Michigan’s bet on online gaming pays off

Online gaming takes off as brick-and-mortar casino revenues tumble during pandemic

East Lansing, MI–An analysis of casino revenue data by experts at Anderson Economic Group shows that online gaming, which was legalized this January, could be a boon for Michigan’s ailing gaming industry and for gaming tax revenue. The State closed brick-and-mortar casinos for several months in 2020 to slow the spread of COVID-19. These actions led to a steep decline in gaming tax revenue. However, new data indicate that the start of online casino gaming in Michigan could more than make up for reduced brick-and-mortar casino tax revenue moving forward.

“Michigan seems to have hit the jackpot with the timing of online gaming legalization,” noted Sarah Mixon, a senior analyst at AEG. “While other states’ gaming industries are down on their luck, Michigan has begun to rake in revenue from online gaming.”

Statewide internet gaming began on January 22. During the first nine days of operations, online casinos generated more than $27 million in revenue, and more than $4 million in tax revenue for the State. “Without online gaming, total casino tax revenue would have fallen short of its January 2020 total,” said Mixon. Instead, total casino tax revenue was $1.6 million higher than January 2020, and $11.2 million higher than February 2020.

In 2019, casinos generated more than $116 million in tax revenue for the State. That amount dipped to $50 million in 2020 as casinos were shut down and wary Michiganders chose to stay home during the COVID-19 pandemic.

This loss in gaming tax revenue was not unique to Michigan. States across the U.S. experienced tax revenue losses as governors ordered brick-and-mortar casinos closed. But online gaming proved to be a bright spot in several states, including New Jersey and Pennsylvania, where online gaming activity increased noticeably.

Mixon also noted that online gaming revenue has remained above its pre-pandemic level even as brick-and-mortar casinos reopen. “We may be on the verge of a larger switch from in-person to online gaming,” she said. “Playing online is an added layer of convenience. There is no need to commute to a casino, and no wait times to play certain games.”

Experts at Anderson Economic Group will continue to monitor online gaming revenue in upcoming months. To learn more, contact AEG.