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When Michigan online gambling was introduced in 2021, a significant concern arose: Would the popularity of online casinos lead to a considerable decrease in activity on the casino floors of Detroit?
Based on nearly a year’s worth of detailed data, it seems that the answer is: There may be a minimal difference, if any at all.
Despite the ongoing COVID-19 pandemic and the perceived threat from online casinos, Detroit’s land-based casinos managed to hold up well in 2021, showcasing resilience during these challenging times.
The actual situation is that the revenues from Detroit casinos and the state’s tax collection are maintaining a stable position.
Detroit casino revenue down slightly
Let’s examine Detroit as the state’s 12 federally recognized tribes do not disclose their retail casino revenue publicly.
Since the late 1990s, the three prominent gambling establishments located in Michigan’s largest city have been in operation. Greektown Casino, MGM Grand Detroit, and MotorCity Casino play a crucial role in generating revenue for both the state and city.
Following a challenging year for the trio, the online casinos were introduced in Michigan on January 22, 2021.
Let’s take a glance at the figures from both 2021 and 2019, marking the final year for Detroit’s casinos before COVID-19 disrupted the status quo.
| 2019 revenue total | 2021 revenue total | 2019 state wagering tax | 2021 state wagering tax | |
|---|---|---|---|---|
| MGM Grand Detroit | $623,515,060 | $554,029,734 | $50,504,720 | $44,876,408 |
| MotorCity Casino | $493,566,673 | $438,271,651 | $39,978,900 | $35,500,004 |
| Greektown Casino | $337,192,961 | $274,461,146 | $27,312,630 | $22,231,353 |
| Totals | $1,454,274,694 | $1,266,762,531 | $117,796,250 | $102,607,765 |
The figures reveal that the casinos generated a revenue of $1.45 billion in 2019, which decreased slightly to $1.27 billion in 2021, marking a 12.9% decline. Additionally, the state witnessed a decrease of $15.2 million in tax revenue.
That is perceptible, yet not excessively concerning.
The city tax revenue for Detroit experienced a decline from $184.2 million in 2019 to $160.8 million in 2021, resulting in a decrease of $23.4 million, equivalent to a 12.7% decrease.
COVID still biggest hurdle for Detroit casinos in 2021
The impact of COVID has reverberated across the young decade, and the reality is evident in the state of Detroit casinos.
Throughout the entirety of 2019, there were no disruptions or limitations that prevented customers from accessing any of the three Detroit casinos.
Detroit casinos were initially shuttered from March 16 to Aug. 5, 2020, as a result of the pandemic. Following their reopening, they operated at a reduced capacity of 15%. However, due to another surge in cases, the casinos were forced to close again from Nov. 18 to Dec. 20.
During the first half of 2021, the three casinos had to adhere to capacity restrictions, resulting in diminished operations. Consequently, the revenue generated in January and February was below $90 million, and a significant portion of this decline occurred prior to the launch of online casinos. In comparison, the lowest revenue month in 2019 was January, which recorded $112 million.
June 22 of this year marked the lifting of capacity restrictions, igniting a surge in revenue for the month of July. With a staggering $115.7 million, July became the highest-earning month of 2021.
AGA: Mask requirements, capacity restrictions among nation’s toughest
Furthermore, in November 2021, two Detroit casinos reinstated mask mandates, resulting in the deterrence of certain customers.
According to the American Gaming Association, the regulations imposed on Detroit casinos in Michigan were recognized as some of the most stringent in the country.
In a statement to Playinmichigan, the AGA stated that although Michigan witnessed a decline in traditional gaming revenue, it is premature to directly link this fluctuation to the introduction of sports betting and iGaming, especially considering the ongoing pandemic.
In 2019, numerous states, regardless of whether they had sports betting and iGaming or not, experienced a decline in traditional gaming revenue. This decline was particularly noticeable in states like Illinois (-12.3%), New Mexico (-11.2%), and Michigan (-12.9%), which were affected by ongoing casino capacity restrictions. The city of Detroit had some of the most extensive and enduring capacity restrictions among all markets, with its maximum capacity limited to 30% until late June when the restrictions were finally lifted.
Online casinos have more than made up the difference
While several factors may contribute to the shifts observed between 2019 and 2021, it is crucial to emphasize that there is no cause for concern.
The concerns expressed by our friends in Ontario, who are worried about online casinos leading to significant provincial losses, have caught our attention. However, the casino industry has valid reasons to question the credibility of these reports.
According to Tuesday’s report, the online casino industry in Michigan generated a revenue of $1.11 billion in 2021. This resulted in $201.7 million in state taxes and an additional $55.3 million in city taxes.
The state taxes collected from both the Detroit casinos and online casinos in 2021 amounted to over $300 million, marking a significant 60% increase compared to the state’s wagering tax revenue prior to the launch of online casinos in 2019.
Despite a decline in casino revenue, Detroit managed to increase its tax revenue by nearly $32 million from both land-based and online casinos.
National numbers still rising despite more online gambling
Despite the increasing popularity of online casinos and sports betting nationwide, the commercial industry remains unaffected.
The AGA reports that commercial brick-and-mortar gaming raked in $41.08 billion between January and November 2021, marking a 6.4% surge compared to the $38.62 billion generated during the corresponding period in 2019.
Despite the increase in online casinos and sports betting, the numbers indicate that the commercial industry continues to thrive.
What can we project for 2022?
2021 has made it clear that online casinos and sports betting are permanent fixtures in our lives.
The industry will be inspired to bring in new users by the impressive record numbers achieved this year. Expect significant advancements in online poker and live-dealer gaming.
However, the brick-and-mortar casino industry will persistently work towards establishing a dependable foundation.
Casinos consistently offer promotions, shows, and hotel packages as enticing reasons to visit. With the optimistic possibility of the pandemic gradually subsiding after the recent Omicron surge (keeping our fingers crossed), we might witness yet another eventful summer at casinos and resorts.
Predicting when the pandemic will largely be behind us is challenging, as is envisioning the future post-pandemic. Certain health restrictions might become a permanent fixture in our lives.
It is evident that individuals still desire the traditional casino experience and this desire is expected to increase as the pandemic subsides.
Despite the online industry experiencing a significant surge, there are numerous advantages for the state and city of Detroit in terms of generating revenue.
