The launch of internet gambling has sent Detroit’s tax revenues from casinos soaring back to pre-pandemic levels.
New figures released Tuesday show that the first full month of online gambling and online sports betting was very lucrative for the city of Detroit, which took in nearly as much in total casino taxes in February as it did for the same month a year ago, just before COVID-19 decimated casinos’ in-person business— and the city’s budget.
The three Detroit casinos paid $14.6 million to the city last month in wagering taxes and fees, or 1% more than in February 2020, according to the latest figures from the Michigan Gaming Control Board.
February 2020 was the last month before the pandemic, which would prompt Gov. Gretchen Whitmer to shutter all non-tribal casinos from March 16 until early August, and again from mid-November until late December during the second surge.
A representative for Detroit’s Office of the Chief Financial Officer said the latest monthly results, while impressive, are still slightly below the city’s total wagering tax haul from February 2020 once a separate 1.25% service fee that the casinos pay is accounted for.
“We are pleased to see new revenues from internet gaming and sports betting in February helping to supplement revenue losses from brick-and-mortar gaming revenue,” the representative, Tracey Lynn Pearson, said in a statement.
The three Detroit casinos are still operating at reduced in-person capacity because of COVID-19, and their tax payments to the city for slot machines and table games was $10.2 million last month, or nearly 30% less than in February 2020.
But thanks to revenues from online gambling along with online and in-person sports betting — none of which was yet offered in February 2020 — the casinos ended up contributing about $200,000 more in taxes to Detroit last month than they did a year earlier at full capacity.
The strong performance could help to ease financial pressure on Detroit later in the year. Before the pandemic, wagering taxes were the third largest revenue source in Detroit’s general fund at more than $180 million a year.
That figure is estimated to fall to $103 million for the current fiscal year ending June 30, according to city revenue forecasts that do not account for any internet gambling or sports betting revenues.
If Detroit enjoys similar hauls in the months ahead, it could meet or exceed its pre-pandemic wagering tax haul, even if the in-person casino business doesn’t fully rebound for years.
However, the representative for Detroit’s CFO cautioned that “one month does not make a trend.”
“While the internet gaming revenue performance looks promising thus far, it remains to be seen how much of this spike may be temporary due to the novelty of internet gaming and the associated promotion by the casinos,” Pearson said.
All online gambling and sports betting operators in Michigan, including those for Michigan tribes, reported $89 million in gross receipts for February, the first full month of operations since online gambling and sports betting launched in Michigan Jan. 22.
Gross receipts for online gaming were just under $80 million. For online sports betting, operators reported $9.5 million in gross receipts and a total handle of nearly $302 million for the month.
Analysts for the PlayUSA.com Network, an industry observer for online gambling and sports betting, said that based on February’s performance, Michigan could be considered one of the top five or so online sports betting markets in the country.
“It is difficult to imagine how an online debut could have gone any better,” said Matt Schoch, an analyst for PlayMichigan.com. “It took less than 40 days to transform Michigan into one of the largest U.S. gaming markets. Operators’ enthusiasm for the state before launch has proven prescient.”