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Online sports bettors in Michigan have a wide array of options to choose from.
Players have the freedom to choose from 15 different operators, allowing them to select the option that instills the highest level of confidence when placing their wager.
FanDuel Sportsbook MI has emerged as the dominant force in the online sports betting market since its legalization in the state over a year ago.
FanDuel has not only been at the forefront of online handle and revenue generation, but it has also established itself as the undisputed leader in tax revenue contribution for Michigan.
FanDuel the established sports betting leader in Michigan
In January 2021, online sports betting became legal in Michigan, marking the beginning of a new era. Since then, FanDuel has emerged as the frontrunner, consistently dominating the field. Out of the 16 months that revenue information has been tracked, FanDuel has held the top spot in online handle for 12 of them. Additionally, it has claimed the leading position in online revenue for 10 months and has contributed the highest amount of state tax revenue in 11 months.
Overall, this implies that FanDuel has established a standard for other operators to strive towards.
Let’s examine FanDuel’s position in historical sports betting data.
- The online handle, $1.5 billion, secured the top spot.
- The online revenue is ranked first at $155.5 million.
- Promos: $56.4 million (3rd)
- The amount of state taxes generated, both from online and retail sources, is $5.5 million, ranking first.
- The local taxes generated from both online and retail sales amounted to $3.9 million, ranking first.
FanDuel’s vital for MI’s taxes
Despite facing tough competition in various areas of FanDuel’s business, the operator has played a vital role in the state’s success.
As we have emphasized, the tax revenue generated by online sports betting pales in comparison to that generated by online casinos.
In terms of tax contributions from online sports betting, FanDuel is undoubtedly shouldering the burden in Michigan.
Of the total $12.7 million in state taxes generated from legalized sports betting, FanDuel, in partnership with its retail counterpart MotorCity Casino, accounts for 43.4%.
It is important to mention that retail tribal operators are not obligated to report their earnings to the MGCB. Therefore, the inclusion of retail numbers can be slightly distorted when considering the data for the three Detroit casinos.
FanDuel’s online tax revenue alone amounts to $4.9 million, which represents 45.4% of the state’s total of $10.8 million.
Excluding BetMGM Michigan’s contribution of $3.2 million, FanDuel alone surpasses the combined state tax generated by the remaining 13 operators.
FanDuel/MotorCity has contributed $3.9 million in Detroit/local taxes, accounting for 46.8% of the cumulative total of $8.34 million.
Few operators contributing to taxes
We have recently examined the process of tax revenue generation for online sportsbooks, as well as the impact of promotional deductions on overall revenue.
The reason for the significant disparity in tax revenue between online sports betting and online casinos is attributed to the distinct tax rates and deductions permitted in each sector.
After reviewing the revenue figures for the month of April, it’s evident that only a small number of tribal operators have been required to pay state taxes for their online sports betting platform.
After calculating the Gross Sports Betting Receipts, the Adjusted Gross Sports Betting Receipts are obtained by subtracting the amount of promos and free wagers from the total.
If the AGR is in a negative state, operators are unable to have any taxes taken since taxes are collected from the AGR.
Since January 2021, six different online operators have failed to generate any state tax revenue, even when considering their all-time revenue.
Michigan legislators have no intention of modifying their existing deduction agreements with operators, despite the relatively lower numbers compared to online casinos.
How do the bettors factor in?
Successful betting can also contribute to the low tax revenue.
Some sports bettors in Michigan are more knowledgeable or fortunate than others, making them a highly competitive group.
Michigan has maintained a 7.8% hold rate throughout its history, ever since the legalization of sports betting in March 2020.
Sportsbooks are retaining 7.8% of all wagers, implying that a lower percentage indicates higher success among bettors.
In comparison to other states,
- Tennessee: 8.6%
- Virginia: 8.4%
- Indiana: 7.7%
- Pennsylvania: 7.4%
- Illinois: 7.1%
- New York: 7.0%
- New Jersey: 6.7%
- Colorado: 6.2%
- Iowa: 6.0%
- Nevada: 5.7%
Michigan is ranked 12th in hold among the 25 states that report sports betting revenue numbers.
