The Michigan iGaming industry is one of the top markets in all the US, as it sits just behind Pennsylvania. It’s so big that it accounts for 95.5% of lifetime online gambling taxes in the Great Lakes State.
The sports betting market, in most jurisdictions, get most of the flashy headlines. However, iGaming is what carries the states that the vertical is legal in. That certainly rings true for Michigan online casinos.
Michigan online sportsbooks are certainly an important part of the fabric of gambling in the state. Online casinos, though, are the bread and butter for the market.
Michigan has generated $1.8 billion in online taxes lifetime
The Great Lakes State is approaching $2 billion in lifetime taxes generated from online sports betting and online casinos. It’s certainly a worthy milestone for the state.
Just to put it into perspective, Michigan iGaming has produced $1.7 billion in tax dollars, thanks to recording $6.8 billion in lifetime revenue. Sports betting on the other hand, has generated $81.8 million in lifetime taxes.
In November alone, online casinos set a revenue record for the third straight month with $226 million. In turn operators paid the state $58.3 million in taxes.
While November is always huge month for sports betting operators, they only paid $2.7 million in taxes, which is a far cry from online casinos.
Tax structure is set up for iGaming operators to pay more
Michigan is one of the more tax-friendlier states in the country, especially for sports betting. Sports platforms are taxed at an 8.4% rate, and of that, operators are allowed to deduct promo spend from revenue. That lowers the effective tax rate to 5% lifetime.
That’s a much lower rate considering what online casinos are taxed. Under Michigan gambling laws, the state has a tiered system, which taxes operators the following:
- Less than $4 million: 20%
- $4 million to less than $8 million: 22%
- $8 million to less than $10 million: 24%
- $10 million to less than $12 million: 26%
- $12 million or more: 28%
In November, BetMGM, FanDuel, DraftKings, BetRivers and Caesars each collected more than $12 million in tax revenue. Those five operators, combined, paid Michigan $48.2 million.
A proposed tax hike from Senators Sam Singh and Jeremy Moss expired expired at midnight on Dec. 31. Singh and Moss sponsored bills that would have raised the sports betting tax to 8.5% and increase each iGaming tier by 1%.
There are no plans for the Senators to reintroduce new bills in 2025, as of yet.
Slot revenue is a big reason for online casino success
The Great Lakes State is one of seven markets that has legal iGaming. In each of those states, online casino revenue far outweighs sports betting earnings.
The most popular games on online casinos are slots. Most operators offer hundreds of slots, while some have more than 1,000 available.
The Michigan Gaming Control Board (MGCB) does not break down iGaming revenue by vertical, so it’s difficult to see the exact contribution slots make. However, for comparisons sake, Pennsylvania online slots make up 75.4% of the total iGaming revenue. The Great Lakes State is sure to be right in that general area.
Michigan reaches huge milestone in 2024
The MCGB announced last month that the state had already reached generated more than $501.4 million in taxes, which benefits the School Aid Fund throughout Michigan.
Of that total, $100.5 million was generated from retail casinos and the remaining total of $400.9 million was generated from online gambling.
MGCB Executive Director, Henry Williams, said in a statement:
“As we look back on another successful year, I am proud of the significant impact the Michigan Gaming Control Board continues to have on our state and its residents.
“From supporting education and first responders to tackling illegal gambling, the MGCB remains steadfast in its mission to protect consumers and enhance the public good.”
As Williams alluded, some of the money has been distributed to first responders and other important causes in the following ways:
- $4 million to the First Responder Presumed Coverage Fund to support public safety workers.
- $3 million to the Compulsive Gambling Prevention Fund to aid in responsible gaming initiatives.
- $3.7 million to the Agriculture Equine Industry Development Fund to support Michigan’s agricultural and equine sectors.
- $3.75 million to the agency’s Emmy Award-winning “Don’t Regret the Bet” integrated marketing campaign, aimed at promoting responsible gaming education across the state.
Each vertical of gambling has a role for the state of Michigan. However, online casinos is what the state relies on the most.
