Schools, First Responders Among Beneficiaries Of Michigan Online Gambling Tax Revenue

The revenue figures from Michigan’s online casinos and sportsbooks are benefiting not only the gaming operators but also other entities involved.

The state’s thriving gaming industry also brings benefits to Michigan’s schools and first responders.

Since its launch in January 2021, online gambling has contributed over $300 million in tax revenue to the state. These funds are allocated to various purposes, with a significant portion designated for the state’s School Aid Fund.

Even though you may have experienced losses, they can still serve as a source of help for those in need. Your unfortunate circumstances might contribute to providing educational resources or nourishment for a child.

Let’s explore further the allocation and calculation of tax revenue funds.

Where Michigan online gambling tax revenue goes

A significant portion of the tax revenue is allocated to a limited number of diverse funds, resulting in a broad distribution.

Here’s some additional information about each of these funds and how the tax revenue is allocated annually.

Internet Gaming (online casinos and poker) Fund

• The amount of $500,000 will be allocated to the Compulsive Gaming Prevention Fund.
• The First Responder Presumed Coverage Fund will receive a donation of $2 million.
• The expenses related to the regulation and enforcement of internet gaming in accordance with the Internet Gaming Act by the Michigan Gaming Control Board.
• If the city of Detroit receives less than $183 million in gaming related tax revenue for the previous fiscal year, a payment is made to the city. Nevertheless, the amount of this payment is always capped at 55% of the total gaming tax deposited in the Internet Gaming Fund, minus the 30% internet gaming tax revenue received by the city.
• At the conclusion of the fiscal year, the School Aid Fund receives the remaining balance.

Internet Sports Betting Fund

With the exception of the payment to the city of Detroit, this fund allocates the money almost evenly across other areas.

• The Compulsive Gaming Prevention Fund will receive a donation of $500,000.
• The First Responder Presumed Coverage Fund will receive a total of $2 million.
• The Internet Gaming Act necessitates spending by MGCB to regulate and enforce internet sports betting.
• At the end of the fiscal year, the School Aid Fund receives the remaining balance.

Fantasy Contest Fund

The fund is relatively uncomplicated and direct, with the MGCB using its expenditures for the regulation and enforcement of fantasy contests. The remaining funds are allocated to the School Aid Fund.

Michigan Strategic Fund

In 1984, the MSF was established with the objective of facilitating economic growth and employment opportunities within Michigan. The tax revenue allocated to the MSF is utilized to support the achievement of these objectives.

School Aid Fund

The funding provided by the Michigan School Aid Fund supports a diverse range of programs within K-12 schools throughout the state. These programs include:

• Per-pupil foundation allowance
• Special education
• At-risk programs
• Early childhood education
• Adult education
• Intermediate school districts
• Public school Academies
• Vision and hearing screenings
• Grants for the No Child Left Behind program
• Federal grants
• School lunches and breakfasts
• Vocational education
• Assessments

Record-setting revenue payments

Michigan’s online casino revenue is consistently breaking monthly records, resulting in a correspondingly unprecedented surge in tax revenue for the state.

Michigan’s online casinos emerged as significant contributors to tax revenue, with state taxes reaching $24.3 million and local taxes amounting to $6.6 million in April 2024. This places Michigan’s internet gaming industry among the leading sources of tax income nationwide.

Michigan has amassed more than $300 million in state tax revenue since the legalization of online sports betting and gaming in January 2021.

The Michigan Lottery has proven to be a significant source of tax revenue for the state, with its contributions reaching new heights in the 2021 fiscal year. During this period, the Michigan Lottery made a historic payment of more than $1.419 billion to the Michigan School Aid Fund.

The Michigan Lottery has contributed over $26 billion to the School Aid Fund since 1972.

Breaking down the actual Michigan taxes

Tax revenue is collected by the state from online casinos, online sportsbooks, and fantasy contests in Michigan.

There are distinct tax rates and allocations for every category, determining the destination of the tax funds. Additionally, online casinos and sports betting have an additional differentiation between non-tribal operators and tribal operators.

Below is the breakdown for each of the three categories.

Online casinos and poker

Internet gaming generates almost 27 times more tax revenue than sports betting, surpassing the other two options by a significant margin.

Tax rates for internet gaming vary between 20% and 28%, determined by the yearly adjusted gross receipts.

Here is the breakdown of taxes for operators who are not affiliated with any tribe:

• Internet Gaming Fund: 65%
• City of Detroit: 30%
• The Agriculture Equine Industry Development Fund (AEIDF) offers a 5% funding opportunity, limited to a maximum of $3 million.

This is where the tax revenue goes for tribal operators.

• Internet Gaming Fund: 70%
• Local Governing Body: 20%
• Michigan Strategic Fund: 10%

Online sports betting

Adjusted gross sports betting receipts are subject to an 8.4% tax rate in internet sports betting.

Non-tribal operators experience a similar distribution of taxes as internet gaming.

• 65% allocation to the Internet Sports Betting Fund.
• City of Detroit: 30%
• The AEIDF offers a 5% interest rate, with a maximum limit of $3 million.

In terms of tribal operators, the situation diverges from online casino tax revenue.

• 90% of the funds allocated to the Internet Sports Betting Fund.
• Michigan Strategic Fund: 10%

Fantasy contests

Fantasy contests are generally simple and easy to understand.

The fantasy contest adjusted revenue is subject to an 8.4% tax rate.

All of the tax revenue is directed towards the Fantasy Contest Fund.