Schools, First Responders Among Beneficiaries Of Michigan Online Gambling Tax Revenue

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The revenue figures for online casinos and sportsbooks in Michigan are benefiting not only the gaming operators but also other entities.

The booming gaming industry in Michigan brings benefits to the state’s schools and first responders as well.

Since its launch in January 2021, online gambling has contributed over $300 million in tax revenue to the state. These funds are allocated to various initiatives, including a significant portion designated for the state’s School Aid Fund.

Therefore, even though you experience losses, they can still benefit those who are in need. Your unfortunate outcome might end up supplying educational materials or nourishment to a young child.

Let’s take a closer look at the breakdown of the allocation and calculation of the tax revenue funds.

Where Michigan online gambling tax revenue goes

A significant proportion of the tax revenue is allocated to several diverse funds, indicating a wide range of beneficiaries.

Here is some additional information about each of these funds and the allocation of tax revenue in each fiscal year.

Internet Gaming (online casinos and poker) Fund

• The Compulsive Gaming Prevention Fund will receive a sum of $500,000.
• The First Responder Presumed Coverage Fund receives a total of $2 million.
• The expenses associated with the regulation and enforcement of internet gaming in accordance with the Internet Gaming Act by the Michigan Gaming Control Board.
• If the city of Detroit receives less than $183 million in total gaming related tax revenue for the previous fiscal year, a payment is made to the city. Nevertheless, this payment is capped at 55% of the total gaming tax deposited in the Internet Gaming Fund, minus the revenue from the city’s 30% internet gaming tax.
• At the conclusion of the fiscal year, the School Aid Fund receives the remaining balance.

Internet Sports Betting Fund

With the exception of the payment made to the city of Detroit, this fund distributes the money almost equally.

• The amount of $500,000 will be allocated to the Compulsive Gaming Prevention Fund.
• The First Responder Presumed Coverage Fund will receive a sum of $2 million.
• The Internet Gaming Act mandates the MGCB to allocate funds for regulating and enforcing internet sports betting.
• At the conclusion of the fiscal year, the School Aid Fund receives the remaining balance.

Fantasy Contest Fund

The fund operates on a straightforward principle: the MGCB allocates its expenses for the regulation and enforcement of fantasy contests, while the remaining amount is directed towards the School Aid Fund.

Michigan Strategic Fund

The Michigan Strategic Fund (MSF) was established in 1984 with the purpose of fostering economic development and job creation within Michigan. Tax revenue allocated to the MSF is utilized to contribute towards achieving these objectives.

School Aid Fund

The funding provided by the Michigan School Aid Fund encompasses a wide range of programs that support K-12 schools throughout the state. Some of the programs included in this funding are:

• The allowance provided per student
• Education for individuals with special needs or disabilities.
• Programs for individuals or groups facing elevated risks.
• Education in the early stages of childhood
• Continuing education for adults
• Intermediate school districts can be rewritten as middle school districts.
• Academies of public schools
• Screenings for vision and hearing.
• Grants provided under the No Child Left Behind Act.
• Federal grants are financial assistance provided to individuals, organizations, or state and local governments by the federal government.
• School meals, including lunches and breakfasts
• Vocational education is the training and instruction that focuses on equipping individuals with the specific skills and knowledge needed to pursue a particular career or occupation.
• Assessments

Record-setting revenue payments

Michigan’s online casino revenue keeps reaching new heights, consequently resulting in record-breaking tax revenue for the state.

In the month of April 2022 alone, Michigan’s internet gaming industry contributed a significant amount of revenue to the state and local taxes. With a whopping $24.3 million in state taxes and $6.6 million in local taxes, Michigan’s online casinos have established themselves as leading contributors to tax revenues in the nation.

Michigan has accumulated more than $300 million in state tax revenue since the legalization of online sports betting and gaming in January 2021.

The Michigan Lottery has played a significant role in generating tax revenue for the state. In fiscal year 2021, the Michigan Lottery made a historic contribution of more than $1.419 billion to the Michigan School Aid Fund.

The Michigan Lottery has contributed over $26 billion to the School Aid Fund since 1972.

Breaking down the actual Michigan taxes

Tax revenue is collected by the state from online casinos, online sportsbooks, and fantasy contests in Michigan.

There are distinct tax rates and allocations assigned to each category, determining the specific destinations for the tax funds. In addition, online casinos and sports betting involve two separate entities: non-tribal operators and tribal operators.

Below, you will find a breakdown for each of the three categories.

Online casinos and poker

Internet gaming far surpasses the other two in terms of tax revenue, generating nearly 27 times more than sports betting.

The tax rates imposed on internet gaming vary from 20% to 28%, depending on the yearly adjusted gross receipts.

Here’s how the taxes are divided among non-tribal operators.

• 65% of the Internet Gaming Fund.
• 30% of the population in the City of Detroit.
• The Agriculture Equine Industry Development Fund (AEIDF) has a 5% interest rate, with a maximum limit set at $3 million.

This is where the tax revenue goes for tribal operators.

• The Internet Gaming Fund constitutes 70% of the total.
• The Local Governing Body comprises 20% of the total group.
• Michigan Strategic Fund will be providing a 10% allocation.

Online sports betting

The tax rate for internet sports betting is 8.4% and is calculated based on the adjusted gross receipts from sports betting.

The tax distribution for non-tribal operators closely resembles that of internet gaming.

• The Internet Sports Betting Fund accounts for 65% of the total.
• The city of Detroit constitutes 30% of the total.
• AEIDF has a cap at $3 million, and the interest rate is set at 5%.

In terms of tribal operators, the situation differs slightly from online casino tax revenue.

• The Internet Sports Betting Fund accounts for 90% of the total.
• The Michigan Strategic Fund represents 10%.

Fantasy contests

Fantasy contests are relatively easy to understand.

The fantasy contest adjusted revenue is subject to a tax rate of 8.4%.

All the tax revenue is directed towards the Fantasy Contest Fund.

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