Detroit Mayor Says Online Gambling Helped Offset Lost Tax Revenue During Pandemic

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Detroit Mayor Mike Duggan is crediting Michigan‘s legal online gambling industry with helping refill city coffers. Without the new market, the state could’ve seen steeper tax revenue losses last year than it did due to the pandemic.

After March 2020, Detroit’s auto plants and three retail casinos joined other businesses in adhering to a state-mandated shutdown due to the spread of the coronavirus. Over the next 18 months, the pandemic cost the Motor City about $348 million in revenue, according to the Associated Press.

On Monday, the Detroit Free Press reported Detroit received $26.6 million in iGaming and online sports betting tax revenue during Fiscal Year 2021. With the $71.1 million in online gambling tax revenue that will join its $1 billion general fund during Fiscal Year 2022, Detroit’s budget can return to “normal,” Duggan told city council.

Duggan said:

“Internet gaming revenue, which was new to us, has so far offset the losses of our income tax revenue.”

How Detroit benefited from online gambling

About 158,000 commuters who would normally have been traveling into the city for work paid income taxes, NextCity.org estimated in 2017. About 59% of them earned more than $40,000 a year. That revenue left Detroit during the shutdowns.

Also pre-pandemic, land-based casinos paid Detroit more than $184 million in city wagering tax during 2019, according to the Michigan Gaming Control Board (MGCB).

Then came the struggle.

Beginning at 3 p.m. on March 16, 2020, casinos shut down from that date through July.

Among Detroit businesses adhering to coronavirus shutdowns were the city’s three retail casinos:

Greektown Casino-Hotel
MGM Grand Detroit
MotorCity Casino Hotel

As a result during 2020, the casinos submitted nearly $74 million in city wagering tax, MGCB figures show.

That’s when legal online gambling entered Michigan.

On Jan. 22, 2021, Michigan online casinos, sportsbooks and poker launched.

That year, MGCB said operators using the licenses of those three casinos – Barstool, BetMGM and FanDuel – sent Detroit $55.28 million in iGaming and $4.07 million in online sports betting taxes and fees.

MGCB’s $59.35 million figure from 2021 doesn’t match what Duggan discussed, because the state board is using the calendar year. Duggan’s numbers from Detroit’s Office of the Chief Financial Officer (OCFO) follow the fiscal year.

Meanwhile, MGCB reported retail casino revenue rebounded and Detroit received nearly $161 million in city wagering tax during 2021.

Play Michigan detailed even more granular tax revenue predictions on Tuesday.

Putting the pandemic in perspective

The roller coaster tax revenue ride during the pandemic is a tale many cities can tell.

However, it’s not the worst economic crisis Detroit’s seen.

The Michigan city that just emerged from bankruptcy in 2014 is used to finding unusual solutions.

This is the city that Forbes reports made a deal in which “outside contributors agreed to put $800 million into Detroit’s underfunded pension plans in exchange for taking the Detroit Institute of Art’s priceless collection of Van Goghs, Matisses and Picassos off the bargaining table.”

Detroit had been considering selling its $4.6 billion art collection to pay its bills.

Balancing the budget with online gambling tax revenue is just the city’s latest work of art.

Author: wpadmin

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