Last week, the Michigan Gambling Control Board approved provisional licenses for 15 platform providers that aim to run online gambling and sports betting operations for the state’s commercial and tribal casinos. All platform providers still have to complete additional regulatory requirements before members of the public can place their wagers, including testing the games and platforms, approve internal controls and obtain occupational licenses for some employees.
In-person sportsbooks went live in March, just before COVID-19 was first detected in Michigan. But setting up rules for online gambling took more time, in part because the gambling control board had to set up an all-new framework that incorporated the licensing process, standards and regulations and penalties for noncompliance.
Residents who opt to place a bet online must be over the age of 21 and be located within the state of Michigan. Under the law, an 8.4% tax on retail sports bets are collected after winnings are paid out. Taxes on internet gambling would range between 20 and 28 percent, depending on how much money a casino generates from online gambling.
Most of the tax revenue generated by online gambling will be directed to the School Aid Fund, which funds K-12 schools in Michigan. Another $4 million a year would go to a fund compensating firefighters who contract cancer due to exposure to smoke and chemicals while on the job, and other funds will be set aside to go to a compulsive gaming prevention fund.
State officials and industry experts predict the launch of online wagering options will open up new markets and boost revenue, particularly as COVID-19 continues to limit in-person gambling. Michigan’s three commercial casinos in Detroit are currently closed as part of a state order shutting down certain in-person business activity. Tribal casinos are not required to adhere to state orders, although two tribes voluntarily closed their gaming facilities and those that remain open are still subject to COVID-19 precautions.
The three Detroit casinos MGM, MotorCity and Greektown had been operating at 15% capacity since operators were allowed to reopen in early August. As of October, those casinos’ year-to-date revenue on table games and slots was $550 million, down 54.2% from the $1.2 billion in revenue reported during the first 10 months of 2019.
In other states where it’s already legal, the numbers show consumers are taking advantage of placing their bets online. In October, New Jersey casinos took in $338 million in total gambling revenue, 43% of which was from online gambling, and in Pennsylvania, 28% of the $320 million in total gaming revenue for October came from online gambling.
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