Since Michigan’s online casino market launched on January 22, it has exceeded all expectations. When lawmakers considered legalizing online gambling in 2019, the Michigan House Fiscal Agency’s analysis estimated $200 million to $300 million in adjusted gross receipts over a 6-month period, based on New Jersey’s 2018 launch estimate of $300 million.
The report noted Michigan has about one million more adult residents than New Jersey, but its per capita personal income is about 40 percent lower. In addition, the report stated a fully mature market would land between $400 million and $600 million in annual AGR.
A new report shows between the January kickoff and May 31, a total of 130 days, AGR was $369,371,106. Monthly AGR has held steady at $88 million. It all means Michigan’s online casinos could generate more than $1 billion dollars in their first 365 days of operation.
Eilers and Krejcik Gaming (EKG) noted this development in its most recent newsletter. It uses gross gaming revenue rather than adjusted, but it stated, “Michigan may find its ceiling sooner than any other U.S. online casino market to date.” EKG also noted the income disparity between New Jersey and Michigan and questioned how much “headroom for growth” remains.
EKG said Michigan’s phenomenal online gambling success was due to what it called a “perfect storm,” including “Covid-19, the blank-check spending posture of major operators, the concurrent launch of online sports betting and online casino amid a tentpole sporting event, the concurrent launch of multiple tier 1 operators and a low-tax online sports policy structure that also places no cap on the amount of promo spend that can be deducted from taxable revenue.”
EKG also pointed out the Michigan casino GGR per adult is $12, the same as the more mature Pennsylvania market, and it also falls behind New Jersey at $16 per adult. However, EKG noted New Jersey’s market is “juiced” by New Yorkers playing the games when they cross the Hudson River.
Despite Covid-19 keeping people at home, other analysts credit Michigan’s online gambling success to legislators’ foresight in launching it at the same time as the Super Bowl and sports betting. They also said many operators opened for business on day one and the tax rate was reasonable.
Former state Rep. Brandt Iden, author of the online gambling bill, stated, “Regardless of predictions from fiscal experts throughout the process, I always maintained tremendous confidence in the prospects for the Michigan market and it’s off to an incredible start. Even with optimal global conditions created by Covid-19 for an online launch, the market is quickly becoming an industry leader. Michigan once again highlights that good public policy allowing for a competitive market, with low tax rates and consumer protections, will ultimately lead to success. As I work with legislators throughout the country, I am proud to highlight the Michigan model.”
