With Governor Gretchen Whitmer signing off HB 4916, Michigan has emerged as the newest state to legalise sports betting this week. The step, analyst PlayMichigan.com said, will compete with the country’s largest legal sports betting markets once it matures, drawing billions of dollars each year in bets and producing millions in tax revenue.
According to PlayMichigan.com estimates, its capacity as a market is immense, able to generate as much as $7bn to $8bn in annual sports bets and $500 m in gross operator sales.
“Michigan is the second-largest state in terms of population to have legalised online sports betting and online casinos and poker, behind only Pennsylvania,” said Dustin Gouker, chief analyst. “Michigan’s business-friendly tax rate and competitive licensing fees will attract operators, too. And with a solid tribal and commercial casino infrastructure already in place, Michigan should be poised for quick success.”
Michigan will tax gross revenue for sports betting at 8.4 percent, and Detroit casinos will pay the city an extra 1.25 percent tax. This makes it one of current legal jurisdictions’ most successful. Pennsylvania, by contrast, levies a 36 percent tax, by far the nation’s highest. New Jersey levies a 9.75% tax on revenue from retail sportsbooks and 13% on revenue from online sports betting, and neighbouring Indiana levies a 9.5% limit on its sportsbooks.
Even with the lower tax rate, according to the analyst, sports betting could raise as much as $40 m per year for the state.
“Some in Michigan obviously wanted a higher tax rate, but the current rate should draw significant interest from sportsbook operators,” Gouker said. “That will help the market mature more quickly than markets such as Pennsylvania, where the ramp-up has been much slower despite having the largest population among all states with legal sports betting.”
Much of Michigan’s sports betting future depends on how much online betting is accepted by the 23 tribes of the state, which is a major variable in how popular the industry might
be in the state. The American Gaming Association’s President and CEO, Bill Miller, reacted to Friday’s news by saying: “With Governor Whitmer’s signature, 20 states plus DC have now legalised sports betting in the United States, capping off a tremendous year of growth.
“These new markets offer more Americans a safe, legal way to wager on sports while positively impacting communities, like in Michigan, where revenue from sports betting will generate needed resources for public education, first responders, and, importantly, responsible gaming.”