Detroit Casino Revenue Flat Through August, And A Decline Could Be Coming

As the debate over legalizing sports wagering and online casino stalls, the Detroit casino market also remains in neutral.

As online casino gambling/sports betting legalization remains stuck in limbo in Lansing, the Detroit casino market continues ad nauseam to show signs of maturation.

According to figures from the Michigan Gaming Control Board, the three commercial casinos reported $974.3 mm in gaming win through August, up 0.7% compared with revenue for the first eight months of 2018. The casinos reported August aggregate revenue of $119.8 mm, off 0.5% from August 2018.

For August, MGM’s win grew 0.7% year-over-year to $53 mm, and MotorCity saw a 0.4% increase to $40 million. At Greektown, August win fell 4.2% to $26.8 mm.

MGM has 44% market share, while the other two properties have 34% and 22%, respectively.

Earlier this month, the MGCB renewed the licenses for all three casinos.

As for taxes, the casinos paid $9.7 mm to Detroit, off about $100k from what they forked over in August 2018. The City of Detroit’s take in August was $18.5 mm.

MGM Grand Detroit outperforming peers

According to the MGCB, MGM reached $400 mm in adjusted gross (gaming) revenue for the year on Aug. 21. It was the quickest the casino has breached the $400-mm mark in a calendar year since it opened in July 1999, according to state gaming regulators.

Once the $400-mm mark is hit, it triggers a $4 mm payment and a 1% tax increase paid to the City of Detroit under the casino’s development agreement with the municipality, per the MGCB.

MGM is currently in the midst of a lawsuit against the state over taxes on what it says were uncollectible gambling markers.

While MGM’s casino in the Motor City is doing well relative to its rivals in Michigan, the Greektown casino is experiencing a rough patch of results following the closing of its sale to Penn National Gaming and VICI Properties. Greektown was sold for $1 billion, a price tag that appears less attractive if Michigan can’t cross the finish line on sports wagering and online casino gaming.

Status of gaming expansion plans

The Detroit casinos reported $1.44 billion in gaming win in 2018, an all-time high but only 1.4% more than what they won in 2011. The casinos lamented about the “record” earlier this year in a hearing pertaining to the online casino legislation. The market is holding steady, but its gains are significantly trailing overall economic growth in the U.S. and gains seen by the U.S. commercial casino industry.

Currently, talks between state legislators backing both sports betting and online casino gaming and Gov. Gretchen Whitmer have stalled. Michigan is facing the threat of a potential government shutdown over the budget and funding that Whitmer is seeking for infrastructure/roads. It’s unclear if Michigan will be able to send a gambling expansion package to the governor’s desk like it did late last year. Ex-Gov. Rick Snyder decided to veto the iCasino bill, kicking the issue to the incoming governor.

Meanwhile, the Michigan Lottery is setting new sales records, thanks in part to online gambling. Whitmer has expressed concern that online slots could take a bite out of the iLottery. The Lottery does contribute more handsomely to the Michigan School Aid Fund than the casino industry, but those pushing back against Whitmer’s reasoning have consistently argued that online casino/sports betting customers aren’t the same as those who are already playing the iLottery.

Potential contraction coming for Detroit casinos

While the Detroit casinos are fortunate that Ohio hasn’t yet legalized sports wagering, which would draw many would-be Detroit casino gamblers south to Toledo, home to a Penn National casino, the Michigan gaming market now has to contend with legal sportsbooks in Indiana.

The Blue Chip Casino opened up its FanDuel Sportsbook this month, and according to Michigan state Rep. Brandt Iden, sponsor of the online casino and sports betting bills, the Blue Chip parking lot is full of Michigan plates on football weekends. Blue Chip is located just a handful of miles from the southwest corner of the Wolverine State.

Indiana is expected to kick off online/mobile sports wagering this fall, and Michiganders will be able to drive across the state line and place a bet from anywhere, including their cars.

Michigan’s September commercial casino revenue report could show a decline, thanks to Indiana retail sports betting, but the real contraction likely wouldn’t come until the Hoosier State goes online.


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