Economic & Social Impact of Online Gambling In Michigan in Year One

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Best known for its 3,288-mile coastline, the longest freshwater one in the US, Michigan may not have a reputation as a US gambling hotbed, yet, it is home to twenty-six land-based casinos. Moreover, pari-mutuel horse wagering has been legal in the Great Lake State for almost ninety years, and the local government has allowed charitable gaming and lotteries since the 1970s.

In 2019, Michigan’s Governor Gretchen Whitmer signed House Bills 4916 and 4311 into law. The first permitted sports betting in the state, and the latter, referred to as the Lawful Internet Gaming Act (LIGA), authorized internet gaming, plus online poker. Naturally, the Michigan Gaming Control Board (MGCB) became the body designated to set and promulgate the rules that became mandatory for Michigan internet’s gaming operators.

According to the MGCB, in 2021, when the mentioned laws came into power, Michigan became the first US state in history to generate over a billion dollars from online poker and casino games in its debut year. It is only the third US territory to do so. Casino-style online gaming created $1.114 billion (keeping $1 billion) in revenues last year in Michigan. While sports betting was responsible for $292 million in gross receipts, raking in from over $3.7 billion in wagers placed. However, gambling companies in the state only kept $110.6 million in adjusted receipts.

These impressive numbers were produced even though LIGA permits online operators to partner with only one brick-and-mortar establishment (including tribal ones) per vertical. Hence the offer of native interactive gaming platforms is not vast here and not competitive with highly reputable top-paying sites in the USA operating from various foreign countries.

The Gambling Tax Revenue Influx Attained in 2021

In January 2022, gambling analyst Matt Schoch claimed that online casinos brought over $200 million in state tax revenues. Now, the accurate number seems to be somewhere in the neighborhood of $209 million. Reports show that the online casino sector paid $201 million to the state in taxes and $55 million to Detroit. The monthly averages came to $17 to $20 million for the state and $3 to $5 million for the city.

On the other hand, mobile sports betting paid out $4.1 million in taxes to the city of Detroit. Plus $7.3 million to the state. November 2021 represented the most profitable 2021 month for sports betting operators, with a handle of $484.6 million, an improvement of $11.2 million from the November 2021 figure. Nevertheless, December’s revenue numbers totaled $34.8 million, down from the $54 million November produced.

In Michigan, commercial casinos pay a 5.8% state tax and a 2.6% city one, a 70/30 split, while tribal operators only pay an 8.4% state tax on funds accumulated from sports wagering. The FanDuel Sportsbook, working with the MotorCity Casino Hotel, was the most successful Michigan mobile sportsbook with gross sports betting receipts of $93 million, paying the state $3.075 million in taxes.

On the online casino side, revenues get taxed at 20-28% based on earnings. BetMGM partnered with MGM Grand Detroit casino, posted 37.3% of Michigan’s online casino revenues in 2021, paying over $50 million in taxes.

The tax allocation for operators based in Detroit is as follows. As discussed, 30% of their gathered tax revenues go to the city, 5% to the Michigan Agriculture Equine Industry Development Fund, and 65% to Michigan’s Internet Sports Betting and Internet Gaming Funds.

Gambling Addiction Concerns Rise

While gambling, in general, may not be new for Michiganians, many argued that state lawmakers allowing the state to become the fifteen US territory to legalize online betting and casino fun would cause problem gambling rates to go up. Their concerns were proven accurate as, in February 2020, the state’s gambling hotline received 213 calls. A month into internet betting launch in Michigan, February 2021, this hotline took in 563 calls, more than double the previous amount. In total, in the entire 2021 calendar year, the state marked 4,463 calls to its problem gambling helpline, nearly triple the amount received in 2020.

That is data collected from the Michigan Department of Health and Human Services. A stat that many also took issue with is that of the gathered gambling-related taxes, only a million dollars went to the Compulsive Gaming Prevention Fund. That is one-fifth of the organization’s annual budget. An undisclosed part of this sum got designated to support Michigan’s Problem Gambling Hotline. Going by projections from various interest groups, around 300,000 people, or 3% of Michigan’s population, can now get classified as problem gamblers.

Undoubtedly, gambling addiction rates in Michigan will grow in the coming years. Hence, the MGCB has put options for people to self-exclude from one to five years and limit their betting activity.

This article was written in collaboration with iGaming analysts from onlineunitedstatescasinos.


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