Detroit Casinos’ Tax Revenue Plummets Nearly 60% During COVID-19 Pandemic

When a city’s arguably largest tax contributors post a nearly 60% year-over-year decline, it’s impossible for that depreciation to not have residual effects. That’s the situation with Detroit casino revenue right now.

The Motor City’s three commercial casinos are approaching a four-month shutdown because of COVID-19. For the city, that’s going to mean some difficult budgetary decisions.

The latest numbers on Detroit casino revenue

Overall tax revenue from all three casinos is down 59.4% through the first six months of this year. That’s compared to the same time period in 2019.

Tax payments to Detroit so far this year by Greektown, MGM Grand and MotorCity have totaled $35.6 million. When July began last year, the three had paid over $87.5 million. Detroit collects 10.9% of the casinos’ aggregate revenue.

For the individual casinos, the revenue percentages look a little better. MGM Grand’s $126.5 million is a 40% drop year-over-year. For Greektown ($70.1 million) and MotorCity ($102.6 million), it’s a 41% downfall.

Total adjusted gross revenue (AGR) from all three casinos year-over-year is down the same 59.4%, as they combined to pull in $735.4 million from January through June of 2019. Perhaps most troubling in this regard is that there doesn’t seem to be any end in sight.

Gov. Gretchen Whitmer hasn’t announced any kind of timeline for allowing commercial casinos to reopen. While the Michigan Gaming Control Board (MGCB) has readied protocols for that day, it all remains in Whitmer’s hands.

What might it look like when Detroit casinos do reopen?

Among the elements of the MGCB plans are pretty standard practices in the “new normal” for casinos nationwide. These include:

• Limited points of entry/exit
• Limited capacity of 15% of fire code
• No smoking or table games
• No indoor dining
• Mandatory face masks for employees and guests
• Alterations of gaming positions
• Mandatory temperature checks

The deciding factors for Whitmer will be the prevalence of positive tests and hospitalization rates around the state, not just in the Detroit metro area. It’s uncertain exactly what thresholds Whitmer considers acceptable to give the green light.

What is certain, however, is that the city’s coffers would prefer that happen as quickly as possible. Detroit leaders have already dealt with the harsh realities of a lack of funding.

Casino tax shortfall means budget cuts coming

Early in May, the city council estimated a loss of $348 million as compared to the city’s projections for the current year. To offset that, the council made cuts totaling $194 million.

Those cuts focused on summer recreation programs for the city’s youth, and demolition projects. The city has also cut hours and pay for many members of its 8,000-strong full-time staff.

Using funds reserved for emergencies and the federal government, Detroit has been able to keep its bills paid so far. Each day the casino shutdown lasts, however, is costing the city an estimated $600,000.

Should the shutdown endure well into its fourth month and beyond, the council may have to consider further cuts and/or shifting more funds from other sources to keep essential services ongoing. The cost of keeping Michiganders and others who would visit Detroit’s casinos safe is high. At the same time, gambling with lives could represent an even higher cost.