How Michigan Online Casinos Reached $2 Billion In Revenue In Record Time

Online casino revenue in Michigan has surpassed the $2 billion milestone.

Becoming the fastest state to reach this milestone, it took just 20 months for the state to hit this mark.

Michigan’s launch of internet gaming in January 2021 clearly demonstrated its superior preparedness, as it outpaced its closest competitor by nearly a year.

August’s online casino revenue numbers push past $2 billion all-time

The Michigan Gaming Control Board announced on Tuesday that the online casino revenue for August 2024 amounted to $130.9 million.

Since its launch 20 months ago, the state has accumulated a total iGaming revenue of $2,028,559,830.

New Jersey and Pennsylvania are the only two states that have achieved the remarkable feat of surpassing $2 billion in online casino revenue.

It took Pennsylvania 30 months to achieve this milestone, whereas New Jersey took a total of 81 months to reach the same point.

Michigan online casinos were ready at launch

How did Michigan manage to complete it much faster than the others?

On January 22, 2021, Michigan embraced the task of simultaneously introducing online sports betting and online casinos.

Michigan demonstrated that what could have been a disastrous venture was actually achievable.

Michigan launched 10 online sports betting platforms and introduced eight online casinos on its opening day.

The unanimous agreement among all tribal casinos to establish the online casino industry facilitated a smoother and successful launch.

The responsibility of preparing their products by launch day was given to the operators by the MGCB, along with the requirements and deadline. Subsequently, it was their duty to ensure that their platform was fully prepared for launch.

According to MGCB Deputy Director David Murley, we made an effort to collaborate with the industry by clearly communicating our requirements for licensing and offering incentives for early compliance. By doing so, we ensured that those who met the deadlines would be among the first to launch their operations. This approach proved highly effective as it facilitated the smooth progression of rule-making and licensing processes, ultimately leading to the swift introduction of internet gaming in Michigan.

What slowed New Jersey, Pennsylvania?

Upon its launch, Michigan seamlessly introduced new users to both the online casino and online sports betting products.

On launch day, Michigan was joined by prominent companies such as BetMGM, DraftKings, and FanDuel.

Users were able to benefit from numerous start-up promotions, thanks to the advertising efforts of well-known operators promoting their sports betting and online casino products.

In late November of 2013, online casinos were introduced in New Jersey. Initially, there were only five operators offering iGaming services.

After the introduction of online sports betting in the autumn of 2018, New Jersey experienced a surge in monthly revenue from online casinos.

In July 2019, Pennsylvania introduced online gaming, albeit with restricted choices in terms of operators and available games. However, online sports betting had commenced over a month prior to that.

The state experienced a slight delay in its operations due to the varying interpretations of the Wire Act. Initially, operators anticipated utilizing servers located in New Jersey to cater to Pennsylvania. However, they had to establish separate servers within Pennsylvania to ensure compliance with the regulations.

Reasonable tax rates for Michigan online gambling

The expansion of online sports betting across the nation has sparked intense debates on tax rates.

Michigan collected extensive input from the online casino industry prior to formulating its policy.

In Michigan, the tax rate varies based on a sliding scale. For monthly gross revenue below $4 million, the tax rate can be as low as 20%. However, for monthly gross revenue exceeding $12 million, the tax rate can reach up to 28%.

Operators in Pennsylvania face a tax rate of 54% on online slot machine games, while table games and poker are taxed at a rate of 16%.

All internet gaming revenue in New Jersey is subject to a 17.5% tax rate.

Michigan initially implemented a favorable promotional policy for its operators, enabling them to deduct a maximum of 10% of their gross receipts for promotional activities during the initial three years. However, this deduction gradually decreases to 6% in Year 4, 4% in Year 5, and eventually ceases to exist in Year 6 and subsequent years.