Big wager
Online gaming and sports betting is a tax windfall for Michigan amid concerns of a rise in problem gambling
It’s difficult to miss the barrage of visual advertising, particularly on television, touting the availability of online sports betting and gaming in Michigan – whether it’s Fanduel, Draft Kings, BetMGM or others.
Online sports betting and online gambling launched in January before the biggest professional football event of the year – the Super Bowl. Since then, online wagering is promising to be a tax windfall for Michigan from the hefty taxes charged to online casinos that offer gaming platforms.
But more gambling availability in Michigan also raises concerns about increased gambling addiction from the ability to wager from a home computer, tablet or cell phone at a time when people are still leery of moving about during the continuing coronavirus pandemic.
The potential of expanded gambling to exacerbate problems with problem gambling isn’t lost on the state health department, which started March off with gambling abuse symposium.
March was also Problem Gambling Awareness Month in Michigan.
“As you look at the continual evolution of gambling and accessibility, we want to make sure we provide services,” said Alia Lucas, who is with the Bureau of Substance Abuse and Addiction Services at the Michigan Department of Health and Human Services.
Among the services provided is a 24hour hotline for people to seek help if they feel they might have a gambling problem. People who feel they have a gambling problem can also voluntarily place themselves on a “disassociated” list that bans them from accessing on
line gaming platforms or entering land-based casinos.
About one percent of the adult population in the United States has a severe gambling problem, according to the National Center for Responsible Gaming.
A gambling problem is defined as a need to gamble more money to achieve the desired excitement, symptoms of withdrawal if gambling stopped or reduced, and an inability to stop or reduce gambling. Criteria such as chasing losses are unique to gambling disorders.
The volume of calls made to the state 24-hour gambling hotline suggests the availability of online gaming may be cause for concern
about an increase in problem gambling as the pandemic continues.
The number of calls jumped from 844 in December to 1,049 in January after online gaming and sports betting began, and then to 1,312 in February.
At least some of the online gaming activity is linked to the coronavirus pandemic, which has closed or reduced capacity at casinos in the past year, and given people access to gaming without the risk of leaving the house.
“COVID has been impactful with gambling activity,” Lucas said. “It’s typically a social activity. Not able to socialize, they have access which causes opportunity. Someone might be sitting next to you and engaging in gambling activity.”
Michigan gambling
Gambling in general
has been legal in Michigan since the 1980s on tribal lands, and expanded in the late 1990s when three casinos were added in Detroit.
Today, there are 26 land-based casinos in the state, most on tribal lands.
The list of online gaming and sports betting platforms is up to eight with the possibility of more to come as they affiliate with land-based operations and gain state gaming board approval.
Online gambling, of course, is the newest wrinkle in Michigan’s betting landscape, and it is proving to be lucrative for the operators and for the state.
Tax windfall
Since online sports betting and gaming began in March, the state has collected piles of tax money
from wagers made at online betting and gaming outlets in January and February, indicating that bettors are taking advantage of the online convenience rather than making a physical trip to any of the more than 25 tribal and land-based casinos in the state.
For online sports betting, the state charges operators 8.4% of the adjusted gross betting receipts. For online gaming, the state’s percentage ranges from 20-28%
So far, those percentages and willing online participation have meant big bucks for the state.
Online gaming operators took in $27.5 million in revenues in January and $75.19 million in February, resulting in payments to the state of $4.2 million in January and $14 million in February.
Sports betting is less lucrative,
generating $13 million in revenues in January and $9.4 million in February, but only $111,695 in January and $142,239 in February in taxes to the state.
However, if February turns out to be an average month, the state’s yearly revenues from online gaming and sports betting could generate as much as $170 million for the state.
The money the state collects from online wagering goes to a variety of places – 30% to Detroit, 5% to the state equine industry fund, and 65% to the state’s internet gambling fund.
The internet gambling fund sends a big part of its proceeds to the state school aid fund after siphoning off $2 million for support of first responders, and $500,000 for the prevention of compulsive gambling.