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Once again, another month passes by with yet another revenue report devoid of any positive figures.
After Tuesday’s regular meeting, the Michigan Gaming Control Board (MGCB) once again issued a revenue report for July with no specific figures.
Despite the positive development of Detroit’s casinos reopening last week, the presence of financial trouble raises alarming signs for the future.
In comparison to 2019, the total revenue from Detroit’s casinos has experienced a significant decline of 65% by the end of July.
Executive Director Richard Kalm emphasized on Tuesday that the loss of revenue will have a significant impact on the fiscal year 2020-21.
Kalm commented on the upcoming new fiscal year, stating that the true impact will be felt on Oct. 1. During this time, we will have to determine our next budget and navigate the challenges of managing online gaming, taking into account the uncertain number of participants.
The ugly numbers from Detroit’s casinos
In July, the casinos in Detroit have generated a total revenue of $854.4 million, surpassing Michigan’s aggregate revenue of $119 million from the same month last year.
The state received $24.2 million in gaming taxes from the casinos by July 31 this year, indicating a 65% decrease compared to the previous year when they had paid $69.2 million by the same period.
Regarding Detroit, the city has received $35.6 million in taxes from the casinos, which is significantly lower compared to the $101.7 million received during the same period in 2019. Consequently, this leaves the struggling city with a budget deficit of $66.1 million that needs to be addressed.
Additionally, let’s not forget about the regulators themselves.
Kalm mentioned that there would indeed be an impact, but he believed our department would likely be less affected compared to the general fund state departments.
However, we have indeed taken numerous actions in an attempt to balance our budget.
Budget cuts could impact online gambling enforcement
Michigan’s online gambling is on schedule for a 2020 debut, as a public hearing is anticipated in the coming month.
The launch of online sports gambling, estimated to take place near the beginning of the next fiscal year on October 1st, may be affected by the COVID-19 pandemic’s impact on regulatory budgets.
During the pandemic, Kalm mentioned that several MGCB staff members have been reassigned to the Unemployment Insurance Agency to provide assistance.
According to Kalm, “However, we have confidence that we will receive reimbursement to aid in safeguarding our budget.”
Furthermore, the compensation for Michigan State Police officers who were assigned to casinos was transferred to the general fund when the closures took place.
According to Kalm, the attorney general has temporarily removed two positions from the MGCB, but he anticipates their reinstatement in the upcoming fiscal year.
Kalm expressed confidence in our financial prospects for the current fiscal year, stating that we anticipate being in a good position. However, he emphasized that the upcoming fiscal year, starting in October, will require careful consideration regarding maintaining our current workforce or making necessary adjustments to accommodate new hires for the online gambling program.
Shut down of charitable gaming events adds to pain
The pandemic has resulted in the absence of any charitable gaming events, causing a significant loss of revenue for the board. As a consequence, the board has been unable to allocate its 22 full-time employees to handle these events.
Kalm expressed concern about the future of the FTE’s, stating that charitable poker and ticket sales, which contribute to our lottery budget, are unlikely to generate significant funds in the near future.
According to Kalm, the positions could be transferred to staff responsible for online gaming licensing. He added that the board has reduced training programs due to a travel ban imposed on state employees across the state.
Kalm stated that they are putting in daily efforts to maintain the integrity of this budget.
