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Prior to the launch of online gambling last month in Michigan, sports betting garnered significant attention and media coverage.
However, according to industry experts and the revenue report released by the Michigan Gaming Control Board on Wednesday, it is widely acknowledged that internet gaming is expected to be the primary source of revenue in Michigan.
Online casinos generated over double the revenue of sports betting operators in the initial 10 days following the statewide launch on Jan. 22, accumulating a total of $13.3 million.
After the launch of Stars Casino on Jan. 29, the total number of online casino operators increased from eight to nine. These operators collectively generated a revenue of $29.4 million.
Currently, online poker is included in the overall internet gaming revenue figures. Despite having only a single operator offering poker, which generated less than $2 million in total online gambling revenue, the early success of online casinos demonstrated their immense potential.
1. It’s not just revenue, but state taxes, too
The tax revenue generated for the state from online casinos in Michigan surpassed our expectations by a remarkable margin.
Casinos and poker sites in Michigan contributed $4.3 million in taxes, while online sports betting generated just over $110,000 in tax revenue. The variation in tax rates for each online platform plays a significant role in this disparity. Online sportsbooks are taxed at a rate of 8.4%, whereas online gambling sites face a graduated tax scale ranging from 20% to 28%.
Nevertheless, with time, the disparity is expected to decrease and vary. Initially, sports betting operators relied on their abundant range of sign-up bonuses to safeguard their revenue. However, as the market stabilizes and a growing number of eligible Michiganders join in, it is anticipated that fewer of these bonuses will be provided.
On the contrary, the monthly sports betting revenue fluctuates based on the total handle and the outcome of bets, whereas online casino revenue remains relatively stable.
2. MGM (and marketing) matters in Michigan
When it comes to industry leaders, let’s not forget the well-known names ranking high on the revenue list.
Our suspicions about BetMGM Casino’s favorable positioning in Michigan turned out to be accurate, primarily due to its strong name recognition. The brand has proven its dominance by capturing nearly 40% of the market share.
| Online Casino/Poker | Total Revenue | Market Share |
|---|---|---|
| BetMGM | $11.1 million | 37.7% |
| DraftKings | $6.9 million | 23.6% |
| FanDuel | $6.6 million | 22.6% |
| Stars Casino / PokerStars* | $2 million | 6.7% |
| BetRivers | $1.4 million | 4.6% |
| WynnBet | $721,916 | 2.5% |
| Golden Nugget | $489,631 | 1.7% |
| William Hill | $122,014 | 0.4% |
| TwinSpires | $60,642 | 0.2% |
Despite experiencing some app issues during its initial launch in Michigan, BetMGM managed to acquire a significant number of customers within the first 10 days. This can be attributed to the extensive marketing campaign conducted by the site prior to its launch.
During the fall football season and the winter months, when Michigan TV viewers are confined indoors, BetMGM had ample time to showcase Jamie Foxx ads to a wide audience. The MGM Grand Detroit casino stands out as the most bustling venue in downtown Detroit.
The BetMGM pitchman is omnipresent, even adorning mural ads on buildings in downtown Detroit. It seems like the message has resonated… but will it endure?
Cross-selling, Golden Nugget, and what’s next
FanDuel and DraftKings, two prominent online gambling brands and industry leaders, are positioned just behind BetMGM. The success of their two online casinos is evident as they have greatly benefited from the cross-selling strategy implemented between their sportsbook and casino games.
However, it is possible that operators will increasingly attempt to convert their sports bettors into casino players as well. The focus will be on cross-selling between online platforms, which is expected to generate significant revenue and attract attention in the future.
Consider Golden Nugget Michigan as an example. Although this brand is recognized as one of the top online casinos in New Jersey, its performance in January was disappointing. It generated less than $500,000 in revenue and ranked seventh out of nine operators, capturing only a 1.7% market share.
Golden Nugget Online Gaming (GNOG) reported a casino wager intake of $2 million within its initial 10 days. Nonetheless, Golden Nugget faced a sluggish revenue initiation in the Garden State as it did not launch right at the starting line there.
The appearance of advertisements for the brand has increased in this area. Due to the decrease in sports events this summer, there might be a decline in sports betting ads, leading to a shift in focus towards online slots and casino games. This change could be advantageous for casino-oriented brands like GN.
3. Things are likely to change in Michigan online gambling
The casino market is poised for growth and evolution, surpassing mere sports betting where early leaders claimed their ground and maintained stability.
If you’re a sports fan in Michigan, it’s highly unlikely that you haven’t heard about the recent launch of online sports betting. However, this might not be as widely known among casino players. As time goes on, we can expect an increase in the number of customers joining, as well as a wider range of games being offered.
At the time of its launch, online game libraries were filled with various choices, yet they lacked the essential component of live dealer games. The inclusion of live casino games in Golden Nugget’s library in 2016 had a significant influence on the market. In New Jersey, this addition proved to be a game-changer for the casino, as it took several years for other brands in the state to recognize the popularity of live dealers and follow suit.
In the same vein, there are expectations of additional online casinos entering the state, such as PointsBet, as well as tribal online casinos under the FireKeepers and Soaring Eagle brands. This will result in a greater number of games, more casinos, and increased competition.
However, every online brand is primarily concerned with the future. The initial 10 days of Michigan online gambling are merely the starting point, with many exciting developments yet to come.
