Michigan Approves Regulations for Mobile Gaming and Sports Betting

The Michigan Legislature has approved regulations governing Daily Fantasy Sports (DFS), online casinos, and mobile sports betting in the state, as anticipated.

Originally anticipated to launch at the end of the year, the MGM Grand Detroit BetMGM sportsbook, which was seen in the Detroit Free Press’ photo prior to its closure due to the coronavirus, is now positioned to launch online earlier than previously thought. The Michigan Joint Committee on Administrative Rules (JCAR) voted yesterday to waive the 15-day waiting period on proposed state regulations, expediting the process for online gambling and the influx of much-needed tax revenue as set by Michigan Gaming Control Board (MGCB) and state lawmakers. This will enable Detroit’s three commercial casinos, including MGM Grand Detroit, to commence their online gaming and sports betting operations. MGM Grand Detroit’s partner BetMGM was expected to launch at the end of the year, but this vote has granted the sportsbook the opportunity to open online earlier due to the coronavirus-induced closure.

Motorcity Casino and Greektown Casino, both located in Michigan, have entered into an iGaming partnership with FanDuel. Through the agreement, FanDuel will utilize IGT’s online gaming platform and the Barstool Sportsbook app. Additionally, Michigan has kept tax collection low.

Michigan Keeps Tax Collection Low

In Michigan, the tax rate for sports betting revenue that takes place through online channels will not be increased. Detroit casinos will yield 8.4% of their online sportsbook wins to the state, the same amount as the three land-based sportsbooks. However, the way that the taxes are allocated differs. 3.78% will go to Michigan and 4.62% will go to the City of Detroit for winnings through land establishments, while 30% of the taxes earned online will go to Detroit. Additionally, 5% are awarded to the Michigan Agriculture Equine Industry Development Fund (with a cap of $3 million per operator annually) and the remaining 65% goes to the state. Concerning internet sports betting carried out through partnerships with Michigan’s federally recognized tribes, all of the taxes are awarded to the state.

GGR from internet casinos could potentially be a big source of income for the state and city, with taxes ranging from 20-28 percent, the final rate depending on adjusted gross receipts. Detroit casinos’ iGaming revenue would be divided between the state and the city, and all tribal online tax revenue would go straight to the state capital. For daily fantasy sports operators, 8.4 percent of their month-by-month income would be shared with the state. In conclusion, online gaming may offer an alternative form of revenue.

Online Gaming Could Help Revenue

The three commercial casinos in Detroit, including MGM Grand Detroit, Motorcity, and Greektown, are once again closed following an order from Michigan Gov. Gretchen Whitmer (D) to stay shut until December 9th. Since COVID-19 has been rampant, the gaming properties throughout the state, unlike tribal casinos, have had to comply with state regulations. During the second quarter, these three casinos earned $0 in GGR, thus making the third quarter’s Casino win of $163.6 million a 53.4 percent year-over-year decrease. With the casinos closed again to prevent the virus from further spreading, the fourth quarter seems to be looking just as dismal. Hopefully though, the Michigan Gaming Control Board is accurate in their statement predicting that online casino wagering and mobile sports betting will be available before the end of the year, thus allowing some income to come in for the casinos despite further closures.