Michigan’s state gambling laws and competitive tax rates on online wagering has sportsbook and casino operators eager to launch in the state.
With online casino gaming and sports betting on the verge of going live in Michigan, operators predict a strong market for their products once the Michigan Gaming Control Board give its final approval, which could be as soon as Monday.
Michigan has one of the lowest taxation levels on sports betting in the nation with an 8.4 percent state tax on revenue. The same will apply to online sportsbooks, although taxes on online casino gaming range from 20 to 28% depending on the casino’s total revenue from online gaming. Other states levy much higher rates on sports betting, such as Pennsylvania at 36%.
Mike Raffensperger, chief marketing officer of FanDuel Group, said Michigan’s tax rates are comparable to New Jersey, which has an 8.5% tax for in-person sports bets and a 13% tax for those placed online.
Those competitive rates helped lead to a national record $6 billion bet at New Jersey sportsbooks in 2020, according to the state’s Division of Gaming Enforcement, with nearly 92% of the money bet with New Jersey sportsbooks transacted online.
“Michigan is extremely exciting from a marketplace perspective,” Raffensperger told MLive. “The legislation and the regulation, I think was done really intelligently. It created a good mobile online sign up, it has a sustainable tax rate, and it’s a good open competitive market. Those are the three things the states that have been really successful, like New Jersey and others — that’s what they’ve done and that’s what Michigan has replicated.”
Michigan also has a rich sports history with pro teams in all four major sports and two prominent colleges in Michigan and Michigan State.
“There is the extremely popular sports culture, not only on the pro team side, but you also have some really tremendously popular college teams,” DraftKings president and co-founder Matt Kalish told MLive. “In sports books, two of the top five sports are college basketball and college football. So when you have the Spartans and you have Michigan, these are really popular college organizations that have had a lot of success and have a lot of fans. I think that really helps just build up the overall audience for something like a sportsbook. It’s ultimately just a way to get skin in the game on the sports you’re watching. So the more consumption of sports that’s going on in the state, the better our product does.”
Michiganders have been able to place legal in-person sports bets at in-state casinos with operating retail sportsbooks since March, but the COVID-19 pandemic curtailed the highly anticipated launch.
The three Detroit casinos – Greektown, MGM Grand and MotorCity — were forced to shut down on multiple occasions and have had to operate at reduced capacity when open, while many of Michigan’s tribal casinos also weren’t operating at full capacity.
Online casino gaming and sports betting could be an avenue for casinos to make up for substantial losses incurred in 2020 while also generating millions in tax revenue for the state and Detroit.
But the process to get online wagering up and running has been scrupulous.
Gov. Gretchen Whitmer signed a legislative package in December 2019 that allows Michigan’s commercial and tribal casinos the opportunity to provide their own online offerings, including mobile sports betting options.
But setting up rules for online gambling was painstaking as the MGCB set up an all-new framework that incorporated the licensing process, standards and regulations and penalties for noncompliance.
After more than 12 months since Michigan became the 20th state to legalize sports betting, operators just await final approval to begin accepting wagers, which they hope will be before the Super Bowl on Feb. 7.
“We’re working with the state regulator to make sure that we do this the right way and the entire category does it the right way, which is making sure our app only functions correctly if you’re within the state lines of Michigan, that we have the appropriate identity checks so that only those who are of age are able to participate and other things that really matter in terms of the way that sports betting needs to be rolled out legally and safely,” Raffensperger said. “Those things just take time to make sure that everyone is satisfied that we’ve got it right.”
Only licensed casinos in Michigan are allowed by law to offer online gaming and sports betting, but with three commercial casinos and the 12 federally recognized Indian tribes that operate the 24 tribal casinos in the state, there will be ample online wagering options for bettors.
Each casino preparing to launch online wagering has partnered with a platform provider for sports betting, casino gaming and poker. For example, FanDuel is partnered with MotorCity, DraftKings has partnered with Bay Mills Resort & Casino in Brimley, while Fox Bet has partnered with Little Traverse Bay Bands of Odawa Indians, which operates casinos in Petoskey and Mackinaw City.
MGCB executive director Richard Kalm said not all operators will launch when the board gives final approval, but there could be more than 10 mobile betting options by the end of the year.
In some states, like Rhode Island and New Hampshire, there is only one.
However, Kalish said the top competition for DraftKings, which has online wagering offerings in 10 other states, is offshore sportsbooks.
“We’re not gonna go in assuming it’s going to be a not very competitive (market),” Kalish said. “There’s going to be a lot of different options for consumers, and we love that. I think we always believe the best product and experience wins, and we’re very comfortable keeping in that kind of marketplace.”
The MGCB last month approved provisional licenses for 15 platform providers, which allows them to launch their applications before launch (wagers still can’t be placed until final approval).
Many sportsbooks are offering signup bonuses and other promotional offers.
“With a competitive market comes a lot of great promotions, kind of really fun things that we often do that consumers can take advantage of,” Fox Bet chief executive officer Kip Levin told MLive. “Ultimately, you’re seeing it everywhere else (other states with online wagering) if you pay attention to the kind of sports betting social media or see some of the other things happening (advertising) in neighboring states. A lot of the way in which customers engage is through fun promotions, and so I think this is just the start, but it’ll be a big part of the way the industry comes out.”