While daily fantasy sports contests have long been played in Michigan, the state is just now profiting off them.
Taxing fantasy contests is new this year in Michigan. The licensing is part of expanded gambling laws, which were signed in December by Gov. Gretchen Whitmer after a yearslong struggle in Lansing.
The Michigan Gaming Control Board recently reported $2.8 million in adjusted revenues for fantasy contest operators in the first quarter, resulting in $240,547 in tax revenue for the state.
Industry giants DraftKings and FanDuel, who also figure to be online Michigan sports betting operators down the line, are among the first DFS entities contributing to the state’s coffers with more to come.
The numbers are a drop in the bucket as the state budget deals with COVID-19 pandemic shortfalls, but every little bit helps increasingly lean 2020 revenues.
Yahoo among four DFS operators soon to be taxed
SportsHub Games Network joins DraftKing and FanDuel as operators already paying the state’s 8.4% tax rate, MGCB spokeswoman Mary Kay Bean wrote PlayMichigan in an email.
Minneapolis-based SportsHub Games Network is the operator of Fanball, CDM Sports, National Fantasy Championships, Whatif Sports, BestBall10s and Leaguesafe.
Bean said four other operators have confirmed they are doing business in Michigan. The operators are in the process of submitting returns and taxes. They are Fantasy Football Players Championship, FullTime Fantasy Sports Network, Yahoo Fantasy Sports and Fantasy Draft.
Those companies had 60 days to submit a license application after they were made available.
History of Michigan daily fantasy sports
The move to regulate DFS came after years of legal wrangling on both sides.
A bill to legalize DFS, designating it as a game of skill, died in 2015.
DFS was also part of bills in Michigan that challenged the federal ban on sports betting before the US Supreme Court repealed the Professional and Amateur Sports Protection Act in May 2018.
Still, former Gov. Rick Snyder vetoed expanded gambling laws, which would’ve set everything in motion one year earlier, at the end of 2018.
Whitmer signed the revised bills at the end of 2019, her first year of office.
Daily fantasy sports funds MGCB expenses, schools
The age requirement is 18 for fantasy contests, while sports betting is 21.
The revenue raised from fantasy contests goes into the Fantasy Contest Fund, which the MGCB uses for its regulatory and enforcement expenses. All remaining money will go to the state’s School Aid Fund.
According to Michigan’s Fantasy Contests Consumer Protection Act, the initial license fee is $10,000, and the annual license renewal fee is $5,000.
Sports shutdown cut into March DFS revenue
The DFS revenue in March was down big in Michigan as sports shut down halfway through the month.
In March, the adjusted revenue was $431,620, with $36,256 in taxes paid to the state. January and February, with the NFL playoffs in January and Super Bowl LIV in February, raised a combined $2.4 million in revenue and $204,291 in taxes.
As the sports calendar trickles back toward normal, the DFS world is capitalizing on what is out there.
For Sunday’s Champions for Charity golf event featuring Tiger Woods, Phil Mickelson, Peyton Manning and Tom Brady, DraftKings is offering a $50,000 free-to-play popularity pool.
Users will select answers to questions based on what they think the majority of voters have selected. The users with the most points will split the prizes accordingly.