Michigan Online Casinos Blowing Out Sports Betting In Creating Tax Revenue
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Legal sports betting and online sports betting continue to experience consistent upward trends in the United States.
Out of all the states in this country, only six provide some form of iGaming, whereas online sports betting is available in dozens of states.
Online sports betting and online casinos were both legalized in Michigan, with both services launching on January 22, 2021.
The past 15 months have revealed that online casinos generate significantly higher state and local tax revenue compared to online sports betting.
Michigan online casino revenue sets record in April
On Tuesday, the April 2024 revenue figures were unveiled by the Michigan Gaming Control Board, revealing a noticeable disparity in tax revenue between online sports betting and online casinos.
In the state, the handle from online sports betting exceeded $371 million, yet the total revenue fell just short of $17 million.
In Michigan, the 8.4% tax rate resulted in generating slightly more than $944,000 for statewide taxes and approximately $600,000 for city and local taxes.
In terms of internet gaming, Michigan achieved a remarkable milestone by generating a revenue of $132.4 million in a single month.
The state collects 70% of the overall tax revenue generated by commercial operators and 80% of the total payment made by tribal operators in the realm of online gaming. The tax and payment rates vary between 20% and 28%, depending on the yearly adjusted gross receipts.
In April alone, Michigan set new records by collecting $24.3 million in state taxes and $6.6 million in city/local taxes from internet gaming.
Online casinos are generating almost 2,600% more revenue in state taxes compared to online sports betting. Additionally, in terms of local taxes, online casinos are generating just over 1,100% more revenue.
Michigan iGaming tax revenue well ahead of sports betting all-time
The tax figures have seen a significant difference since the launch of both online products in late January 2021.
State taxes from online sports betting have accumulated a substantial $10.8 million, while local taxes have reached nearly $6 million.
Over its entire existence, internet gaming has generated a total of $290.6 million in state taxes and $112 million in local taxes.
The variance in state taxes amounts to a staggering 2,700%, while the difference in local taxes reaches an astounding 1,900%.
Take into account that the cumulative state tax revenue from online sports betting is less than half of the amount generated solely by internet gaming in April 2024.
All 15 online sports betting operators combined have raised less in state taxes all-time compared to the total amount raised by six different online casino operators, namely BetMGM, FanDuel, DraftKings, BetRivers, Golden Nugget, and WynnBet/Caesars.
In April 2024, BetMGM Michigan contributed a substantial amount of $8.8 million in state taxes, coming close to the record-breaking total for sports betting.
Michigan in elite company
At present, iGaming is only available in six states across the country. While Nevada solely provides online poker, the remaining four states, including Michigan, offer a broader range of online casino games.
- Delaware
- New Jersey
- Pennsylvania
- West Virginia
Since 2019, Pennsylvania has been conducting online operations, resulting in online casinos generating $424.4 million in tax revenue, whereas sports betting tax revenue amounted to $160 million. It is worth noting that retail sports betting was introduced in Pennsylvania in 2018.
Online casinos in New Jersey have accumulated a remarkable $658 million in state tax revenue, while the combination of retail and online sports betting has contributed a noteworthy $249.2 million in tax revenue.
Legalizing online casinos and internet gaming undoubtedly provides a significant boost to state and local tax revenue.
Other states should consider emulating Michigan’s approach in legalizing both forms of gambling, particularly those aiming to introduce online sports betting.
