MGCB Budget Is Tight With Casino Closures, Could Impact Online Gaming

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Yet another month passes by with yet another revenue report showing zero income.

After the regular meeting held on Tuesday, the Michigan Gaming Control Board (MGCB) published yet another revenue report for July, which was devoid of any figures or information.

Despite the positive development of Detroit’s casinos reopening last week, the presence of financial trouble raises alarming signs for the future.

Compared to 2019, Detroit’s casinos have experienced a significant decrease in aggregate revenue, which is down by 65% through July.

Executive Director Richard Kalm highlighted on Tuesday that the loss of revenue will have a significant impact on the 2020-21 fiscal year.

Kalm expressed that the true challenge lies ahead on October 1st, as they grapple with determining the next budget and managing online gaming with uncertain numbers of participants for the upcoming fiscal year.

The ugly numbers from Detroit’s casinos

In July, Detroit’s casinos accumulated a total of $854.4 million in revenue, surpassing last year’s July revenue of $119 million for the entire state of Michigan.

The casinos have paid $24.2 million in gaming taxes to the state up until July 31 this year, which is a 65% decrease compared to the $69.2 million they had paid by this time last year.

In terms of Detroit, the city has received $35.6 million in taxes from casinos, which is significantly lower compared to the $101.7 million generated in the first seven months of 2019. This creates a budget deficit of $66.1 million for a struggling city to address.

In addition, we must not forget about the regulators themselves.

Kalm stated that an impact is anticipated, but it is likely that we will not be as heavily affected by it as the general fund state departments.

However, we have indeed taken various steps to restore our budget’s stability.

Budget cuts could impact online gambling enforcement

Online gambling in Michigan remains on schedule for a 2020 launch, as a public hearing is anticipated to take place next month.

The launch of online sports gambling is expected around the same time as the start of the next fiscal year on Oct. 1, but there is a possibility that the COVID-19 pandemic might affect regulatory budgets for that period.

During the pandemic, Kalm mentioned that certain MGCB employees have been reassigned to support the Unemployment Insurance Agency.

Kalm expressed confidence in our ability to secure reimbursement to provide financial relief for our budget.

Furthermore, the compensation for Michigan State Police officers who were previously assigned to casinos was transferred to the general fund when the closures occurred.

Kalm stated that the attorney general has temporarily removed two positions from MGCB. He anticipates their reinstatement in the upcoming fiscal year.

Kalm expressed confidence in our financial situation for the current fiscal year. However, he emphasized that in the upcoming fiscal year starting in October, we will need to carefully consider whether to maintain the same number of personnel or make adjustments to accommodate the new programming for online gambling.

Shut down of charitable gaming events adds to pain

The pandemic has resulted in the absence of any charitable gaming events, causing a significant loss in revenue for the board. This loss is particularly impactful as the board has dedicated a team of 22 full-time employees to manage these events.

Kalm expressed concern about the FTE’s being in jeopardy. He stated that it is unlikely that there will be any charitable poker or a significant amount of charitable ticket sales in the near future, which is our primary source of budget for the lottery.

According to Kalm, the possibility of transferring those positions to online gaming licensing staff was mentioned. Additionally, he mentioned that the board has reduced training programs due to a travel ban imposed on state employees across the entire state.

Kalm expressed that they are dedicated to working diligently each day in order to preserve the integrity of this budget.

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