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In 2020, the gambling industry added to the negative impact on Michigan’s balance sheet.
There is optimism that the industry can play a significant role in the 2021 recovery, thanks to the upcoming introduction of online sports betting, casinos, and poker platforms. However, it is important to acknowledge that the gambling sector faced significant challenges in 2020. The closure of casinos due to the pandemic and the subsequent obstacles impeding the launch of online gambling were major setbacks.
In 2021, it is believed that the combination of land-based casinos and online gambling can play a significant role in propelling Michigan towards progress.
To gain a comprehensive understanding of the current state of gambling in Michigan, it is crucial to examine the events of 2020. This includes analyzing the figures, the temporary closures, the imposed restrictions, the gradual reopening process, and the considerable delay in the launch of gambling applications.
Just how bad was it for Michigan casinos?
Peeling back the layers of the Michigan gambling industry reveals a heartbreaking trickle-down effect.
In 2020, many states experienced a common reality, including Detroit, where the reopening of casinos was delayed for several weeks and even months. Eventually, in August, the casinos reopened with a limited capacity of just 15%, amidst a chaotic sports landscape.
The impact of the never-ending year was not limited to the commercial casinos in Detroit alone. Native American tribes, casino corporate owners, unions, local governmental entities, workers, and the general public all shared the burden.
In 2020, Detroit’s casinos were shut down for a total of 176 days, leaving them with a mere 190 days of operation. Consequently, the state government’s share of tax revenue from Greektown Casino, MGM Grand Detroit, and MotorCity Casino will experience a significant decline.
As the year approached its end with just a week of gaming left, the state tax revenue experienced a significant decline of 59%, amounting to $48.5 million compared to the previous year. Similarly, Detroit’s tax collection saw a substantial drop of 61%, resulting in $71.2 million.
| Adjusted gross receipts | State tax revenue | Detroit city tax revenue | |
|---|---|---|---|
| 2019 | $1,454,274,694.07 | $117,796,250.22 | $184,229,506.23 |
| 2020* | $598,332,906.28 | $48,464,965.41 | $71,201,615.85 |
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Although Detroit casinos remained closed throughout December 2020, the revenue reports for that month will not be released until January.
Michigan’s 12 federally recognized tribes suffered a significant economic setback as all 23 tribal casinos were forced to shut down for extended periods.
Although the tribes are not obligated to disclose their casino revenue numbers, the downturn may become apparent through revenue sharing payments to the state and local governments from slot machines and table games in the upcoming years.
Casinos taking a cautious approach to reopening
Considering all of those factors, it is understandable that Michigan casinos have faced challenges. Presently, land-based casinos in the state continue to navigate a delicate balancing act on a daily basis.
Customers must feel assured about the measures taken to prevent the transmission of COVID-19.
Nevertheless, the revenue is affected by the unsold drinks, unoccupied table game seats, closed slot machines, and the expenses incurred for safety equipment.
The Michigan Gaming Control Board has mandated that the Detroit casinos must enforce several restrictions, including a maximum group size of six for entry.
Some of the tribal casinos that have recently implemented extra precautions include:
- Drinks are exclusively served on the casino floor at Bay Mills Casino in Brimley. As for The Back Bay, it solely operates for take-out and room service purposes.
- The Ojibwa Casinos in Baraga and Marquette have implemented a mask policy, which requires all visitors to wear masks while on the premises. However, players are permitted to remove their masks once they are seated and actively engaged in playing games.
- Table games at Gun Lake Casino in Wayland were closed until December 26th, but have now reopened to offer blackjack, craps, roulette, and baccarat.
Will online gambling help fill budget holes in Michigan?
The signing of expanded gambling laws by Gov. Gretchen Whitmer in December 2019 was anticipated to provide a much-needed boost to state revenue through the introduction of online sports betting and online casinos.
At that time, nobody could anticipate the extent of its future indispensability.
Each week, the state remains in the spotlight due to ongoing disputes regarding aid packages for individuals affected by the pandemic. The last week of 2020 witnessed a contentious battle over a COVID-19 relief bill initiated by the Republican-dominated state legislature. Governor Whitmer, before signing the bill, decided to reduce its size by half, resulting in further disagreement.
The amount of revenue that online gambling will contribute to state coffers is subject to varying estimates.
In 2019, when the bills were signed by Whitmer, it was estimated that online gambling would generate a total of $19 million. However, other evaluations suggest a higher amount of around $25 million, and the bill’s sponsor, Rep. Brandt Iden, believes that these activities will eventually generate hundreds of millions of dollars annually for the state.
Given the deficit in 2020, having any additional source of revenue is preferable to having none. By observing the success of New Jersey and Pennsylvania, where all three online sectors are functioning, it is apparent that a well-established market in Michigan could potentially generate a substantial amount of revenue, possibly reaching nine figures.
Online casinos and sportsbook apps contributed approximately $170 million in tax revenue to the Garden State between January and November 2020.
How 2021 will look is dependent on the pandemic
However, if you have not been informed, it is important to understand that this pandemic will not disappear quickly.
As 2020 came to a close, Michigan’s casinos remained operational, but their future remains uncertain. The potential impact of the incoming Joe Biden presidency on shutdowns adds to the uncertainties. Additionally, the rollout of the vaccine in Michigan poses another unknown variable that could potentially cause complications.
Despite the fact that casinos might stay operational, a considerable number of potential players are likely to choose to stay at home due to perceived risks. A large portion of Michigan residents believe that an increase in gambling opportunities could lead the state towards a more prosperous future.
2020 has demonstrated that predicting events can be quite challenging.
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