According to the Michigan Gaming Control Board, the state received $7.3 million in tax revenue, and the City of Detroit received $4.1 million in taxes from online sports betting in 2021. Tribal revenue share is estimated to provide an additional $520 million to the state. The total will be confirmed in April 2022. A bill (HB 4823) brought to the legislature in mid-2021 would change how the tax revenue is divided.
Online casinos paid out the majority of that tax revenue, representing nearly 98% of the total tax revenue. Currently, the state revenue is split between the Michigan Agriculture Equine Industry Development Fund and the Michigan Internet Sports Betting Fund, also called the Michigan Internet Gaming Fund.
The Michigan AEIDF fund can only receive 5% or up to $3 million a year. Any funds beyond that amount would automatically go to the Michigan Internet Sports Betting Fund. With the state’s first year of online gambling breaking records and becoming the third state in US history to generate more than $1 billion in annual revenue from online gaming and the first to do so in its first year, there has been a push to change the limit.
Big Bucks: Michigan Casino Revenue Tops $1.2 Billion In 2021
Changing Tax Revenue Use
Rep. Julie Alexander, chair of the House Committee on Agriculture, introduced the bill in May 2021.
“The agriculture industry employs many skilled and hard-working Michigan residents, and horse farms are no exception,” Rep. Alexander said. “…the plan will remove the arbitrary cap on this support for horse breeders and owners – growing our agriculture economy without raising taxes. Supporting Michigan farms and farmers is one of my major priorities.”
Supporters of changing the tax agree with Rep. Alexander, stating that limiting revenue directed to the AEIDF has a direct negative impact on the horse racing industry in Michigan. While horse racing has a long history in the state, distributed winnings have decreased. This has caused breeders to search for horses out of state. The hope is that by removing the cap, the AEIDF can better support in-state horse breeding programs and support the associated jobs.
The primary argument against the bill revolves around the same decline of the horse racing industry. It has been on a decline across the country for years due to concern over the animals’ wellbeing. Additionally, this year, the AEIDF only received $365,000 based on the current 5% split. Even though the state had a strong year, it will take many years to reach the $3 million a year cap.
Supported by Rep. Kevin Hertel, the bi-partisan bill passed in the House in June 2021. The bill is now with the Michigan Senate for consideration.