MGCB Budget Is Tight With Casino Closures, Could Impact Online Gaming

Another month, another empty revenue report.

The Michigan Gaming Control Board (MGCB) released another blank revenue report for July after Tuesday’s regular meeting.

While good news is on the horizon with last week’s reopening of Detroit’s casinos, the financial trouble presents concerning writing on the wall.

Aggregate revenue for Detroit’s casinos is down 65% through July compared to 2019.

That loss of revenue will be impactful for the 2020-21 fiscal year, as Executive Director Richard Kalm detailed Tuesday.

“The real meat of this is going to hit us on Oct. 1 when we’re going to try and figure out what we’re going to do with our next budget and how we’re going to administer online gaming with the amount of people that we may or may not have,” Kalm said of the upcoming new fiscal year.

The ugly numbers from Detroit’s casinos

Through July, Detroit’s casinos have brought in $854.4 million. Last year, in July alone, Michigan recorded $119 million in aggregate revenue.

Through July 31 this year, the casinos paid $24.2 million in gaming taxes to the state, down 65% from a year ago when they had paid $69.2 million by this point.

As for Detroit, the casinos have paid $35.6 million to the city in taxes compared to $101.7 million through seven months of 2019. That’s a budget hole of $66.1 million for an ailing city to deal with.

Not to mention the regulators themselves.

“There is going to be an impact,” Kalm said. “We’re probably not going to be as affected by the impact as general fund state departments.

“But we certainly have made several moves to try and make our budget whole.”

Budget cuts could impact online gambling enforcement

With a public hearing expected next month, online gambling in Michigan is still on track for a 2020 launch.

However, the COVID-19 pandemic could impact regulatory budgets for the next fiscal year, which starts Oct. 1. That’s right near the latest estimate for the launch of online sports gambling.

Kalm said some MGCB staff members have been moved to the Unemployment Insurance Agency to help during the pandemic.

“But we believe that we are going to be able to get reimbursed to help cushion our budget,” Kalm said.

In addition, compensation for Michigan State Police officers assigned to casinos was moved to the general fund during closures.

The attorney general eliminated two MGCB positions temporarily, Kalm said. He expects them to be reinstated in the next fiscal year.

“We think we’re going to be OK for this fiscal year,” Kalm said. “It’ll be next fiscal year beginning in October where we’re really going to have to figure out whether we’re going to keep the same amount of personnel, or adjust those new personnel accordingly for the new programming for online gambling.”

Shut down of charitable gaming events adds to pain

During the pandemic, there have been no charitable gaming events. That’s a chunk of missed revenue for the board, which assigns 22 full-time employees to them.

“Those FTE’s are threatened,” Kalm said. “We don’t anticipate there’s going to be charitable poker or an appreciable amount of charitable ticket sales, which is how we get our budget for that, for lottery, in the short term.”

Kalm said those positions could be shifted to online gaming licensing staff. He also said the board has cut training programs because of a statewide travel moratorium on state employees.

“We’re working every day to try and keep this budget whole,” Kalm said.