Michigan Gambling Industry Among State’s Biggest Tax Contributors

It’s hard to debate that the gambling industry in Michigan is thriving.

Michigan online casinos continue to set record revenue marks. Retail casino revenue is on par with pre-pandemic levels.

While it’s good news for the industry, it’s also good news for the state of Michigan as a whole.

With record revenue comes record tax revenue, which aids a lot of funds here in the state.

Altogether, Michigan’s gambling industry invested nearly $2 billion back into the state for 2022.

That puts it among the state’s greatest sources of tax revenue and funding income.

Breaking down Michigan gambling tax revenue

Michigan’s gambling industry has a number of different avenues, but here’s how it all breaks down in terms of money it gave back to the state in 2022.

• Online Casinos: Michigan online casinos contributed $289.2 million in state taxes and $77.8 million in city taxes in 2022. It also had $32.8 million in governing body of jurisdictions payments. Altogether that equates to $399.9 million.
• Online Sports Betting: Michigan’s online sportsbooks contributed $13.7 million in state taxes and $6.8 million in city taxes. That equals a total of $20.5 million.
• Detroit Casinos: The three Detroit casinos paid $101.8 million in state taxes. They also paid $155.6 million in city taxes. That makes a total of $257.4 million.
• Detroit Sportsbooks: The three Detroit retail sportsbooks paid $711,087 in state taxes and $869,106 in local taxes for 2022. That makes a total of $1.6 million.
• Tribal Casino Payment: Michigan’s 23 tribal casinos made a collective payment of $30.8 million to local entities in 2022.
• Fantasy Contests: Altogether, Michigan’s fantasy sports generated $1.4 million in tax revenue for the state.
• Michigan Lottery: For fiscal year 2022, the Michigan Lottery contributed $1.25 billion, all of which goes to the Michigan School Aid Fund.

When adding all the pieces together, that’s $1.96 billion in money going back into Michigan.

With Michigan online casino tax revenue on pace for a 27% increase in 2023, the state’s contributions next year could surpass $2 billion.

How much does Michigan collect in tax revenue?

Last September the state released the tax revenue for Michigan in fiscal year 2020-21. That timeline is October 2020-September 2021.

Altogether, the state recorded $38.9 billion in state restricted tax revenue.

Here’s how those taxes collectively looked.

*Each category features a variety of different industries and tax contributors.

That same report also estimated that fiscal year 2022-23 should amount to $41.5 billion in tax revenue for the state.

Where gambling tax revenue stacks up with other Michigan industries

Contributing nearly $2 billion back to the state is no small number.

It makes the gambling industry one of the biggest revenue sources for the state.

By comparison, here are some other notable industries in Michigan and what they contributed in tax revenue for FY 2020-21.

These are some pretty big industries that gambling is surpassing with tax revenue for the state.

Where do Michigan gambling taxes go?

The money raised through gambling taxes in Michigan is spread out to a number of different funds.

Among the funds that receive a lot of the taxes revenue are:

• Internet Gaming Fund
• Internet Sports Betting Fund
• Fantasy Contest Fund
• Michigan Strategic Fund
• School Aid Fund

The city of Detroit and local governing bodies also receive their fair share of the total tax revenue. The Agriculture Equine Industry Development Fund also receives a small percent of funds.

While those funds sound a bit vague, they are used to aid other funds that include responsible gambling and first responders.

The School Aid Fund is the largest recipient of gambling tax revenue. The Michigan Lottery alone has contributed more than $27 billion to it since 1972.

Only three tax labels provided more money to the School Aid Fund than the gambling industry in the report.

• Sales Tax: $6.9 billion
• Individual Income Tax: $3.5 billion
• State Education Tax: $2.3 billion

Altogether, the School Aid Fund received $16.1 billion in tax revenue for FY 2020-21.