An Interview with Michigan Representative Brandt Iden Who Has Spearheaded the State's Recent Efforts to Legalize Online Gaming and Sports Betting

STEVE RUDDOCK: Rep. Iden, thank you for taking the time to speak with us. Before we delve into the legislative process in the state of Michigan, could you provide our readers with an overview of your legislative career and how gaming became one of your areas of focus?

REP. BRANDT IDEN: Sure. I'm in my third and final term in the statehouse. It's my fifth year, so I've got one year left with term limits in Michigan. I'm the current chair of the Ways and Means Committee, which is basically where all the bills that require a secondary committee review in the House are sent before they go to the House floor.

About four years ago, I got involved with gaming because I had some interest in the Internet gaming piece. I'd seen what New Jersey had done, what Pennsylvania was looking at, and thought, there's a lot of folks who play on the Internet, who play poker on the Internet, who are involved in Internet gaming, but don't realize that it's illegal. I thought we could use consumer protections in the state, as well as [online gaming] providing a secondary opportunity for some additional tax revenue. At the time, we were looking at infrastructure funding and some other areas for increasing revenue without having to go down the road of tax increases. I thought gaming would be a good way to do it and protect folks at the same time. And I happen to be a consumer myself. I'm a gambler. I enjoy sports betting. I like craps. I thought this would be something interesting to get involved in. I just didn't know it was going to involve four years of my time.

It started with Internet gaming, but when PASPA [the Professional and Amateur Sports Protection Act] was repealed, we went down the track of sports betting as well as Internet gaming. It turned into a much larger, comprehensive gaming and consumer protection package of bills. Unfortunately, those bills were vetoed at the end of last year by the former governor. All those bills were widely bipartisan, supported by a large number of my colleagues. But we've had to start all over again [after the veto].

So here we are ten months later, working with a new governor, trying to educate her and her staff on what the package of bills does, why it's important to get the state up to speed with sports gaming because of what the other states around us are doing, as well as the consumer protection standpoint. We need to get them to understand the comprehensive nature of what we're trying to do. And that's really been the education process that I've undergone for the past ten months.

I believe that my colleagues are there. I've got a tremendous amount of bipartisan support with these bills. Democrat sponsors, Republican sponsors, and the bills have since been passed out of the Ways and Means Committee, and all but one were reported out of the full House.

As I continue to negotiate and have conversations with the administration as to what the next steps for the bills are going to look like, it's my intent to try and get these to the governor before the end of the year to get us up and running by next year. So, that's a quick speed dating version of what's happened over the past four years.

STEVE RUDDOCK: When you're crafting gaming legislation of this kind, what are the main areas of concern that you look at from a legal perspective?

REP. BRANDT IDEN: Michigan is very complex in terms of gaming. We've got 23 tribal casinos. We've got three commercial casinos. We've got a very robust brick and mortar lottery, as well as an Internet-based lottery. And we've got a number of constitutional provisions.

I had to deal with the tribal compacts, and Michigan has a lot of different compacts, some going back to 1993. Those tribes are compacted differently than tribes post-1993, what we call sort of the current compacts. So, you've got different sets of compacts, with different language.

Michigan also has a constitutional provision on expansion of gaming, because the three commercial casinos were established through a constitutional amendment referendum. So those were established under the secondary set of laws if you will—constitutional provisions with a very complex, very strict set of rules about how they can operate.

And then you've got the Internet lottery piece, which is the state's version of the gambling side of things. The online lottery was established five years ago, and so you've got that structure as well.

When I look at sort of the legal sphere, I have to take all of those different provisions into account and sort of blend those all together to try to come up with a comprehensive bill that fits all of those individual issues. And that is obviously very complex, and it certainly took a lot of time to get a bill drafted that the tribes can accept with their compact situation, and that the commercial casinos can accept as well. And then we have to try to get the state on board. And that piece of the puzzle—how all of those fit together with lotteries—has been problematic. It's been a very complex legal review of where we stand and where we've come since 1992 in the state of Michigan with gaming. And we've become a very large gaming state. And that's just the nature of where we're at with how robust the options are for the consumers in the marketplace.

STEVE RUDDOCK: And when the bills are first crafted, is there a legal office or other oversight that they go through? Someone or some office that signs off on the bill? Or are those concerns addressed more in the committee stages?

REP. BRANDT IDEN: Very good question. So, we have a number of check-stops for that. My chief of staff is an attorney. My policy director who oversees the policy for the Ways and Means Committee is as an attorney as well. And then we have a legislative services bureau, which does the bill drafting. And that's comprised of attorneys. Not to mention the stakeholders. They all have a strong legal background in their particular areas of interest. So, you know, I've got tribal law folks, and I've got folks on the commercial side of things. We certainly have a lot of legal minds reviewing things as we look at them. Interestingly enough, I'm not an attorney. My background is finance, I was on finance side of things before I came into the legislature. But I've certainly learned a tremendous amount in terms of gaming law over the course of the past five years.

STEVE RUDDOCK: Is there anything that sticks out specifically in terms of trying to get the stakeholders to reach a compromise that still fits within the legal framework you're constrained by?

REP. BRANDT IDEN: Yeah. So obviously not having any background in tribal gaming specifically, and not having any background in gaming at all, I learned that the specifics of tribal gaming are very unique. The compact situation is very unique and remember that the tribes are sovereign nations. So, the most challenging part, whether it be the gaming legislation or the sports betting legislation (you've seen this now) is we basically had to get the tribes to a point where they were able to feel comfortable waiving their sovereign immunity. They had to be comfortable with the idea of applying for state licensure to operate mobile, or any sort of Internet-based application. Whether it's mobile poker or sports betting, the question was, how do we allow the tribes to operate off-reservation, so they're able to participate in the same market space that the commercial casinos are able to participate in? We had to figure out a way to craft the bill that deals with that very complex issue and at the same time, get them to feel comfortable with the sovereign immunity piece.

So again, very complex and it took a tremendous amount of time. But what I believe we've come up with is a piece of legislation that all the stakeholders can agree to. And I'm confident, I continue to remain confident, that the governor will sign the legislation.

I also believe that this could be model legislation for other states with tribal gaming interests across the board. The states that have come online with sports betting and mobile applications, aside from New Mexico, which is kind of an outlier because of the way the tribe initiated sports betting on their own out there, don't possess tribal gaming interests. We haven't seen any states come on board that have a large tribal interest, and Michigan would really be one of the first. And I think one of the complexities to that legal question is, how do tribes participate in the same sphere as commercial casinos? And how does the state provide oversight to that when they are truly separate sovereign nations that operate games differently than the way that the commercials run gaming? If we're successful, which I do believe we will be with this piece of legislation, I believe it could be model legislation and provide a legal framework for how tribal gaming can interact with commercial gaming in other states and still provide for sports betting and mobile applications and all those other things.

Because again, that question remains, how do tribes participate in the marketplace off-reservation? And that's a key legal question that we really had to grapple with when crafting our legislation. I believe that we've at least got the tribes to the point where they are comfortable with the language. The governor's office is also comfortable with the language as it relates to that legal question. I think we've solved the problem. I think there are greater things that we're still debating in terms of tax rates and other things with the legislation. But with the complexities involved around the coexistence of tribal and commercial gaming interests, I think it's resolved. So, it would be very interesting to see, again, if this becomes law, if our legislation is adopted in a similar way in other states dealing with these same issues and legal question.

STEVE RUDDOCK: Your sports betting and online gaming legislation offers tribes two options. They can choose to enter into an agreement with the state as a commercial operator, or they could renegotiate their compact. And if I recall correctly, one of the sticking points in the past was a concern from tribal gaming interests that during the compact renegotiation process, commercial casinos would get a head start?

REP. BRANDT IDEN: Great memory. Those were some of the questions that were involved. And yes, at any point in time a tribe could go in for a compact amendment to be able to sort of deal with that. I think that there are a lot of concerns whenever you go in for a compact amendment. The tribes get very concerned about the multitude of changes which could come into effect. So, a tribal compact amendment is really the last place that they want to go.

What we were able to do, and this sort of speaks to your point about participating as a commercial operator is give them a separate option. In our legislation tribes can apply for separate state licensure, through the gaming control board, which would grant them the ability to offer online gaming—poker, casino, sports betting—depending on what the governor signs in the end. The separate licensure is exclusive to online gambling and the process is the same process the commercial casinos would have to go through with the state.

They'd have the oversight of gaming control for online gambling. It would be very confined to the specifics of online games. That's the only sort of state oversight that gaming control would have over tribal gaming operators. So, it's a separate license that they would apply for, just like the commercials have to, and they would agree to be regulated just like the commercial casinos. This is obviously something new for the tribes because they're not currently regulated in that structure. This structure of licensure would provide for your example of treating them like a commercial casino. That's basically what that was, and what the separate licensure was designed to do.

STEVE RUDDOCK: When you're crafting legislation for your state you also have to consider federal laws, and there's a bit of murkiness regarding the Wire Act at the moment. Not to mention there are several other federal laws that apply to gaming (UIGEA [Unlawful Internet Gambling Enforcement Act], IGRA [Indian Gaming Regulatory Act], and IGBA [Illegal Gambling Businesses Act]) that have to be considered. How does that fit into the state's plans for gaming expansions or gaming?

REP. BRANDT IDEN: Excellent question, and one that legal scholars and legislators like myself are really sort of debating what happens next. First and foremost, I think it's sort of two separate things. One, I always tell legislators when the question gets asked, don't be afraid of the Wire Act. I tell them you can still do in-state betting. You can still proceed with legislation. Plenty of other states are doing it, and the federal government is not jumping in. In this particular case, the DOJ [Department of Justice] has gone back and forth on these opinions. They're in, they're out. I don't think the federal government knows what they're doing. It's frustrating to sort of say that as a lawmaker, but I do hang my hat on the belief that this is not an issue that they're really going to go after states on.

Second, the more states that come on board, the less that becomes an issue. And I actually believe that sometime in the future, it might be three years, five years down the road, there will be changes to the Wire Act as it relates to interstate gaming. I don't believe changes to the Wire Act are coming during my legislative career, but I do know that there are entities that are out there looking at that because that's the next step to this, especially as more states come online. But again, as I started with, the more states offering online gaming, the harder it is for the federal government to do anything. With each new state what will happen is there will be tremendous backlash from those governors, from those states.

If the federal government were to try to change something that they've already implemented, the Supreme Court was very clear in saying that this is a states' rights issue. Gaming has always been a states' rights issue. So, I do believe the Wire Act will be the next question perhaps for the Supreme Court, as it relates to gaming issues. And I believe that you'll probably see changes to it in the future as well. So again, I tell legislators, don't be scared about dealing with it just because these questions are out there about the Wire Act. Yes, that's important. Yes, we have to look at it. We have to deal with it. It's a part of the conversation, but it can't be a reason to not act. In my opinion, it can't be a barrier for entry for states, because we just haven't seen where the federal government is taking any action. It's sort of like what's going on in the cannabis world with state legislatures. There are a lot of differences and a lot of different nuances, but as it relates to the legal question; if the federal government isn't going to step in and take any action, then I don't see what the problem is. I guess that's sort of my take on it.

STEVE RUDDOCK: There's also been some outside groups that have questioned if online gambling is permissible under Michigan law without the constitutional amendment you mentioned earlier. Do these threats have any impact on legislative efforts? Is the threat of legal action something that weighs on a legislator's mind?

REP. BRANDT IDEN: You know, I think four years ago when we started this conversation that that was a key component of it. There was this movement at the state level by certain interest groups to stop online gaming from happening. As we've seen more and more states come online that question has sort of gone away. You've got Illinois, and even though it's a bit of a complicated mess over there, Illinois passed a bill. You've got Indiana, which is up and running with mobile betting. From what I hear, Ohio is close. And you have sports betting and online gaming in Canada. Michigan is surrounded by sports gaming and mobile gaming. I tell my colleagues, I don't think at this point in time it's really a relevant question anymore because they haven't seen those interests go in and try to do battle, if you will, at the legal level on that issue in other states.

I do believe it was a real issue when we were at the forefront of this discussion four years ago, when Michigan was at the head of that. But now, as time has passed and other states have come online, I just don't see it as a concern for my colleagues.

I'm certainly not worried about [it]. I absolutely believe that this is taking games which are already legally offered in the casino and offering them in a new way. This is not an expansion. It's simply a new platform in which to be able to game. We're not adding anything. We're not adding any casinos, especially in the state of Michigan. We very clearly said we're comfortable with the current level of gaming, which is a very important legal point. There won't be any independent retail operators outside of those that are already licensed. So, by that I mean you're not going to see a situation in Michigan where there'll be a new retail front for FanDuel where you could just walk into at the shopping mall or something and start placing bets. The only operators will be folks that are licensed or operate under current licensees such as MGM Detroit Motor City Casino, or Firekeepers Casino in Battle Creek. They would have to work with them. They could operate their sportsbook for them, but they have to work through an existing licensee. So, by that definition, there is no expansion.