Michigan online gamblers may not realize it, but some of the taxes on their casino, poker, and sports bets go to help horses and the horse racing industry. Soon, those bettors may be doing even more to help – without it raising tax rates on them or their favorite sites.
That’s because two bills are headed to Gov. Gretchen Whitmer, whose signature would create laws that increase deposits into the Agriculture Equine Industry Development Fund (AEIDF).
How Michigan Online Gamblers Help Horses Now
At the moment, Michigan online casinos and sportsbooks contribute far more tax dollars to the fund than do taxes on horse racing betting. That may change as online gambling sites expand into horse racing wagering.
During 2021, taxes on horse racing betting generated $3.1 million in tax revenue, according to the Michigan Gaming Control Board (MGCB). That $3.1 contributed to the fund, as did $4.5 million in tax revenue from online casino and poker gambling. Then online sportsbooks added $412,498, the MGCB said.
That meant Michiganders provided $8.2 million to the AEIDF in 2021.
Numbers aren’t yet available for 2022.
If Whitmer approves amending the law, more tax revenue may enter that fund next year.
MGCB described the fund:
The AEIDF promotes economic development by providing funding in Michigan’s rural areas. It supports the breeding of horses in Michigan, supports research beneficial to the industry, and promotes horse racing and other equine competitions in the state. The AEIDF also supports MGCB’s regulatory expenses, including race personnel, licensing, and blood testing.
MGCB Communications Specialist Mary Kay Bean tells MichiganSharp:
Northville Downs is the only Michigan horse racing track regulated by the MGCB. Fairgrounds tracks in Michigan are not regulated by the MGCB.
The AEIDF Benefits from Commercial Casino Taxes
Those bills would amend a current AEIDF finance formula that taxes Michigan’s non-tribal online gambling revenue.
Out of the sites paired with Michigan’s 15 online gambling license holders, only Barstool Sportsbook and Casino, BetMGM, and FanDuel partner with commercial operators specified in the law these bills may amend. Their retail casino licenses hail from Hollywood Casino at Greektown, MGM Grand Detroit Hotel and Casino, and MotorCity Casino Hotel, respectively.
The proposed amendments are perhaps best described for Michigan online gamblers by state Rep. Julie Alexander, R-Hanover, who introduced HB 4823 on May 11, 2021. That same day, state Rep. Kevin Hertel, D-St. Clair Shores, sponsored HB 4824.
Alexander wrote about the proposed legislation on June 2, 2021, when the House passed both bills:
Currently, 5% of tax revenue raised from sports betting and internet gaming at commercial casinos is deposited into the AEIDF, up to $3 million each from sports betting and internet gaming. Any amount beyond $3 million in a year must revert to the Internet Sports Betting Fund or the Internet Gaming Fund, respectively. Alexander’s plan would remove the $3 million maximum for both sports betting and internet gaming.
Yesterday, during the last day of the Michigan Legislature session, senators approved HB 4823, to amend iGaming, and HB 4824, to end the cap on sports betting tax contributions.
For perspective, the fund’s 2021 portion of state online casino, poker, and sports betting tax revenue of nearly $5 million is a single-digit fraction of the $209 million Michigan online gamblers helped create last year. It’s a little more than 2%.
The Operators Adding to the AEIDF
Every month, MichiganSharp reports on Michigan’s online gambling revenue.
In October, Barstool’s online casino generated $4.6 million in gross gaming revenue (GGR).
BetMGM was the top online casino site, with GGR of $52 million. FanDuel Casino was No. 2, at $23 million.
Those are the only sites creating tax revenue relevant to the bills on their way to Whitmer. The bills don’t call for tax increases on any of them or even a change to the 5% of their tax revenue going to the fund.
If the amendments become law, the change would allow the AEIDF to keep the tax revenue rather than redirect it if it exceeds $3 million for each form of online gambling tax revenue coming from commercial operators.