Michigan Internet Gaming Revenue Already Punching With US Heavyweights

When Gretchen Whitmer signed bills for expanded Michigan gambling in December 2019, the governor’s office issued a news release estimating the economic impact.

The Department of Treasury projected $19 million in new revenue as the state added internet gaming and sports betting.

Brandt Iden, then a state representative who pushed the legislation through Lansing in a years-long struggle, took those projections several steps further a few months later.

In an interview with Playinmichigan last summer, Iden said he believed that number could reach nine digits in the first full fiscal year, which starts this October.

Michigan, it turns out, should easily reach nine figures of state tax revenue just from internet gaming before that fiscal year even begins.

And the state is just getting started.

Internet gaming tax revenue will easily hit nine figures

Michigan has netted $35.6 million in state tax revenue in 69 reported days of internet gaming, which combines online casinos and online poker.

That’s more than $515,000 per day. At that rate, with 183 reporting days remaining until the next fiscal year begins Oct. 1, $94.4 million more would still be on the way.

That hypothetical haul would bring the state tax total to just under $130 million as the clock begins on Iden’s once lofty projections.

“It’s been great to see the interest,” Iden said Wednesday. “When I talk to people, they’re enjoying it, they’re playing safely. There’s a tremendous amount of money coming into the state.”

Iden also said there’s no indication the Michigan Lottery has taken a hit yet since the Jan. 22 launch of online gambling. The lottery impact was a key point of contention for the opposition during the lawmaking process.

Michigan approaching New Jersey, Pennsylvania already

There was belief around the Michigan market that the Great Lakes State could reach the upper echelon of internet gaming states fairly quickly.

But to be on the same level as New Jersey and Pennsylvania right away is a seismic start.

Michigan raised $95.1 million in total internet gaming revenue for March, according to numbers released Tuesday by the Michigan Gaming Control Board. The 69-day total is $204.2 million.

The March total already puts Michigan in the ballpark of the nation’s leading internet gaming states.

Last week, New Jersey reported $113.7 million in internet gaming revenue, and Pennsylvania tallied $97.7 million in revenue.

Both of those marks broke records, and by nearly 10% in New Jersey’s case.

For context, New Jersey launched internet gaming in November 2013, and Pennsylvania started in July 2019.

Michigan market had early advantages

Now, it’s fair to point out that Michigan gambling had some built-in economic impact advantages compared with the leaders.

For one, legislators and regulators leaned heavily on the laws and rules from other states while charting Michigan’s path forward.

So not only did operators have products more refined, with established results, but the actual framework is a conglomeration of what was established in other states.

While PA online casinos launched with only a handful of games, Michigan’s offerings were more robust.

The state’s leading operator, BetMGM Casino, launched with nearly 150 games.

The coronavirus pandemic also gave the internet gaming market an advantageous start. Casinos in the state are open, but are operating under capacity restrictions. It stands to reason that several would-be brick and mortar casino customers stayed home.

Reasons to believe in Michigan’s internet gaming growth

Although life inching back to normal this summer could boost retail casinos, there are still many reasons to believe Michigan’s internet gaming growth will continue.

Consider:

• Live-dealer action is coming. Live-dealer casino offerings were a game-changer in other states and should launch here this year. PlayTech and Evolution have live-dealer studio spaces in metro Detroit, with the latter hiring for positions there.
• Online poker will grow. Compacts with other states will grow the player pool down the line, as could additional operators.
• More casino games are coming. A blackjack variant, Spanish 21, was added to DraftKings offerings in New Jersey and will soon be in Michigan. Others will follow.
• More operators will launch. PointsBet has not yet launched its online casino, while FireKeepers, Parx Casino and Soaring Eagle have not yet launched any online gambling products. They are all expected to arrive this year.
• The focus will shift from sports betting. With Michigan sports betting in a relative offseason here until football begins, expect to see more market efforts shift to casino promotions. In addition, companies such as DraftKings are increasingly trying to cross-sell sports bettors with late-night “post-game” casino bonuses and casino games themed around sports.

Other states, especially ones with tribal gaming, are taking notice

Other states are aware of Michigan’s success, Iden said.

The former lawmaker is now a governmental liaison for Sportradar, a global sports data supplier.

In his role, Iden said other states are looking to follow the economic impact model for Michigan gambling, particularly where there are substantial tribal gaming interests.

In Michigan, the tribes came to the negotiating table, risking some of their overall gambling market positions to build a bigger pie to divide. Local taxes going back to the tribes from operators was one of the key pieces for moving legislation forward.

“’How do we integrate with the Michigan model to try to do something that works in our state?’” Iden said, referring to a question he’s been receiving. “That’s been a lot of the conversations I’ve been having, which has been fantastic to see people open to this and looking at it.”

As a result, neighbors such as Indiana, Ohio and Canada are seeing the returns from Michigan and are trying their own expansions, which could cut into the market.

“It’s because states see that revenue coming out of their state and going to a neighboring state and saying, ‘Look, we can do this too, and look at the massive amount of money this is bringing in.’”