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State tax revenue nears $90M just 6 months after online gambling goes live

Analysts say Michigan's tax revenue from online casino play and sports betting could reach $200M by the end of the year
Online Gambling 6 months out
Posted at 4:39 PM, Jul 21, 2021
and last updated 2021-07-21 17:09:05-04

Six months after online gambling and sports betting became legal and dozens of online platforms popped up, the state has racked up nearly $90 million in tax revenue.

Governor Gretchen Whitmer signed legislation all the way back in December 2019 that would eventually make online casino play and sports betting legal in Michigan.

Finally launching at the end of January 2021, initial estimates predicted the state might see somewhere between $10,000,000 and $50,000,000 in annual tax revenue.

“We knew it would be big... This is a state with a casino culture, but it's been huge," said Matt Schoch, an analyst with PlayMichigan, a website that tracks the state's gaming industry.

Looking at numbers for the period of January to June 2021, the state has already raised $87.8 million in state tax revenue, with an additional $34.7 million in local and tribal revenues.

“And that's just crushing the projections of even the more optimistic ones that people had going into it,” Schoch told FOX 17 Wednesday afternoon.

Online casinos and sports books have so far taken in roughly $483.1 million in the first six months of 2021.

Online sports betting is taxed at 8.4%, while online casino play is taxed on a scale that ranges from 20%- 28%.

“Sports betting has been about what we expected, but online casino certainly has been a lot bigger than what people expected,” Schoch said.

“I think the growth is going to be coming in the sports betting... I think that there's a little bit of industry belief that maybe the online casino numbers have already plateaued a little bit.”

With potential for $200 million in annual state tax revenue— where does all that money actually go?

“The horse racing industry gets a little bit of that tax money... There's a prevention fund for firefighters who had been getting afflicted with a type of cancer,” Schoch said.

The majority of the money goes to Michigan school aid fund, while another large chunk goes into a state compulsive gambling fund that supports programs at the Department of Health and Human Services.

“The compulsive gambling prevention fund is the funding source by which I'm able to provide all the program funding," said Alia Lucas, program specialist for gambling disorder, treatment and prevention services with the MDHHS. "So, I'm able to enact all of the contractual relationships with all of the providers throughout the state to provide services through those funds.”

Lucas says with gambling now accessible via your phone, they are expanding their messaging to younger audiences.

"Gambling is a recreational event for most individuals," she said Wednesday.

“But we want to ensure that for those individuals that are having a difficult time, being able to allocate a specific amount of time and energy and funding for gambling, we want to make sure that they have information on what that looks like if they're possibly experiencing it, and how to get help and where to get help.”

The MDHHS staffs a clinician in every county of the state, ready to help anyone struggling who calls their problem gambling hot line at 1 (800) 270-7117.

As for additional benefits that we may see here in West Michigan, tribal gaming operators will actually see some of their taxes paid returned to them.

“The tax rate is the same for the tribal operators, but where that money is dispersed, including some of it going back to the tribe itself," Schoch explained.

"The tribes did a good job of negotiating that throughout the legislative process... So there is some local benefit for West Michigan from this as well.”