Michigan appears poised to take a spot as one of the biggest legal online gambling markets in the US. Online casinos and sports betting could earn as much as $650 million in the first year of operations, according to analysis from MichiganSharp.com.
That $650 million projection would bring in more than $93 million in first-year tax revenue for the state. Michigan’s legal online gambling platforms could go live by the end of 2020.
Michigan Sharp evaluated several different sources in coming up with these projected numbers. Our analysis points to the possibility of the state realizing $400 million in sports betting revenue, along with another $250 million in online casino and poker revenue, in the first year.
See our complete guide to Michigan Online Gambling Revenue.
Michigan Sets Its Sights On Gambling Expansion
The effort to legalize sports betting and online gambling in Michigan lasted several years, and finally became reality in 2019.
House Bill 4916 passed in December 2019, giving the green light to legal sports betting (both retail and online), online casinos, and online poker. The legislation makes Michigan one of five US states to legalize all three online verticals of sports betting, casinos, and poker.
The Michigan Gaming Control Board (MGCB) oversees the approval and licensing procedures for potential sports betting and online gambling operators in the state. The MGCB began accepting applications for internet gambling and online sports betting licenses in July.
With the MGCB fast-tracking the approval and licensing process, the first of Michigan’s legal online gambling platforms could launch by the end of the year.
Online Gambling In Michigan: By The Numbers
Much like New Jersey and Pennsylvania, Michigan’s mobile gambling platforms will operate in partnership with the state’s land-based casinos. All of the state’s 26 retail casinos can apply for the opportunity to offer online gambling.
Michigan’s situation is unique, however, as both tribal and commercial casinos are eligible to apply for internet gambling and online sports betting licenses. The state hosts 23 tribal casinos, as well as three Detroit-based commercial casinos.
With both tribal and commercial casinos in the mix, the online gambling options available to Michigan’s 10-million population should be numerous when the industry reaches full maturity.
The state will tax gross gaming revenue from retail and online sports betting at an 8.4% rate, with commercial casinos paying an additional 1.25% tax to the city of Detroit. Online casino and poker revenue is taxed at 20-28%, using a tiered system based on revenue earned.
The tax rates levied on sports betting revenue puts Michigan in position as one of the most competitive US states in that category. Pennsylvania, which launched retail and online sports betting in 2019, taxes sports wagering revenue at 36%.
New Jersey taxes retail sports betting at 9.75%, and online sports betting at 13%. Indiana applies a 9.5% tax to legal sports betting, while Colorado levies 10% on its legal sportsbooks.
Michigan Government Officials Estimate $240-500 Million Annually
The competitive sports betting tax rate, combined with the number of potential operators, puts Michigan in a position to become one of the biggest legal online gambling markets in the US. With a population of 10-million and deep-rooted sports traditions, Michigan’s prospects in the sports betting industry appear bright.
Michigan Rep. Brandt Iden predicted that sports betting alone could bring in as much as $500 million annually in revenue. Other revenue estimates for sports betting included $240 million for the high end of projections from the Michigan Senate Fiscal Agency.
Both Iden and the Michigan Senate Fiscal Agency projected numbers within a range of $240-$270 million for annual online casino and poker revenue.
Online Gambling And Sports Betting Revenue of $650M In First Year, According To MichiganSharp
With these numbers, as well as a range of other projected figures in mind, MichiganSharp projects that Michigan’s legal online casino and poker platforms could earn $250 million in first-year revenue, resulting in an estimated $60 million in tax earnings for the state.
MichiganSharp’s sports betting projections point to big potential numbers for Michigan’s first year in the market. We considered the projected figures from Iden, the Senate Fiscal Agency, the Michigan Department of the Treasury, and other Michigan-based sources.
Additionally, MichiganSharp evaluated the first-year revenue figures for legal sports betting in Pennsylvania, as well as other similar domestic and international markets.
With those figures in mind, MichiganSharp projects that sports betting in Michigan could bring in $400 in first-year revenue after online sports betting launches. This projection would bring in nearly $34 million in tax revenue to the state.
Together, this means Michigan state could see a total of $650 million of revenue in the first year from online gambling and sports betting.
Contact: Amber Hoffman, Managing Editor, Michigan Sharp: amber.hoffman@i15Media.com