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Every month, the Michigan Gaming Control Board releases a report which provides details on the revenue generated by Detroit’s three commercial casinos. This report encompasses the net income earned by the casinos, along with the taxes paid to both the state and the city.
April 2020 marks the inaugural instance where the monthly revenue for the casinos, since their establishment in the summer of 1999, will amount to $0.
Due to the COVID-19 pandemic, Detroit’s three casinos were closed on March 16. As per an executive order from Gov. Gretchen Whitmer, these casinos will remain closed until at least May 28.
The slowdown has caused significant challenges for numerous economic sectors, however, the complete elimination of casino revenue is particularly severe for companies, the industry, and public finances.
April has meant consistent revenue for Detroit casinos
According to data compiled by the Center for Gaming Research at the University of Nevada, Las Vegas, Detroit casino revenue in April has displayed remarkable consistency over the past few years.
Over the past nine years, Detroit’s casino revenue in April has consistently exceeded $121 million, with only one exception in April 2014 when it fell $4 million short of that average at $112 million.
April revenue for the Detroit casinos exceeded $125 million in 2019.
However, there were early indicators in 2020 that suggested the possibility of an increase in revenue.
In comparison to the revenue generated in January and February of 2019, the revenues for the same period in 2020 saw a 6.7% rise, amounting to $120 million and $121 million, respectively.
Michigan casinos retail sports betting could have provided boost
Greektown Casino-Hotel and MGM Grand Detroit launched their retail sportsbooks on March 11, while MotorCity Casino followed suit the following day.
After the initial legal sports bet was made in the state, the casinos remained open for a duration of six days, despite the suspension of numerous major sports leagues worldwide.
The adjusted gross receipts from sports betting totaled $105,548, with Michigan earning $3,990 and the city of Detroit collecting $4,876, according to the casinos’ report.
The month appeared to be a promising one for sports fans to get an early glimpse of the new sportsbooks, with the originally planned dates for college basketball’s Final Four, the start of the NHL and NBA playoffs, and the NFL Draft coverage all falling between April 4-6.
Afterwards, a significant portion of American life was disrupted due to the impact of COVID-19.
Public missed out on big revenue share
Due to the establishment of sportsbooks and the unfavorable Michigan weather that often confines people indoors, it is within reason to predict that April 2020 will attain a revenue level similar to the average of previous Aprils.
Detroit casinos would have amassed over $121 million if their 2020 revenue had aligned with the average of the previous nine years.
The state would have collected $9.8 million through an 8.1% wagering tax, while Detroit would have generated $13.2 million from a 10.9% tax on the net win. Additionally, the city’s take would increase further with the inclusion of development agreement payments.
Tribal casino closures impact state, local entities
By March 22, all 24 tribal casinos in Michigan had also been closed down.
After reconsidering its decision, Island Resort and Casino in Harris has decided to postpone its reopening on Wednesday, resulting in a period of over 45 days without tribal casino gaming.
In the MGCB’s annual tribal gaming report for 2019, it was revealed that Michigan’s 12 federally recognized tribes made a significant contribution of over $54 million to the Michigan Economic Development Corporation or the state’s strategic fund. Additionally, tribal casinos also provided local governments with more than $30 million through 2% revenue sharing payments.
Without a breakdown of monthly revenue patterns, it is evident that tribal casinos have contributed over $84 million to state and local governments. This substantial amount equates to a daily average of more than $230,000. Consequently, if the shutdown extends for 45 days, public entities could potentially lose $10.4 million or more.
Not to mention the financial losses experienced by the tribes themselves.
According to a recent report by Bridge Magazine, a nonprofit news organization in Michigan, Frank Ettawageshik, executive director of the United Tribes of Michigan, stated that approximately 50% of tribal governments’ funds are sourced from gaming revenue.
