Michigan Gambling Industry Among State’s Biggest Tax Contributors
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There’s no denying that the gambling industry in Michigan is flourishing.
Michigan’s online casinos are continuously achieving new revenue records, while the revenue generated by retail casinos is now comparable to levels seen before the pandemic.
Not only is it positive for the industry, but it also benefits the entire state of Michigan.
The state benefits greatly from the record tax revenue generated alongside the record-breaking overall revenue.
In total, the gambling industry in Michigan contributed approximately $2 billion to the state in 2024.
This places it in the category of the state’s top sources of tax revenue and funding income.
Breaking down Michigan gambling tax revenue
In terms of the funds returned to the state in 2024, let’s breakdown the various avenues within Michigan’s gambling industry.
- In 2024, Michigan’s online casinos made a significant financial contribution, with $289.2 million going towards state taxes and $77.8 million towards city taxes. Additionally, the governing bodies of jurisdictions received payments amounting to $32.8 million. Collectively, these contributions amounted to a substantial sum of $399.9 million.
- Michigan’s online sportsbooks generated $13.7 million in state taxes and $6.8 million in city taxes, resulting in a combined total of $20.5 million in tax contributions.
- The total amount of taxes paid by the three Detroit casinos was $257.4 million, consisting of $101.8 million in state taxes and $155.6 million in city taxes.
- The combined total of state and local taxes paid by the three Detroit retail sportsbooks for the year 2024 amounted to $1.6 million, with $711,087 going towards state taxes and $869,106 towards local taxes.
- In 2024, local entities received a total payment of $30.8 million from Michigan’s 23 tribal casinos.
- Michigan’s fantasy sports brought in a total of $1.4 million in tax revenue for the state.
- In fiscal year 2024, the Michigan Lottery made a significant contribution of $1.25 billion, the entirety of which directly benefits the Michigan School Aid Fund.
In total, a staggering amount of $1.96 billion is being reinvested into Michigan when combining all the individual contributions.
Michigan’s online casino tax revenue is set to increase by 27% in 2024, potentially exceeding $2 billion in state contributions for the year.
How much does Michigan collect in tax revenue?
In September of last year, Michigan’s tax revenue for the fiscal year 2020-21 was made public. This fiscal year spans from October 2020 to September 2021.
In total, the state’s state restricted tax revenue amounted to $38.9 billion.
Here is a collective overview of how those taxes appeared.
A diverse range of industries and tax contributors can be found within each category.
In addition, the report projected that the state’s tax revenue for fiscal year 2024-23 would reach $41.5 billion.
Where gambling tax revenue stacks up with other Michigan industries
$2 billion is a significant amount of money that has been contributed back to the state.
The gambling industry’s immense contribution establishes it as one of the primary revenue generators for the state.
In contrast, let’s examine other significant sectors in Michigan and their respective contributions to tax revenue during the fiscal year 2020-21.
The state is generating significant tax revenue from gambling, outpacing several major industries.
Where do Michigan gambling taxes go?
The funds in Michigan that receive money from gambling taxes are distributed across various categories.
Some of the funds that receive a significant portion of the tax revenue include:
- Internet Gaming Fund
- Internet Sports Betting Fund
- Fantasy Contest Fund
- Michigan Strategic Fund
- School Aid Fund
In addition to the fair share of total tax revenue received by the city of Detroit and local governing bodies, a small percentage of funds is allocated to the Agriculture Equine Industry Development Fund.
Although the specific purpose of those funds is not clearly defined, they are utilized to support other funds related to responsible gambling and first responders.
Since 1972, the Michigan Lottery has contributed over $27 billion in gambling tax revenue to the School Aid Fund, making it the primary beneficiary of these funds.
In the report, the gambling industry contributed more money to the School Aid Fund than any other tax labels, with only three exceptions.
- Sales Tax: $6.9 billion
- The total amount of income tax paid by individuals is $3.5 billion.
- The State Education Tax amounts to a total of $2.3 billion.
In total, the School Aid Fund collected a tax revenue of $16.1 billion for the fiscal year 2020-21.
