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In the United States, the popularity of legal sports betting continues to rise steadily, and this trend is also observed in the realm of online sports betting.
Although online sports betting is available in numerous states across the country, only six states provide some form of iGaming.
On January 22, 2021, Michigan not only legalized online sports betting but also authorized the operation of online casinos, both of which promptly commenced their services.
Online casinos have proven to generate significantly higher state and local tax revenue compared to online sports betting, as evidenced by the past 15 months.
Michigan online casino revenue sets record in April
On Tuesday, the April 2022 revenue figures were unveiled by the Michigan Gaming Control Board, shedding light on the significant disparity in tax revenue between online sports betting and online casinos.
The state’s online sports betting generated a handle exceeding $371 million, yet the total revenue fell just short of $17 million.
In Michigan, the 8.4% tax rate generated slightly more than $944,000 in revenue for statewide taxes and just under $600,000 for city and local taxes.
Michigan had a remarkable month of $132.4 million in revenue in regards to internet gaming.
The state collects 70% of the overall tax generated by commercial operators and 80% of the total payment made by tribal operators for online gaming. The tax and payment rates vary between 20-28% depending on the yearly adjusted gross receipts.
In April alone, Michigan achieved remarkable milestones in tax revenue generated from internet gaming, totaling $24.3 million for the state and an additional $6.6 million for city and local taxes. These exceptional figures set new records for Michigan.
Online casinos are accumulating approximately 2,600% more funds than online sports betting in terms of state taxes. Regarding local taxes, the difference is slightly above 1,100%.
Michigan iGaming tax revenue well ahead of sports betting all-time
The tax numbers have seen a significant difference since the launch of both online products in late January 2021.
State taxes from online sports betting have accumulated a total of $10.8 million, while local taxes have amounted to nearly $6 million.
Over its entire existence, online gaming has generated a total of $290.6 million in state taxes and $112 million in local taxes.
The disparity in state taxes amounts to a staggering 2,700%, while the discrepancy in local taxes stands at an astounding 1,900%.
It’s worth noting that the cumulative state tax revenue from online sports betting falls significantly short of the amount generated solely by internet gaming in April 2022.
The combined state tax contributions of the six online casino operators (BetMGM, FanDuel, DraftKings, BetRivers, Golden Nugget, WynnBet/Caesars) surpass the total tax revenue generated by all 15 online sports betting operators.
In April 2022, BetMGM Michigan contributed a significant $8.8 million in state taxes, approaching the record-breaking total generated by sports betting.
Michigan in elite company
At present, online gambling is available in only six states across the country. While Nevada exclusively offers online poker, four other states, in addition to Michigan, provide online casino options.
- Delaware
- New Jersey is a state located in the northeastern region of the United States.
- Pennsylvania
- West Virginia is a state located in the eastern region of the United States.
Since 2019, Pennsylvania has successfully established its online presence, with online casinos generating a remarkable tax revenue of $424.4 million. In contrast, the tax revenue from sports betting amounted to $160 million, even though retail sports betting had already commenced in 2018.
Online casinos in New Jersey have contributed a substantial $658 million in state tax revenue, while both retail and online sports betting have collectively generated $249.2 million in tax revenue.
Legalizing online casinos and internet gaming undoubtedly contributes significantly to the state and local tax revenue, highlighting its substantial impact.
States should consider emulating Michigan’s approach in legalizing online sports betting, particularly those striving to launch their own platforms.
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