Michigan Gambling Adds $2 Billion in Tax Revenue, Among Biggest State Contributors

Over the past five months, revenue reports have pointed to a steady growth in the Michigan gambling industry. Online and retail casinos have particularly been on an upward trajectory, smashing monthly revenue records since the year began. Sports betting in the state has also shown signs of financial recovery especially in the last two months.

Gambling in the state has also contributed immensely to the economy through taxes. In 2022, the MGCB reports that the industry brought in almost $2 billion worth of tax revenue. This figure makes it one of the biggest tax contributing industries in Michigan.

Early this year, the Michigan Gaming Control Board revealed that the gambling industry in the state generated a total tax revenue of $1.96 billion in 2022. This amount came from a wide variety of sources, considering that Michigan permits online and retail gambling in different capacities.

Online casinos were the largest contributor to the total tax revenue in 2022. They brought in $289.2 million in state taxes and another $77.8 million in city taxes last year. When added to the governing body of jurisdictions payments worth $32.8 million, the total tax revenue from Michigan online casinos came to $399.9 million.

The total revenue from online casinos is more than what was generated from sports betting, tribal casinos and Detroit online gambling centres put together. Interestingly, in 2023, online casino tax revenue is expected to rise by 27%, possibly adding $80 million to the total tax payments generated.

Michigan sports betting apps also brought it a sizable $20.5 million tax revenue. This total amount comprised $13.7 million paid as state taxes and $6.8 million worth of city taxes in 2022. Similarly, Detroit sportsbooks pulled in $1.6 million, paying more local taxes than state taxes for the outgone year. On the other hand, Detroit casinos fared better with a whopping $257.4 million worth of tax revenue.

The Michigan Lottery was the only sector of the gambling industry that generated above $1 billion worth of tax revenue. Michigan recorded a total tax figure of $1.25 billion from the lottery and another $1.4 million from Fantasy Contests within the state. The 23 tribal casinos in the state completed the tally with a contribution of $30.8 million to local authorities.

The Wolverine State spends gambling tax revenue on several projects and statutory funds. Perhaps the largest of all is the School Aid Fund which takes up all the tax revenue generated by the Michigan Lottery.

Since 1972, the Lottery has contributed over $27 billion to the School Aid Fund. Only Sales Tax, Individual Income Tax and the State Education Tax have contributed more to the School Aid Fund than the Lottery.

Other channels where the Michigan gambling taxes are invested include the Internet Gaming Fund, Internet Sports Betting Fund, Michigan Strategic Fund, and the Fantasy Contest Fund. All these funds are spent on promoting responsible gaming as well as financing first responders. 

In addition, the Agriculture Equine Industry Development Fund and the city of Detroit are some other local entities that receive part of gambling taxes.

With a total tax revenue of close to $2 billion in 2022, Michigan online gambling ranks as one of the highest contributing industries. To fully understand how much Michigan adds to gambling in the state, it helps to compare its input to other revenue sources.

For context, Corporate Income Tax is another leading tax revenue generating sector, but it falls short of the gambling’s industry contribution as it offered only $1.7 billion between 2020 and 2021.

Motor Vehicle Registration and Gasoline Tax are close runners up, contributing $1.4 billion and $1.1 billion, respectively. In fact, Michigan gambling contributes double the tax revenue generated from Alcohol Tax, Diesel Fuel Tax and Recreational Marijuana Tax combined.

The Alcohol industry could only generate tax returns of $285.8 million at the end of the fiscal year in 2021. Recreational marijuana also contributed $140.8 million, despite projections for its growth post-pandemic. In total, Michigan made a collective tax revenue of $38.9 billion from across all its industries. Online gambling is expected to grow exponentially, and one may expect that tax revenue possibly doubles over the next financial year.