The Michigan online casino industry has reached milestones that took other states far longer to achieve. The August monthly revenue report, released by the Michigan Gaming Control Board, pushed the iGaming industry over the $1 billion revenue mark for 2022.
August online casino revenue grew 3.7% in August, compared to July’s numbers ($127 million), translating to $130.9 million in revenue. The month brought the total online casino revenue to $1 billion from January 2022 – August 2022.
Now experts believe Michigan online casino operators will surpass $1.5 billion in revenue for 2022. Considering 2021 saw operators reach $1.1 billion total, Michigan is already on track to easily beat 2021’s numbers. If the state does reach $1.5 billion, it would be a 36% increase from 2021.
With TwinSpires’ exit announced in early 2022, the state hasn’t been 15 operators strong for some time. Now with SI Sportsbook live in the state, thanks to their partnership with Island Resort & Casino, it’s likely the Hannahville Indian Community will partner with Sports Illustrated if they’re able to produce a casino app in Q4 2022. If they’re able to, 2023 will likely see continued growth in iGaming revenue in Michigan
Michigan Online iGaming Operators Surpass $2 Billion in Total Revenue
Last year, it took Michigan until December to reach the $1 billion mark. Collectively, 2021 and 2022 have resulted in state operators making over $2 billion since launching in January 2021.
Only two other states have reached $2 billion in iGaming revenue since launching: Pennsylvania and New Jersey. It took Pennsylvania 30 months to reach the $2 billion mark, while New Jersey took 81 months to reach the milestone.
Pennsylvania officially launched online casino gaming in July 2019, a month after online sports betting went live in the state.
Michigan and Pennsylvania both had that going for it, the combo sports betting and casino gaming. Sports betting naturally encourages wagering on casino games and table games as well.
New Jersey, on the other hand, launched online casino gaming back in November 2013 and had only five operators in the state. Once online sports betting did finally begin in 2018, New Jersey operators experienced a noticeable growth month over month attributed only to the establishment of legal sports wagering in the state.
Other constraints that often to launch complications
Another area where Pennsylvania was set back, was due to legal concerns at the time. State operators were unsure where the US Department of Justice (DOJ) stood at the time on the Wire Act. Recent interpretations by the DOJ led to many confused operators unsure if their services would be liable for litigation if they launched in Pennsylvania. Basically, state operators initially thought they would be able to base servers in New Jersey rather than Pennsylvania. Pennsylvania legislatures eventually required operators to conduct all aspects of their business within Pennsylvania state lines.
The number of operators available at launch in Michigan undoubtedly helped boost its phenomenal first year and a half revenue numbers. Michigan launched online casino gaming and sports betting in January 2021. On launch day, Michigan had eight online casino operators and ten online sports betting operators live.
The Michigan Gaming Control Board (MGCB) made sure operators knew what was required of them to be good to go come launch day.
MGCB Deputy Director David Murley said, “I think we tried to really work with the industry by telling them, ‘Look, if this is what we need, in terms of say, licensing, this is what we need. And if you get it in by this time, you’ll be part of the first group that launches.’ Then we tried to incentivize the industry to get their stuff in and to talk to us to get these issues resolved. Knowing then that, if they did that, then they weren’t going to be left behind.”
“I think that was very successful. It allowed us to move this stuff through the rules and everything else with the licensing, and get internet gaming launched in Michigan very, very quickly,” said Murley.
Michigan legislature also set a sliding tax scale. While New Jersey has a slightly lower overall effective tax rate at 17.5%, the highly competitive market makes it harder for new sports books and casinos to establish. Michigan offered operators an untapped market when they launched and a sliding tax scale starting at 20% for gross revenue less than $4 million and capping at 28% for gross revenue over $12 million. Pennsylvania, conversely, taxes online slot machine games at 54% and table games/poker at 16%.
Mac Daniel is a Michigan native and freelance writer for PlayOnlineCasino and PlayOnlineSportsBetting. He has experience writing about a wide variety of topics, including healthcare, tourism, non-profit organizations, and most recently casino and sportsbetting news. To check out more of his work, visit: playonlinemichigan.com