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

Michigan has crossed the $2 billion mark when it comes to online casino revenue.

It took the state just 20 months to hit this mark, becoming the fastest state to reach this milestone.

Beating its nearest competitor by nearly a year, it’s clear Michigan was well prepared for internet gaming upon its launch in January of 2021.

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

On Tuesday, the Michigan Gaming Control Board reported $130.9 million in online casino revenue for August of 2022.

That puts the state at $2,028,559,830 all-time for iGaming revenue since launching 20 months ago.

Only two other states have the distinction of reaching $2 billion in online casino revenue – New Jersey and Pennsylvania.

Pennsylvania needed 30 months to reach this milestone, while New Jersey needed a total of 81 months to get there.

Michigan online casinos were ready at launch

Why was Michigan able to do it so much quicker than the others?

Michigan took on the challenge to launch online sports betting and online casinos on the same day: Jan. 22, 2021.

What could have been a disastrous venture, Michigan proved it could be done.

On opening day, Michigan had 10 online sports betting platforms and eight online casinos go live.

With all tribal casinos in mutual agreement to get the online casino industry up and running, it made the groundwork easier for a successful launch.

The MGCB also put the responsibility on the operators to get their products ready by launch day by giving them the requirements and the date. From there, it was up to them to make sure their platform was good to go.

“I think we tried to really work with the industry by telling them, ‘Look, if this is what we need, in terms of say, licensing, this is what we need. And if you get it in by this time, you’ll be part of the first group that launches.’ Then we tried to incentivize the industry to get their stuff in and to talk to us to get these issues resolved. Knowing then that, if they did that, then they weren’t going to be left behind,” said MGCB Deputy Director David Murley said. “I think that was very successful. It allowed us to move this stuff through the rules and everything else with the licensing, and get internet gaming launched in Michigan very, very quickly.”

What slowed New Jersey, Pennsylvania?

Michigan was able to immediately introduce new users to both the online casino and online sports betting products upon launch.

Michigan also had the big names like BetMGM, DraftKings and FanDuel on board on launch day.

With those popular operators advertising their sports betting and online casino product, it was able to offer a lot of start-up promotions to users.

New Jersey actually launched online casinos in late November of 2013. Upon launch, it had just five operators available and was only for iGaming.

Once online sports betting started in the fall of 2018, New Jersey started to see a boost in monthly online casino revenue.

Pennsylvania launched online gaming in July of 2019, but had limited options as well, both in terms of operators and available games. Online sports betting had already launched more than a month earlier.

Wire Act interpretations caused a bit of a slow start for the state, as operators originally believed they would be able to use servers in New Jersey to operate in Pennsylvania. They then had to set up separate servers in Pennsylvania to pass regulation.

Reasonable tax rates for Michigan online gambling

Tax rates have been a hot-button issue as more states expand into online sports betting around the country.

When it comes to online casinos, Michigan took in a lot of feedback from the industry before establishing its policy.

Michigan has a sliding scale for tax rate. It is as low as 20% for gross revenue less than $4 million each month. It gets as high as 28% for gross revenue greater than $12 million.

In Pennsylvania, operators are taxed 54% on online slot machine games and 16% on table games and poker.

New Jersey has a 17.5% tax rate on all internet gaming revenue.

Michigan also launched with a favorable promotional policy for its operators. For the first three years of operation, they were able to deduct up to 10% of gross receipts for promotional purposes. That shifts to 6% in Year 4, 4% in Year 5 and then disappearing in Year 6 and beyond.