Schools, First Responders Among Beneficiaries Of Michigan Online Gambling Tax Revenue

Written By Drew Ellis on May 19, 2022
Michigan money

Record revenue numbers for Michigan’s online casinos and sportsbooks are helping more than just gaming operators.

Michigan’s schools and first responders also reap the rewards of the state’s booming gaming industry.

Online gambling has generated more than $300 million in tax revenue for the state since it went live in January of 2021. That money goes to a variety of funds, with a large chunk of it earmarked for the state’s School Aid Fund.

So, your losses are still a win for others who need it. Your bad beat could be providing a textbook or a meal for a child.

Here’s a deeper dive into how that tax revenue money is dispersed and how the tax revenue is calculated.

Where Michigan online gambling tax revenue goes

Large portions of the tax revenue go to a handful of different funds, which is pretty broad.

So, here’s a little more information on each of these funds and how the tax revenue is spread out each fiscal year.

Internet Gaming (online casinos and poker) Fund

  • $500,000 goes to the Compulsive Gaming Prevention Fund
  • $2 million goes to the First Responder Presumed Coverage Fund
  • Expenditures for the Michigan Gaming Control Board’s cost of regulating and enforcing internet gaming under the Internet Gaming Act
  • A payment to the city of Detroit is made if the total gaming related tax revenue received by the city of Detroit falls below $183 million for the preceding fiscal year. However, the total of this payment can never be more than 55% of the total gaming tax deposited in the Internet Gaming Fund, minus the 30% internet gaming tax revenue received by the city.
  • The remaining balance goes to the School Aid Fund at the end of the fiscal year.

Internet Sports Betting Fund

This fund spreads the money out nearly the same, outside of the payment to the city of Detroit.

  • $500,000 goes to the Compulsive Gaming Prevention Fund
  • $2 million goes to the First Responder Presumed Coverage Fund
  • Expenditures for MGCB’s cost of regulating and enforcing internet sports betting under the Internet Gaming Act
  • The remaining balance goes to the School Aid Fund at the end of the fiscal year.

Fantasy Contest Fund

This fund is pretty simple and straight forward, as the MGCB receives its expenditures for regulating and enforcing fantasy contests. The rest goes to the School Aid Fund.

Michigan Strategic Fund

The MSF was created in 1984 and is responsible for helping promote economic development and creating jobs in Michigan. The tax revenue given to the MSF is used to help reach those goals.

School Aid Fund

The Michigan School Aid Fund covers a variety of programs at K-12 schools around the state. Included in the funding are:

  • Per-pupil foundation allowance
  • Special education
  • At-risk programs
  • Early childhood education
  • Adult education
  • Intermediate school districts
  • Public school Academies
  • Vision and hearing screenings
  • No Child Left Behind grants
  • Federal grants
  • School lunches and breakfasts
  • Vocational education
  • Assessments

Record-setting revenue payments

As Michigan continues to set monthly records with online casino revenue, that also means record-setting tax revenue for the state.

Just in April 2022, Michigan generated $24.3 million in state taxes from internet gaming and $6.6 million in local taxes. That puts its online casinos among the top tax revenue producers in the country.

Since online sports betting and gaming became legal in January of 2021, Michigan has generated over $300 million in state tax revenue.

The Michigan Lottery also has been a big tax revenue driver for the state. In the 2021 fiscal year, the Michigan Lottery contributed record payment of over $1.419 billion to the Michigan School Aid Fund.

Since 1972, more than $26 billion has gone to the School Aid Fund through the Michigan Lottery.

Breaking down the actual Michigan taxes

The state collects tax revenue from Michigan online casinos, Michigan online sportsbooks and fantasy contests.

Each category has its own tax rates and allocations for where that tax money goes. For online casinos and sports betting, they also have two different factors – non-tribal operators and tribal operators.

Here’s the breakdown for each of the three categories.

Online casinos and poker

Of the three, internet gaming’s tax revenue blows the others out of the water, raising nearly 27 times as much as sports betting.

Tax rates for internet gaming range from 20-28% based on yearly adjusted gross receipts.

For non-tribal operators, here’s how the taxes are spread out:

  • Internet Gaming Fund: 65%
  • City of Detroit: 30%
  • Agriculture Equine Industry Development Fund (AEIDF): 5%, with a cap at $3 million

For tribal operators, here’s where the tax revenue goes:

  • Internet Gaming Fund: 70%
  • Local Governing Body: 20%
  • Michigan Strategic Fund: 10%

Online sports betting

Internet sports betting has an 8.4% tax rate based on adjusted gross sports betting receipts.

For non-tribal operators, the taxes are spread out nearly the same as internet gaming.

  • Internet Sports Betting Fund: 65%
  • City of Detroit: 30%
  • AEIDF: 5%, with a cap at $3 million

When it comes to tribal operators, things are a little different than online casino tax revenue.

  • Internet Sports Betting Fund: 90%
  • Michigan Strategic Fund: 10%

Fantasy contests

Fantasy contests are pretty straight forward.

An 8.4% tax rate is issued to the fantasy contest adjusted revenue.

That tax revenue all goes to the Fantasy Contest Fund.

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Drew Ellis

Drew Ellis has lived in Michigan his whole life, and has been writing professionally for the last 21 years. Ellis has covered anything from youth baseball in mid-Michigan, a top-25 college football program, and pro sports in the Detroit area. Always keeping busy, Ellis also has over 10 years of experience in covering sports betting, handling all major sports.

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