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According to estimates from the city, the closure of Detroit’s casinos due to the COVID-19 pandemic is resulting in a daily loss of $600,000. By next summer, the city is projected to suffer a total financial setback of $112 million.
The closure of Greektown Casino-Hotel, MGM Grand Detroit, and MotorCity Casino will extend until at least June 12, as the impact of the coronavirus continues. Projections indicate that these establishments may experience financial deficits for over a year.
In a report released on Wednesday, The Detroit Free Press provided these numbers, outlining the losses incurred by the city due to the closures, as tribal casinos across Michigan cautiously begin to reopen.
Next week, over 50% of the state’s 26 casinos will be reopening.
Detroit casinos will stay closed into June
As of Wednesday afternoon, 16 tribal casinos in Michigan, out of the state’s 23 tribal casinos, were either already open or scheduled to reopen by June 8. Michigan’s 12 federally recognized Native American tribes have the freedom to operate these casinos.
The Detroit trio, on the other hand, remains bound by the stay-at-home orders imposed by Gov. Gretchen Whitmer, which have been extended multiple times and are currently set to expire on June 12.
Earlier this month, Detroit Mayor Mike Duggan stated that the complete reopening of Detroit’s casinos will only occur once a COVID-19 vaccine is available, which might require approximately a year.
Losses mount for casinos and the city
In 2019, the Detroit casinos generated adjusted gross receipts amounting to $1.45 billion. As a result, the city received over $184 million through a 10.9% wagering tax.
In the wake of Michigan sports betting’s inauguration in the city, all three establishments ceased operations on March 16, merely five days later.
The closure of casinos for approximately six weeks resulted in a significant decline in revenue for Detroit casinos, as reported by the Michigan Gaming Control Board. Comparing the revenue from April with the same period in 2019, there was a notable decrease of 39.2%.
According to the Free Press, the casinos contribute approximately 16% of Detroit’s general fund revenue. This influx of funds ranks as the city’s third-largest source of funding, following local income taxes and state revenue sharing payments.
In 2019, Detroit casinos contributed over $117 million to the state of Michigan’s revenue.
Detroit casinos have safety measures for reopening
The parent company of MGM Grand has unveiled a comprehensive seven-point safety plan for the reopening of its casinos. In a similar vein, Penn National Gaming, the parent company of Greektown, has also disclosed its general guidelines for ensuring safety during this period.
As casinos reopen across the nation, they are implementing mandatory mask-wearing and temperature checks.
In order to minimize exposure, Michigan casinos have implemented various safety precautions. These precautions include:
- We ensure that half of the slot machines are always kept turned off.
- Restricting the amount of participants in table games.
Based on the COVID-19 Casino Tracker provided by the American Gaming Association, a total of 181 casinos were operational across the country on Wednesday afternoon, whereas a significant number of 808 casinos remained closed.
Official: Detroit will ‘have a balanced budget’
According to the Detroit Free Press, David Massaron, the Chief Financial Officer of Detroit, stated that considering the impact of soft openings and limited capacities, the city is expected to face a financial loss of $112 million by June 2021.
For more than a year, we have been operating under the assumption that those casinos are not running at maximum capacity. Furthermore, we expect that when they resume operations, it will be with a reduced density, meaning there will be fewer individuals, concerts, and entertainment events.
According to Massaron, the city will make necessary adaptations to ensure a balanced budget for the upcoming fiscal year.
Online casinos will help down the road
The implementation of online sports betting and online casinos will lead to a significant boost in the industry in the future.
Despite the shutdown of much of the sports world, states like New Jersey, Pennsylvania, and Indiana are using mobile sports betting apps to offset their brick-and-mortar casino losses.
Michigan casinos may potentially launch anytime between August and early 2021, according to the latest estimates.
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