As expected, Michigan lawmakers have signed off on regulations that will govern daily fantasy sports (DFS), online casinos, and mobile sports betting in the state.
The Michigan Joint Committee on Administrative Rules (JCAR) voted yesterday to waive a 15-day waiting period to approve proposed state regulations. The decision expedites the process to commence online gambling and begin generating much-needed tax revenue for the state and City of Detroit.
JRAC approved the regulations set forth by the Michigan Gaming Control Board (MGCB) and tax rates imposed by state lawmakers. The MGCB can now proceed in fielding mobile sports betting and iGaming applications from casinos, both commercial and tribal.
Detroit’s three commercial casinos are ready to commence online gaming and sports betting operations.
MGM Grand Detroit is partnered with the parent company’s interactive gaming platform BetMGM. Motorcity and FanDuel have reached an iGaming agreement and Greektown. They will use its company’s online gaming platform powered by IGT and its Barstool Sportsbook.
Michigan Keeps Tax Collection Low
Unlike other states, Michigan isn’t jacking up the tax rate on sports betting revenue that’s facilitated online.
Detroit casinos will share 8.4 percent of their online sportsbook win with the state. That’s the same tax rate imposed on the three land-based sportsbooks.
However, there are differences in where the internet sports betting tax revenue is allocated. For land-based sportsbook operations, Michigan collects 3.78 percent of the sports betting tax revenue, and the City of Detroit retains the remaining 4.62 percent.
But for online sportsbook income, Detroit will keep 30 percent of the tax revenue. Five percent will go to the Michigan Agriculture Equine Industry Development Fund (up to $3 million per year from each operator), and the remaining 65 percent to the state.
For internet sports betting conducted in partnership with one of Michigan’s federally recognized tribes, 100 percent of the tax receipts will go to the state.
Gross gaming revenue (GGR) from internet casinos will be taxed on a scale ranging from 20-28 percent, the final rate dependent on adjusted gross receipts. iGaming from Detroit casinos will be split between the state and city, while tribal online tax revenue will fully go to the state capital. DFS operators will share 8.4 percent of their monthly income with the state.
Online Gaming Could Help Revenue
Detroit’s three commercial casinos are closed once again on Michigan Gov. Gretchen Whitmer’s (D) orders through at least December 9. COVID-19 has been a devastating year for the gaming properties, which, unlike tribal casinos, must adhere to state directives.
MGM Grand Detroit, Motorcity, and Greektown reported $0 in GGR during the second quarter, as they were forced to be dark throughout the three months. Casino’s win totaled $163.6 million in Q3 — a 53.4 percent year-over-year loss.
With the casinos again shuttered, Q4 is shaping up to be another dismal quarter. Online gaming and mobile sports betting will allow the three casinos to bring in some revenue during potential state-mandated closures in the months ahead.
The MGCB says it’s likely that the first online casino wager and mobile sports bet will be placed before the end of the year.
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