If you’ve been paying attention to Detroit commercial casino revenue numbers in recent months, you’ve noticed that they are trending downward.
While some will be quick to draw a correlation to iGaming, it’s not quite that simple.
The reality is really much better for the gambling industry than some would like you to believe.
Looking at the Detroit casino revenue numbers
To convey the recent trend, let’s pull ourselves back and look at things since Michigan online casinos first began operation in January of 2021.
Here’s a comparison of where Detroit’s retail casino revenue has stood for every month since. It also includes the growth or decline from year-to-year for each month of 2022.
The numbers represent the combined gross revenue for the MGM Grand Detroit, MotorCity Casino Hotel and Hollywood Casino at Greektown.
| Month | 2021 Revenue | 2022 Revenue | Change |
|---|---|---|---|
| January | $86,780,342 | $98,971,816 | +14.04% |
| February | $86,461,688 | $95,591,360 | +10.56% |
| March | $110,866,726 | $120,928,380 | +9.08% |
| April | $107,441,347 | $116,855,073 | +8.76% |
| May | $107,938,168 | $106,269,228 | -1.55% |
| June | $105,801,010 | $98,196,117 | -7.19% |
| July | $115,678,780 | $105,942,852 | -8.42% |
| August | $112,167,014 | $104,481,457 | -6.85% |
| September | $106,933,597 | $100,818,011 | -5.72% |
| October | $111,470,607 | TBD | TBD |
| November | $103,858,944 | TBD | TBD |
| December | $111,364,308 | TBD | TBD |
For the first four months of 2022, the retail revenue was improving from its previous year’s mark.
The months of May, June and July is where a decline began. Since July, trends have began moving back toward even.
Overall Michigan gambling revenue growth undeniable
It’s easy to just look at the commercial numbers and say they are dipping and raise a red flag.
It’s a “glass half empty” look at a just half a glass.
The reality is the Detroit casinos are bringing in more revenue than ever before when you combine the commercial and online revenue numbers.
Prior to online legalization and the pandemic, Detroit’s three casinos brought in $1.454 billion in gross revenue for 2019.
In 2021, they brought in $1.267 billion in gross revenue at the retail locations. That is a 12.9 percent decrease commercially. However, add in $579.2 million in online gross revenue and that is a combined total of $1.846 billion. That number is a 27 percent increase from 2019’s total revenue for the trio.
You can see the cumulative growth the three Detroit casinos have experienced since online casinos launched in the graph below, courtesy of Spectrum Gaming Group.
Similarly, the chart below reflects the revenue for the three Detroit casinos from December 2019-February 2020 and compares it to the same months for the 2021-2022 winter. Numbers are reflected in millions.
While the commercial revenue dipped 17.2%, an addition of $184 million in online revenue boosts the total revenue for the three months to a 32.6% increase.
Don’t expect the online revenue numbers to decline any time soon either. Every quarter has seen growth since launching in January of 2021.
- Q1 2021 (started mid-Jan): $191,438,595
- Q2 2021: $244,126,239
- Q3 2021: $262,954,196
- Q4 2021: $304,934,730
- Q1 2022: $338,313,034
- Q2 2022: $343,422,276
- Q3 2022 (through 2 months): $234,686,324 (on pace for new high)
What to make of Detroit retail casino revenue decline
While online sports betting is available in 33 states, online casinos are only operational in six states in the US. It’s been much more difficult for the gambling industry and lawmakers to get comfortable with iGaming.
Lawmakers that want to keep online casinos from coming to their state will point to Michigan’s numbers as a sign of “cannibalism” of the retail industry.
In truth, there are a lot of factors that go into the latest numbers dip in Detroit.
Detroit a small percentage of commercial casinos
Perhaps the biggest point is to understand that Detroit doesn’t represent all retail casinos in Michigan. In fact, Detroit makes up just three of the 26 commercial casinos in the state.
A total of 23 tribal casinos run operations in Michigan. All of which do not report monthly commercial revenue. They pay a revenue share to the government based on their fiscal year.
We won’t know how these tribal casinos fared in 2022 until their annual Tribal Gaming Report is released. It’s possible that they saw an increase in revenue for the year.
The only commercial casinos Michigan has data for are all located in Detroit. That’s in the Southeast corner of the state and not easily accessible for a large portion of the population.
Detroit is also not known for being a “casino destination” like many of the cities that are home to tribal casinos.
Detroit is an entertainment attraction for visitors that also just so happens to have three casinos available around the city.
Gas Prices and Inflation
It’s been a tough summer for many consumers with rising prices across the board, especially at the gas tank.
Higher costs for travel and every day needs could have consumers opting for less time at the casino.
According to AAA, the current Michigan average at the pump on Oct. 14 was $4.244 per gallon. That is up nearly a dollar per gallon than a year prior ($3.316).
When commercial revenue numbers began to hit their biggest declines in June, that is when Michigan experienced record-highs in gas prices.
The record-high average in Michigan of $5.223 per gallon occurred on June 11, 2022. Detroit had its highest average of $5.307 per gallon occur on June 15 of this year.
According to the University of Michigan Consumer Survey, the median expected year-ahead inflation rate rose to 5.1% in October.
The same survey reports that energy prices have rose 18.6 percent, while food prices have rose 13.9 percent over the last 12 months.
Pandemic concerns
While retail casinos are largely out of any pandemic restrictions, that doesn’t mean 100 percent of the consumers pre-pandemic are back to being comfortable in a retail casino.
It was in June of 2021 that the retail casinos were able to resume full operations, but still required masks.
The mask mandates at the Detroit casinos came to an end in February of this year for vaccinated consumers. However, all three stated they would not seek proof of vaccination from those not wearing masks.
The casinos themselves have still been feeling the impact of staffing shortages and COVID policies that impacted the overall experience for consumers.
Casinos have seen fewer dining and entertainment options than were available pre-pandemic.
Michigan casino revenue could see even more of a boost
If there’s anything we’ve learned in the nearly two years of having online casinos in Michigan, it’s been successful.
It’s led to more than $2 billion in revenue for the operators and more than $525 million in tax revenue for the state.
Commercial numbers remain strong on top of the online numbers, and there’s data to indicate that commercial revenue could see a boost as well.
New records nationwide
According to the American Gaming Association, nationwide commercial gaming revenue hit a new quarterly record in Q2 of 2022.
A total of $14.81 billion was recorded from April through June of this year, setting a new record by 3.3 percent.
The first half of 2022 saw $291.6 billion generated, an 18% increase from 2021. That also puts the U.S. on pace for a new annual record for the second consecutive year.
On top of that, the National Indian Gaming Commission announced an all-time high of $39 billion in commercial gaming revenue in 2021.
Commercial gaming doesn’t seem to be slowing down collectively, nor does online gaming.
According to the AGA, the six states with online casinos generated $1.21 billion of gross revenue in Q2 of 2022. The $2.42 billion in commercial iGaming revenue generated through June of this year is a 43.5 percent jump over the same period in 2021.
Detroit economics on the rise
According to the Detroit Economic Outlook for 2021-2027 (PDF), Detroit residents are expected to see strong wage gains for 2022, with continued growth into 2027.
Wage growth for Detroit residents has increased by 6.6 percent in 2022. While expected to dip back to 3.7 percent in 2023, by 2027 the average annual wage of Detroit payroll employees should reach 34 percent higher than it was in 2019. Projections call for the average yearly wage to reach $89,500.
Job growth is expected to reach 5.4% in 2022 for Detroit as well. With more development projects on the horizon, Detroit should continue to see steady job growth.
Detroit’s unemployment rate dropped to 10.6% in May. The rate was nearly 40% in the early days of the pandemic.
