibility,” she wrote.

The flexibility, however, does not pertain to online casinos.

MI online casinos will gradually add games

For online casino players, the rule basically means don’t expect there to be a slew of online casino games right off the bat.

How slowly will games be added? Let’s take a look at a future MI online casino brand, Golden Nugget.

The market leader in New Jersey, Golden Nugget online casino has an access deal for Michigan with an Upper Peninsula tribe.

When Golden Nugget launched in New Jersey in December 2014, the site had just 19 games.

After adding titles monthly using its NJ-based server over the last six years, Golden Nugget now has 741 slot titles alone in its library.

While things should move quickly in Michigan, there is still a process to follow with the MGCB to get games approved. It takes time to go from 19 games to 700-plus.

Live dealer studios must be in Michigan, too

Evolution Gaming essentially has a monopoly on live dealer technology and is rolling out partnership announcements with Michigan online casino operators.

So far, the company has teamed with PointsBet, BetMGM, and William Hill.

Then, physical studios have to be built and approved by Gaming Laboratories International. GLI has been authorized by the Michigan Gaming Control Board to perform the testing and certify.

“The Board will have to review the operational and technical details of each studio, separate or shared, to ensure it meets the requirements of the act and rules,” Bean wrote to Playinmichigan.

Pending rules for a “live game environment” permits the authorized participants to take part in live-streamed games, interact with game attendants, and interact with fellow authorized participants.

Even so, the studios must be inside the state. Evolution cannot use the studios being built in Pennsylvania or the ones currently operational in New Jersey.

Online casino revenue will eventually outpace sports

All that said, revenue from virtual slot machines, live dealer, table games, video poker, and other games will far outpace Michigan online sports betting.

Get this: The sports gambling world was ablaze with the record amount of New Jersey handle in September.

But sports bets generated $45.1 million in revenue, while online casinos generated more than $85 million in revenue. In fact, NJ online casinos have consistently achieved $80 million or more in revenue since March.

A jump on the online sports betting market, however, will give their sister casinos a boost over competitors. Operators will have a chance to cross-sell customers to casinos. And vice versa.

That gives brands associated with one market reasons to exist in both. For example, DraftKings and FanDuel are now in the casino business, while Golden Nugget is looking to open a Michigan sportsbook, too.

However, Golden Nugget owner Tilman Fertitta is following the money. The Houston Rockets owner leaves no doubt where he thinks the gold ultimately will be.

“We’ll be very strong in sports, but we’re in the iGaming business,” Fertitta said this summer. “That’s where the money is, that’s where the customer is more valuable, and that’s where the big money is going to be made going forward.”

It just might be a while before the games are as robust as the sports.