The gambling industry was just another negative for Michigan’s balance sheet in 2020.
There’s hope the sector can be a major positive during a 2021 recovery, fueled by the anticipated launch of online sports betting, casinos, and poker sites. But make no mistake: The swings were low for gambling in 2020. Casinos shut their doors due to the pandemic and the launch of online gambling stalled in part because of it.
There’s reason to believe that land-based casinos plus online gambling can help get Michigan moving in the right direction in 2021.
But to truly understand where Michigan gambling stands, we must dive into 2020 — the numbers, the closures, the restrictions, the cautious reopenings, and the lengthy wait for gambling apps.
Just how bad was it for Michigan casinos?
When we peel the onion back on the Michigan gambling industry, the trickle-down impact is enough to make you cry.
It’s just another 2020 reality, one that a lot of states are feeling. While other states were cautiously reopening casinos, Detroit casino doors remain closed — for weeks, then months. When they did reopen in August, the casinos dealt with one of the lowest capacity limits in the US (15%) and a sports world gone topsy turvy.
And it wasn’t just the commercial casinos in Detroit. Native American tribes, casino corporate owners, unions, local governmental entities, workers, and the public at large felt the brunt of a year that never seemed to end.
Detroit’s casinos closed for 176 days in 2020 and will only have been open for 190. As a result, the state government’s cut of tax revenue from Greektown Casino, MGM Grand Detroit, and MotorCity Casino will be down considerably.
Heading into Dec. 23 with only a week of gaming until the end of the year, state tax revenue was down 59% to $48.5 million compared to 2019. Detroit’s tax take was down 61% to $71.2 million.
|Adjusted gross receipts||State tax revenue||Detroit city tax revenue|
*Detroit casinos were closed for most of December 2020, but revenue reports for that month are not due out until January.
Each of Michigan’s 23 tribal casinos closed for extended periods, too, cutting off a major economic artery for the state’s 12 federally recognized tribes.
The tribes do not have to report casino revenue numbers, though revenue sharing payments to the state and local governments from slot machines and table games after this year should provide a glimpse of the downturn.
Casinos taking a cautious approach to reopening
Taking all of that into account, it is no surprise Michigan casinos did not have the best of times. Even now, land-based casinos throughout the state are playing a daily balancing act.
On one hand, customers have to feel safe about the provisions enacted to prevent the spread of COVID-19.
However, each drink not sold, every table game seat and slot machine closed, and the cost of safety equipment impacts the bottom line.
The Detroit casinos are under orders from the Michigan Gaming Control Board to allow groups of no more than six to enter together, among other restrictions.
Among the tribal casinos that recently adjusted additional measures include:
- Bay Mills Casino in Brimley only serves drinks on the casino floor. The Back Bay is only open for take-out and room service.
- Ojibwa Casinos in Baraga and Marquette have a mask policy. However, players can remove it when they are seated to play games.
- Gun Lake Casino in Wayland had its table games closed until Dec. 26 but reopened blackjack, craps, roulette and baccarat.
Will online gambling help fill budget holes in Michigan?
When Gov. Gretchen Whitmer signed expanded gambling laws in December 2019, it was believed that online sports betting and online casinos would give a welcome shot in the arm to state revenue.
Nobody had any idea back then how necessary it would become.
The state continues to make headlines each week with fights over aid packages to those impacted by the pandemic. The final week of 2020 featured a fight over a COVID-19 relief bill from the Republican-led state legislature that Whitmer cut in half before signing.
Estimates vary over how much online gambling will add to state coffers.
When Whitmer signed the bills in 2019, online gambling was projected to raise $19 million combined. Other assessments peg it closer to $25 million with bill sponsor Rep. Brandt Iden opining the activities will ultimately raise nine figures annually for the state.
Considering the shortfall in 2020, any new revenue stream is better than none. Looking to New Jersey or Pennsylvania, two states with all three online verticals up and running, a mature market in Michigan could easily reach that nine-figure amount.
From January to November 2020, the Garden State earned about $170 million in tax revenue from online casinos and sportsbook apps.
How 2021 will look is dependent on the pandemic
But in case you haven’t heard, this pandemic isn’t going away overnight.
While all of Michigan’s casinos were open as 2020 closed, there’s no guarantee that will continue. Among the uncertainties is how the incoming Joe Biden presidency in January will impact shutdowns. The vaccine rollout is also an unknown variable that could bog down Michigan.
Even if casinos remain open, there’s a significant amount of potential players who will stay home because of perceived dangers. Many Michiganders hope an uptick in gambling options will help move the state toward a more prosperous path.
But if 2020 proved anything, events can be hard to predict.