Michigan Rivals NJ As 2nd-Largest iGaming Market, Behind Pennsylvania

Written By Drew Ellis on February 27, 2024 - Last Updated on March 4, 2024
State outlines of Michigan and New Jersey with

The year 2023 was a record-setting one when it came to online casino revenue. Not just for Michigan, but for its top competitors nationally as well – Pennsylvania and New Jersey.

Michigan online casinos haven’t been around as long as their peers, but the state is holding its own when it comes to generating gross revenue and tax revenue.

Complete 2023 numbers from PlayMichigan found that Michigan was second in the United States behind Pennsylvania in terms of gross online casino revenue. Pennsylvania had revenue of more than $2.1 billion in 2023.

Michigan posted a record $1.92 billion in online casino revenue in 2023. That was a 21.6% jump from 2022’s previous record of $1.58 billion. The Great Lakes State had just over $115,000 more in gross online casino revenue than New Jersey in 2023.

There are six US jurisdictions that offer legal online casinos. PlayMichigan calculates that the total legal online casino revenue in the United States was over $6.5 billion in 2023, producing total state and local taxes of $1.66 billion.

Michigan behind Pennsylvania in gross iGaming revenue in 2023

Looking at the top three markets for gross online casino revenue in 2023, Michigan and New Jersey were neck-and-neck, both behind PA. Gross revenue is how much the online casinos won subtracted from how much customers wagered.

Bar chart showing 2023 online casino gross gaming revenue by state

Michigan online casino revenue edged New Jersey’s but still finished nearly $182 million behind Pennsylvania.

2023 OC Gross RevenuePennsylvaniaMichiganNew Jersey

Note: Each of the three states reports its monthly iGaming revenue differently, which can create some discrepancies in reporting through different outlets.

Michigan 3rd in adjusted iGaming gross revenue

In the gambling industry, gross revenue is one factor for determining which state has the edge over others.

However, adjusted gross revenue (AGR) can also be a determining factor.

Adjusted gross revenue is slightly different than gross revenue. AGR takes the gross revenue and subtracts promotional spending by the operators.

In 2023 the three states had the following amounts for promotional credits listed for their online casinos:

  • Pennsylvania: $363,759,418
  • Michigan: $191,349,974
  • New Jersey: $163,835,405

When subtracting the promotional dollars spent, the iGaming adjusted gross revenue rankings for 2023 come out as:

  1. New Jersey: $1.76 billion
  2. Pennsylvania: $1.74 billion
  3. Michigan: $1.73 billion

Michigan 2nd in 2023 iGaming tax revenue

These three states also have different tax rates for online casino gaming that are applied to the operators’ revenue.

New Jersey’s tax rate is 15% of the internet gross gaming revenue.

Pennsylvania is even more complex. It charges 16% tax on online peer-to-peer games like poker and online table games. It also charges 54% tax on online slot machine revenue.

Online casino taxes in Michigan vary by the AGR of the respective operator.

  • Less than $4 million: 20%
  • $4-8 million: 22%
  • $8-10 million: 24%
  • $10-12 million: 26%
  • $12 million or more: 28%

These rates make up the majority of tax revenue each state generates. There are other percentage criteria that operators agree to in each state to make up the yearly totals.

In 2023, Pennsylvania understandably led the way in tax revenue for the state and local governments, thanks to its high rate on slot games. Michigan was a distant second, but still notably ahead of New Jersey.

  • Pennsylvania: $745,467,307
  • Michigan: $486,563,064
  • New Jersey: $335,945,157

Michigan’s tax revenue from iGaming in 2023 was also over a 21% jump from 2022’s record of just under $400 million.

Tax revenue from gambling in Michigan, including online casinos, helps support the School Aid Fund, Michigan Strategic Fund, first responders and more.

Photo by PlayMichigan
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Drew Ellis

Drew Ellis is currently the Lead Writer of PlayILottery.com. He was the former Lead Writer of PlayMichigan, the No. 1 source for online gambling news in Michigan. A lifelong resident of the state, Ellis has been working in various forms of media since 1998, including more than a decade in the sports betting industry prior to transitioning into US casino markets in 2020.

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