Michigan Online Casino Boom Could Mean $80 Million More In 2023 State Tax Revenue

Written By Paul Costanzo on April 28, 2023
Michigan online casino tax revenue

Michigan online casinos are on pace to provide a record amount of tax revenue to the state.

Based on the first quarter of 2023, Playinmichigan is projecting the 15 online casinos in Michigan will collectively produce nearly $368 million in tax revenue this year. That would be a 27% increase from last year’s number, and well ahead of what online sports betting and casinos combined to pay in 2022.

Michigan’s fiscal year runs from October through September. Our projections are based on the calendar year.

What does Michigan online casino tax revenue pay for?

The biggest recipient of tax revenue from online gaming is education. It is technically at the end of the “priority” list for how money is distributed, but it still brings in the largest chunk.

To start, 65% of Internet gaming tax revenue from commercial operators – BetMGM, FanDuel and Barstool online casinos – and 70% from tribal operators goes into the Internet Gaming Fund.

Here’s how the rest is broken down:

  • 30% of commercial operator tax revenue to the City of Detroit
  • 5% up to $3 million of commercial operator tax revenue to the Agriculture Equine Industry Development Fund
  • 20% of tribal operator tax revenue to local governing bodies
  • 10% of tribal operator tax revenue to the Michigan Strategic Fund

The Internet Gaming Fund then pays out in this order:

  1. Payment to the City of Detroit IF the total gaming related tax revenue received by the City of Detroit falls below $183 million for the preceding fiscal year. However, the total of this payment can never be more than 55% of the total gaming tax deposited in the Internet Gaming Fund, minus the 30% internet gaming tax revenue received by the City of Detroit.
  2. MGCB’s regulation and enforcement of the Lawful Internet Gaming Act.
  3. MGCB’s administration and enforcement of millionaire party activity under the Bingo Act.
  4. $500,000 to the Compulsive Gaming Prevention Fund.
  5. $2 million to the First Responder Presumed Coverage Fund.
  6. Remaining balance to the School Aid Fund at fiscal year-end.

How much online casino tax money will go to Michigan schools?

Based on our projections, the Internet Gaming Fund will receive a little more than $254 million of the money collected in 2023. Of that, more than $200 million could be allocated to the School Aid Fund.

That means $200 million available for a variety of vital K-12 services, such as special education, early childhood education, school lunches and breakfasts, vision and hearing screenings and more.

There are about 1.45 million Michigan children enrolled in K-12 schools. With the money from online casinos – not including the Michigan Lottery or online sports betting – you could cover a year’s worth of school lunches for more than a quarter of them.

How did we come up with our projections?

The projection of $367,959,588 in online casino state tax is based on what was paid in the first three months of the year, and the quarterly growth from 2022. The combined payment from January, February and March 2023 was $82.4 million.

A year ago, Michigan online casinos made a total tax payment of $289 million. The Q1 payment in 2022 was $64.6 million.

It feels like an ambitious projection, but Michigan online casinos continue to blow away expectations.

The industry is showing no sign of slowing down. In fact, it’s doing the opposite. So, until that changes, there’s no reason to doubt a projection even when it feels quite lofty.

And, thanks to well-crafted legislation, that success could have a lasting positive impact in Michigan.

Photo by Shutterstock.com
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Paul Costanzo

Paul Costanzo is the managing editor of Playinmichigan, the No. 1 source for online gambling news in Michigan. He has covered news and sports throughout the state at various media outlets over the past 20 years. Paul works with a talented team at Playinmichigan to provide the latest news and information on Michigan’s booming sports betting, online casino and online poker industries.

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