With the launch of Michigan online gambling in 2021, one big question was: Would the appeal of online casinos cause a big reduction in the action on Detroit’s casino floors?
With nearly a year of nuanced data, the answer appears to be: Only slightly, if at all.
The pandemic is forcing land-based casinos through some tough times, especially in 2020. However, Detroit casinos held up OK in 2021 despite COVID-19 lingering and the supposed threat online casinos posed.
In reality, Detroit casino revenues, and the state’s tax take, are holding relatively steady.
Detroit casino revenue down slightly
Since the state’s 12 federally recognized tribes do not publicly report retail casino revenue, let’s take a look at Detroit.
The three downtown gambling halls in Michigan’s largest city have been operating since just before 2000. Greektown Casino, MGM Grand Detroit and MotorCity Casino are essential revenue sources for the state and city coffers.
After a tough 2020 for the trio, online casinos launched in Michigan on Jan. 22, 2021.
Here is a look at the numbers from both 2021 and 2019, the last “normal” year for Detroit’s casinos before COVID-19 changed everything.
|2019 revenue total||2021 revenue total||2019 state wagering tax||2021 state wagering tax|
|MGM Grand Detroit||$623,515,060||$554,029,734||$50,504,720||$44,876,408|
What these numbers show is that the casinos earned $1.45 billion in 2019 revenue and dropped slightly in 2021 to $1.27 billion, a 12.9% drop. The state also raked $15.2 million less in tax revenue.
That’s noticeable, but not overly alarming.
When it comes to Detroit city tax revenue, 2019 produced $184.2 million. In 2021, that number dipped to $160.8 million. The $23.4-million drop was a 12.7% hit.
COVID still biggest hurdle for Detroit casinos in 2021
COVID has been the biggest story of the young decade, and Detroit casinos hold up that truth.
The 2019 calendar year didn’t have any interruptions or restrictions that kept patrons from either of the three Detroit casinos.
In 2020, the pandemic closed Detroit casinos from March 16 to Aug. 5, then kept them at 15% capacity, and closed them again from Nov. 18 to Dec. 20 due to another surge.
In the first half of 2021, all three casinos were forced to operate under capacity limitations. That led to January and February producing revenue numbers under $90 million with much of that downtick coming before online casinos launched. In 2019, the lowest revenue month was January at $112 million.
As capacity restrictions were lifted on June 22 of this year, it sparked July to the peak revenue month of 2021 at $115.7 million.
AGA: Mask requirements, capacity restrictions among nation’s toughest
In addition, mask requirements were back at two Detroit casinos in November 2021, keeping some patrons away.
The American Gaming Association pointed out that Michigan’s mandates on Detroit casinos were among the nation’s toughest.
“While Michigan did see traditional gaming revenue decrease, it’s too early to attribute any fluctuation to the launch of sports betting and iGaming, especially in the context of the pandemic,” the AGA said in a statement to PlayMichigan.
“Many other states — both with and without sports betting and iGaming — similarly saw traditional gaming revenue decline from 2019. Several of those states being impacted by lingering casino capacity restrictions, e.g. Illinois (-12.3%), New Mexico (-11.2%) and Michigan (-12.9%). In fact, Detroit casinos had some of the furthest-reaching and longest-lasting casino capacity restrictions of any market, only lifting its 30% maximum capacity restriction in late June.”
Online casinos have more than made up the difference
A number of factors can translate into the changes from 2019 to 2021, but the bottom line is there’s no reason to worry.
We’ve seen the concerns our friends to the north, Ontario, are expressing regarding online casinos causing millions of losses provincially. The casino industry doubts those reports for good reason.
As reported Tuesday, online casino revenue for Michigan in 2021 came in at $1.11 billion. That produced $201.7 million in state taxes and another $55.3 million in city taxes.
Between the Detroit casinos and online casinos in 2021, that’s more than $300 million in state taxes. That’s 60% growth compared to 2019’s state wagering tax number prior to online casinos launching.
Detroit took in nearly $32 million more in tax money from land-based and online casinos, despite a drop on the casino floor.
National numbers still rising despite more online gambling
Though online casinos and sports betting are the growing trend around the country, it’s not taking away from the commercial industry.
According to the AGA, commercial brick-and-mortar gaming generated $41.08 billion from January through November of 2021. That’s a 6.4% increase from the $38.62 billion generated during the same period in 2019.
Those numbers show that the commercial industry is still going strong despite the surge in online casinos and sports betting.
What can we project for 2022?
If 2021 told us anything, it’s that online casinos and sports betting are here to stay.
The record numbers put up throughout the year will only lead to more innovation and creativity from the industry to add new users. Online poker and live-dealer gaming are likely to see big pushes this year.
But, the in-person casino industry will continue to make strides to maintain a reliable base.
Promotions, shows and hotel packages will always provide incentives to visit casinos. As the pandemic hopefully begins to move past the latest Omicron surge (fingers crossed), we could see another big summer at casinos and resorts.
It’s hard to predict when the pandemic will mostly be in the rearview mirror. It’s also hard to know what life will look like when it has passed. Some health restrictions may be a new constant.
What we can decipher is that people are still craving the in-person casino experience and that should only grow as the pandemic lessens.
With the online industry surging in the meantime, there are still a lot of positives for the state and city of Detroit when it comes to bringing in money.