Michigan Blows Past Online Gambling Budget Projections

  • Michigan regulated their online sportsbook and online gambling industry in Jan. 2021.
  • They projected revenues of up to $50 million over the course of the year.
  • They’ve seen almost $90 million in state tax revenue in the first six months alone.

LANSING, Mich. - Michigan recently regulated online sports betting and online casino gameplay, and it has been a runaway budgetary success story. Projections held that the yearly total online gambling revenue would be up to $50 million.

However, in six months, the state has already received almost $90 million in tax revenue from online gambling providers.

In addition, they have received $34.7 million in tax revenue from local and tribal gaming operators.

The $90 million in state tax revenue comes on a gross total of $483.1 million over the course of the first six months of legalization, which began in January. Notably, sports betting is taxed at 8.4%, while other forms of online gambling are taxed at much higher rates, starting at 20% and going all the way up to 28%.

This means that it is plausible that one cause of the revenue jump is a mismatch between the projected users of sports betting compared to projected users of online casinos.

Another is simply that the state’s projections undershot the amount of interest there would be in online gambling in all forms. Still, this is a notable sea change in Michigan, and could mark the beginning of a fruitful relationship between the state and online gambling providers.

This could also put pressure on neighboring states to regulate their online gambling industries.

Ohio, for example, was unable to get a compromise through the legislature to allow for online gambling, and seeing the runaway success that Michigan has had could alter the terms of their debate.

Where Will The Money Go?

The revenue windfall will mostly end up in the Michigan School Aid Fund, which funds much of public education. Money will also be directed towards a fund that is aimed at combating compulsive gambling via programs run by the Department of Health and Human Services.

In addition, it is possible that tribal operators will see some of this money themselves, given the terms of Michigan’s regulation of sports betting and online gambling.