The state of Michigan raised a few eyebrows when it decided to launch its legal betting platform at the start of a global pandemic that has since seen the shuttering of all major casinos across the US and the hibernation of marketable sports around the globe. Michigan’s launch came quickly after becoming legal in December, 2019 – within 11 weeks of the Governor signing off on the plan and with designs to coincide with March Madness, an enormous revenue generator for sportsbooks around the United States.
With the canceling of NCAA Basketball’s premier annual tournament came the perceived need for Michigan to re-jig the plans. That is exactly what the state and regulators of the platform have done during a time when all casinos and therefore betting opportunities were effectively closed due to the coronavirus crisis. One of the major criticisms of the platform from the outset was its lack of mobile options – something Michigan is working on presently and should be finalized by the end of this year.
Projections for the Michigan Scene
According to MichiganSharp.com, the Michigan legal betting market in the state is expected to elevate into an elite category with an eye-opening $650 million in betting and online revenues its first year. That revenue would contribute $93 million in taxes for the state. Sports betting is estimated to be $400 million of the revenue total which would be responsible for $33.6 million in tax revenue for the state. Online casinos and poker, which will be taxed at between 20-28% will cover the rest.
With a population of 10 million and the Detroit Lions of the NFL, the Detroit Pistons of the NBA, the Detroit Tigers of MLB, the Detroit Red Wings of the NHL and two major collegiate programs the Michigan Wolverines and Michigan State Spartans calling the sports-crazed state home, it is not a shock that Michigan is projected to have the earning potential it does.
At this point, there are 26 retail casinos and 23 tribal casinos operating in Michigan – none of which have an online component yet but are setting themselves up for a robust mobile platform.
What Michigan Has Done Wrong
Obviously, the timing of the launch can be questioned but there was no way that legislators and regulators in Michigan could have seen COVID-19’s effects coming. That said, once the writing was on the wall, the state could have stopped the launch altogether.
Michigan also failed to introduce any sort of online betting to start out with – mobile was always going to be a work in progress that would culminate in a launch much later. And with brick-and-mortar facilities being closed, no mobile meant no betting at all for the better part of four months. Mobile should have been part of the initial plan, so casinos and the state could have at least had an opportunity for revenue generation during the COVID lockdowns.
“Mobile wagering should be the major revenue driver for Michigan’s sports betting market,” said Geoff Fisk, analyst for MichiganSharp.com. “The convenience and ease of access of online sports betting opens up a whole new world of opportunities for both bettors and sportsbook operators.”
What Michigan Has Done Right
Perhaps the best feature of the Michigan legal sports betting scene is their 8.4% tax rate that has made it one of the most attractive markets for the biggest betting providers in the world to infiltrate. By comparison, New Jersey taxes land-based sports betting at 9.75% and online sportsbooks at 13%, Indiana‘s online sports betting tax rate is 9.5%, and Pennsylvania taxes sports betting at a whopping 36%.
“All of the pieces are in place for Michigan to become a major hub for sports betting and online gambling,” said Geoff Fisk. “Virtually all of the state’s casinos should want a piece of the new market, especially with the attractive tax rates.”
Michigan’s Detroit Tigers became the first MLB team to sign a partnership deal with a gambling provider in July when they signed on with premier global sportsbook operator PointsBet. Michigan, in a sense likely started a wave of partnerships that MLB is bound to sign with providers going forward.
Catching up Is Hard to Do
The COVID factor looms large over Michigan. Casinos, which are the only places to wager in the state so far will be limited to 15% capacity for the time being according to Governor Gretchen Whitmer, which is less than the 20-25% in Nevada and Louisiana and 50% at one casino in Ohio. That means a lack of traffic for the only wagering opportunities in the state.