Michigan Gambling Interests Grow Stronger with Repeal of Political Donations Ban

The biggest win for the gambling industry in the new Michigan gambling expansion law isn’t the legalization of iGaming or sports betting. Arguably, it’s the political donations ban repeal.

One of the nine bills signed into law by Wolverine State Gov. Gretchen Whitmer reverses the restriction which previously existed in Michigan. There are serious implications ahead now, some of which could be negative for the state.

What’s the deal with the political donations ban repeal?

When the state amended its constitution in 1996 to allow for land-based casinos, that amendment included an important tenet. The law banned organizations in the gambling industry from donating to political causes.

That restriction is no longer part of state law in Michigan. Casinos, sportsbooks, casino employee unions, and others are now free to give money to election campaigns, voter referendum drives and other political initiatives in the state.

The argument for lifting the restriction is clear. Corporations and labor unions in other industries that are also regulated by the state are free to be politically active, so why should the gambling industry be disadvantaged or singled out?

Another legitimate point questions the efficacy of such a ban. Casino employees and owners have been free to donate money to political causes as private individuals, and that money comes from the gambling industry.

It could be said that this repeal removes that unnecessary “middle man” and brings such donations out into the open. While those points are valid, there are several valid counterpoints, as well.

The downsides of political donations ban repeal

The first argument against this part of the law is a popular sovereignty issue. The people of Michigan voted for the original restriction, but repealing that ban wasn’t subject to a referendum.

While that could merit a lawsuit, it’s uncertain whether any Michigan citizens will file such a complaint. The bigger issues have more to do with what will happen now that the repeal has taken place.

Gambling interests can be powerful influencers. That can range from deciding elections to filling non-elected positions in the government.

It’s also possible that casinos in Michigan could hold sway over legislators’ votes on future bills. Michiganders have already seen the sway gambling corporations could hold in this process.

Examples in the gambling expansion legalization process

In the months leading up to Whitmer’s signature, state legislators behind the new law involved commercial and tribal casinos in the process. In fact, getting the “sign-off” from tribal operators was an important step toward legalization.

The trick to getting that support was to set a tax rate that isn’t burdensome. The repeal could be interpreted as a concession made to the casinos to get their consent on the bills.

Therein lies the issue. While to some degree the input of the people who will be most affected by a law is wise to include, the potential ability of gambling interests to completely derail legislation is problematic.

While it’s too early to tell exactly how this repeal will affect the state, what’s certain is that it’s a significant change. The onus is now on Michigan’s officials to not let the state’s gambling interests carry too much legislative influence with their deep pockets.