According to a new study, the closure of Michigan’s 26 casinos cost state and local governments nearly $100 million in tax revenue during the first three months of the shutdowns. As Michigan moves toward reopening its 26 casinos, new analysis shows just how much revenue ground has been lost over the last three months.
The closing of the state’s casinos has left a revenue hole in the Michigan budget that will be very difficult to fill. It shows just how difficult the road that lies ahead is as the state begins to recover from the COVID-19 pandemic.
According to the analysis, from March 15, when casinos were closed, through June 15, the closures have resulted in a loss of:
- $44.6 million in tax revenue for the city of Detroit.
- $44.2 million in tax revenue for the state of Michigan.
- $7.5 million in revenue for various local governments, a result of the 2% revenue sharing payments from tribal casinos.
- $375 million in revenue for Detroit-area casinos.
Combined, that is $96.3 million in lost revenue for state and local governments. And that number will continue to increase until every casino has reopened and recovered.
The response to the pandemic was swift and understandable, but the toll has been significant in terms of tax revenue. And that is just one facet. Operator revenue has completely dried up, and that will have long-term ramifications, too, including job losses.
The good news is many tribal casinos have reopened, albeit with reduced capacity and other limitations. And Gov. Gretchen Whitmer has expressed hope that Detriot casinos can reopen before the Fourth of July. But that too will come with restrictions that will continue to affect revenue, including a 15% capacity limit and a smoking ban on the casino floor.
In addition, new revenue will flow soon. Sportsbooks, which launched on March 11, were shuttered after collecting less than $600,000 in sports bets over six days. But with the sports world beginning to reopen—including the NBA in late July, which should draw significant interest—sports bettors will drive revenue never realized before.
With the sports world figuring out a safe way to reopen, sportsbooks will be a key to Michigan’s recovery efforts. After three long months, a return to something resembling normal is welcome for everyone, including state and local governments and the operators themselves. If Michigan can avoid major setbacks, casino revenue will only help as the whole state recovers.
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