The Future Is Bright for Michigan Online Casinos

The State of Michigan expects to rake in the big bucks as they prepare to launch an online casino offering before the end of 2020.

Retail sportsbooks went live in Michigan on 11 March 2020, just days before the novel Coronavirus pandemic caused a complete shutdown of all 3 commercial and 23 Indian casinos.

Just in Time

Governor Gretchen Whitmer not only signed the Lawful Internet Gaming Act into law in December 2019, but also signed the Lawful Sports Betting Act which allows for NFL, MLB, NBA, NHL, MLS, NASCAR, UFC, PGA, to offer Michigan bettors the chance to bet on beloved US sports teams and athletes.

Since then, many existing commercial and Indian casinos have partnered with online operators with a view to offer games of chance over the internet.

Show Me the Money

Analyst Geoffrey Fisk, from MichiganSharp, estimates that online gambling will generate around $650 million in the first year, with sports betting expected to generate $450 million and online casinos are estimated at $200 million.

This will bring in a total of $93 million in tax revenue going to the state. So, what’s the hold up?

Colorado-based writer, Christopher Gerlarcher commented on the situation, saying:

“Although internet gambling was legal, the regulations governing online gaming hadn’t been written. The Michigan Gaming Control Board released a timeline for when it would complete those regulations, but it’s projected to take 373 days. (How that squares with the bill’s Section 10 requirement that the Control Board create regulations within a year is unclear.)”

While legal online casinos won’t be cleared to operate until 2021, sportsbooks are up and running with existing casinos being invited to apply for online gaming licences through the Michigan Gaming Control Board.

Only one of the sportsbook partners don’t offer casino services, which indicates that it won’t take long for online casinos to launch in the state once the necessary gaming regulations have been passed.

Tiered Taxes

When it comes to the taxation of online casinos and poker rooms, revenue will be taxed on a sliding scale of between 20% and 28% depending on earnings.

Sports betting, both online and retail, gets taxed 8.4% by the state, while Detroit’s three commercial casinos pay an extra 1.25% in city tax. Fisk commented:

“All of the pieces are in place for Michigan to become a major hub for sports betting and online gambling. Virtually all of the state’s casinos should want a piece of the new market, especially with the attractive tax rates.”

By comparison, New Jersey sets their taxes for land-based casinos at 9.75% while online sportsbooks pay 13%. Indiana, on the other hand, sets the tax for online sports at 9.5%, and Pennsylvania takes 36% of sports betting revenue.

Online sports betting has taken the states of Pennsylvania and New Jersey by storm with online betting bringing in 80% of the total sports betting revenue. Michigan shows similar promise and may well become one of the biggest online gambling markets in the US.