On Thursday of the past week, the Gaming Control Board in Michigan made an announcement to report the state’s revenue over the last 25 years. According to the report they released, a total of $2.5 billion tax revenue had been collected from the betting industry in Michigan. This is great news in whatever perspective given that Michigan is one of the newest betting markets in the US. It goes to show that betting legalization is a good idea for states to adopt.
This is obviously going to be shocking news to many people and especially those that have long underestimated gambling as a business. For others that come from well established gambling destinations such as New Jersey, this amount is quite insignificant to be talked about in public forums. It is important however to take account of the great strides made in growing this industry around the country and even more importantly, to look at the value that gambling taxes bring.
From the time when legalized gambling was initiated in Michigan, the state authorities had collected quite an impressive revenue sum from the operators. A big portion of the revenue that was declared was sourced from internet sports betting, fantasy contests, internet casino gaming and Detroit brick and mortar casinos.
There is also additional gambling revenue that is collected from the tribal casinos of Michigan. Although there are over 20 under this category, none of them operates under regulation of the MGCB. The money collected from mainstream and regulated casino is channeled into the Michigan’s School Aid Fund but the amount could be higher if all operators were covered. From the tribal casinos activities, only online based gaming, casino and sports, is subject to state taxes and licenses.
According to the executive director of MGCB, Henry Williams, the money collected from gambling operations in the state is used to advance education efforts in the state. It is critical to fund education because it is a direct investment in the development of the state’s future workforce. Williams goes on to commend the efforts of his fellow workers in the role they play of overseeing the funding of school activities for the schools in Michigan.
Taxes collected from all the money that gamblers have betted on various physical gambling platforms across the state is collected and sent to the School Aid Fund on a monthly basis. As far as internet gaming is concerned, as well as fantasy contests and internet sports betting, the taxes are accumulated and deposited into the School Aid Fund at the end of every financial year. The net amount that makes it to the fund is arrived at after all required allocations have been made; they are calculated based on guidelines provided by the respective laws established for the transfers.
What we cover
The history of online gambling in Michigan
The start of online gambling in Michigan can be traced back to January 2021 but the people of this state have been betting for a much longer period. The casinos operating in Detroit for instance date back to more than twenty years ago. This is where the bulk of the tax revenue that funds the schools in the state is sourced from. It is obvious from the numbers published that each of the various gambling segments contributes to the Education tax fund in different proportions. Breaking down the individual fund sources would look as follows;
- Retail Tables/Slots: $2.43 billion
- Retail Sports Betting: $1.7 million
- Internet Gaming: $87.2 million
- Internet Sports Betting: $1.8 million
- Fantasy Contest: $2.4 million
The state of Michigan has been fortunate over time to have state leaders that saw well into the future benefits of gambling. On July 17, 1997 the former Governor of Michigan, John Engler, signed into law the Michigan Gaming Control and Revenue Act. Another gambling support law, the Lawful Internet Gaming Act, Lawful Sports Betting Act, and the Fantasy Contests Consumer Protection Act, were signed by another former Governor, Gretchen Whitmer on Dec. 20, 2019.
Williams points out the great steps that have taken place within the gambling industry in Michigan even before the nationwide legalization of 2018. The gambling industry in Michigan has experienced significant growth over the years. Around 1997, no one would have imagined the changes that the market is currently witnessing. According to William, legal and regulated gaming has grown proportionately to the penetration of the internet.
In the 90s when the internet had nearly 130 million users, many people thought that it was a passing cloud that would gradually fade. Woe unto those who at the time chose to only pay attention to the development of brick-and-mortar casinos. Many believed that the city of Detroit was more stable with physical gaming premises. Obviously, both gaming forms have proven to be beneficial to the school system in Michigan.
In addition to what the state of Michigan achieved due to the haul, it is evident that the benefits of legal gambling are being enjoyed by many people. The casinos for a start have so far reported that they have submitted approximately $3.44 billion in taxes from 1999 to 2021. This means that there are many individuals who have benefitted from wins and bonuses offered by the operators. The following figures are an insight into the offerings and how they perform;
- Retail Tables/Slots: $3.39 billion
- Retail Sports Betting: $2.1 million
- Internet Gaming: $48.0 million
- Internet Sports Betting: $2.7 million
Final Thoughts
1999 to 2021 is a long time for someone to be hooked on gambling but not if that person is a casino investor. The reported revenue collected from gambling operations during this period are an indication that the market is profitable for all stakeholders. For the state authorities, this means more money for public projects and the schools are definitely running smoothly on this account.
