Sports bettors and online casino gamers found themselves sitting on the sidelines in Michigan for all of 2020, even when there was a glimmer of hope that the state would launch online gaming before the year was out.
However, people seeking to place wagers from computers and mobile devices can likely do so in the coming weeks.
“We’re ready when the industry is ready,” Michigan Gaming Control Board (MGCB) Executive Director Rick Kalm told MiBiz.
That’s where this high-profile issue stands at the start of 2021, weeks after state officials waived a 15-day review period on sports betting rules and then issued provisional licenses for 15 different platform providers just eight days later. The actions paved the way for online gambling to go live.
The MGCB is now awaiting each platform — including popular sites like DraftKings and FanDuel Sportsbook — to undergo independent testing to ensure the integrity of their games. This extensive vetting ensures that platforms are using geolocation properly and are able to properly identify a bettor so that bets are not placed by someone who is underage or not located in the state of Michigan.
With a number of states looking to deploy online gambling at the same time — including Iowa and Illinois — Kalm said he wouldn’t be surprised if those testing labs may be experiencing a bottleneck.
Another caveat that may be slowing the process: Michigan was the only state to regulate online gambling for both tribal and commercial casinos. This means that Michigan’s tribally owned casinos must be licensed by the MGCB for online gaming when they have otherwise operated independently of the state authority for gaming that takes place on tribal land.
The state must wait until platforms for both a tribal and commercial casino are ready before launching in order to give both types of casinos equal opportunity out of the gate.
Kalm said he expects sports betting will go live first in the middle of January while online gaming will follow shortly after.
While casinos and consumers might characterize it as a slow, painstaking process, Kalm was impressed wih the speed at which the MGCB has moved.
“From a state regulatory perspective, we did this in a lightyear — it was very quick,” Kalm said. “From the time the law was signed in December of 2019, and in light of COVID shutting down the casinos and shutting down our ability to go to the office, we were able to get those rules set in time for this legislature to review it and approve it.”
Ready to regulate
With such an overwhelming demographic expected to migrate to online sports betting and gaming, it will somewhat reshape the MGCB as cybersecurity and control becomes a paramount issue.
The MGCB does have some experience regulating an online gaming format through the Michigan Lottery.
“We’re going to adapt,” Kalm said. “We have a division of online gaming already inside the agency which will be ensuring internal controls and watching the online gaming format. But we still have the retail side — the commercial casino side — and we have regulators in place there, too. It’s sort of adding another arm to us.”
For security and control, all servers for these online platforms must be located within Michigan and anyone who can change the outcome or touch the software has to be vetted and licensed to do so.
Manipulation of game results is another critical issue for sports betting. Platforms will have to contract with third-party data monitoring companies to look for suspicious betting activity.
The stringent control measures were developed after a year of consulting with industry professionals and other states.
“We collaborated really closely with Indiana and New Jersey, who are out in front of (sports betting and online gaming) already,” Kalm said. “New Jersey really wrote the book on it — they’ve been doing it several years. We’ve done visits to New Jersey and collaborated with their gaming board.”
Sports gambling floodgates
With some casinos opening in-house retail sports books this fall, initial numbers reveal strong demand. In October, Michigan’s three commercial casinos recorded total wagers of $46 million and gross receipts of around $7.6 million to the casinos. This was also while the casinos were limited with capacity restraints.
In November, when those casinos spent much of the month closed completely, they recorded total wagers of $25 million. When users are able to place bets from home, the total amounts wagered could potentially rank among the top sports gambling states in the country.
“There are some people that won’t go to casinos and (casinos) never captured that market,” Kalm said. “A lot of it has to do with the younger demographic, the 25- to 35-year-olds that are very comfortable using technology.”
New Jersey, with a similar population to Michigan, in October 2020 saw $803 million wagered via sports betting, of which 92 percent was done via mobile app. Revenue on sports betting tallied $58.5 million for that month. The state has seen more than $4 billion placed on sports bets for the entire year.
“We fully expect Michigan to be successful just given the pent-up demand from operators and suppliers in the state but also the end customer — the Michigan residents, I think, will be excited to have some really cool products that they can play on,” said Max Bichsel, vice president of U.S. business for Gambling.com Group, which does digital marketing for the global online gaming industry.
The company has launched an affiliate website to cover online gaming in Michigan called GreatLakesStakes.com
In a report from The Gambling.com Group, the organization predicted that Michigan would skyrocket to No. 3 for online gaming revenue in 2021, behind Pennsylvania and New Jersey.
“Look at a nearby state like Illinois, which has only been live with online sports betting for a little while as Governor (J.B.) Pritzker has removed the requirement for on-site registration. They’re taking almost half a billion dollars in bets in October,” Bichsel said. “You take that to a state like Michigan — where it has online casinos and online sports with no on-property registration requirement — and I think the numbers will be pretty impressive, pretty quickly.”