The Detroit casino market contracted 0.3% in October, the fifth straight month gaming win has fallen in a year-over-year comparison, according to figures released by the Michigan Gaming Control Board, the Wolverine State’s commercial casino regulator.
The three properties in the city reported $115.7 mm in aggregate gaming win last month. Through October, casino win was up 0.3% compared to the first 10 months of 2018.
Michigan casino gaming could be on the verge of a down year, however, as gaming win has now declined in a year-over-year comparison for five months in a row. Previously, gaming win fell in June (-1.4%), July (-0.3%), August (-0.5%), and September (-2.5%), per state figures. The sluggish performance in 2019 follows a 2018 when the three casinos sheepishly set a new record for gaming win.
The market posted more than $1.44 billion in gaming revenue in 2018, a new all-time high. The casinos won $1.42 billion in 2011, which was the previous record. The $1.44 billion was a modest 1.4% gain over the previous record for the Wolverine State. In terms of a year-over-year comparison, commercial casino win was up a more impressive 3.1% from 2017.
Despite the record, the casino industry shrugged off the accomplishment earlier this year at a hearing on gaming expansion. There’s an argument that the U.S. economy is stronger now than it was in 2011, so the additional 1.4% has not been something to write home about for the Detroit casino industry.
Still, the 3.1% market growth in 2018 compared to 2017 did almost keep up with national commercial gaming win growth of 3.46% in 2018, a figure from the American Gaming Association.
Indiana mobile didn’t appear to have an impact
The Hoosier State, which shares a border with Michigan, began online/mobile sports betting on Oct. 3, with the launch of products from BetRivers and DraftKings. FanDuel launched its online gambling platform on Oct. 21. Collectively, the online/mobile sportsbooks in Indiana took $48 mm in wagers last month.
Fortunately for the Detroit casinos, the Motor City is located far away from the Indiana border. Gamblers in or around Detroit aren’t able to easily flock to Indiana to place a bet. A sportsbook in Toledo, Ohio, or online/mobile sports betting in the Buckeye State, would have an impact on the Detroit casino market.
Detroit and Toledo are separate by less than 60 miles. The drive from Detroit to Clear Lake, Ind., the town on the northeast corner of Indiana, is more than double the commute at about 2.5 hours.
Michigan is missing out on potential tax dollars by not having sports betting while wagering is happening Indiana, but the Detroit market is insulated. In addition to location, the Detroit casino market might have a firewall of sorts thanks to more than 80% of industry winnings coming from slot machines. Slot players and sports bettors aren’t typically the same customer. Sports betting in Ohio, assuming Michigan doesn’t have it first, probably would not siphon away too many of the slot players from Detroit.
Gaming expansion in Michigan
The commercial casinos, as well as Michigan’s tribal casinos (which aren’t factored into the MGCB figures), would receive a major boost under legislation on the table right now in Lansing. Proponents of online gambling in the state have been pushing the issue for years, and last year a package of bills hit the then-governor’s desk only to suffer a crushing defeat in the form of veto.
This year, current Gov. Gretchen Whitmer, a Democrat, is considering using her veto power on legislation that would authorize sports betting (retail and online) and online casino gambling. Whitmer wants the casino industry to pay a rate on sports betting win that is in line with their taxes on slot and table game win. Michigan sports betting proponents want a 12% effective rate, while Whitmer wants a little more than 18%. The Detroit casinos pay 19% of their slot and table game revenue back to the city and state.
Furthermore, Whitmer is concerned that online casino, specifically iSlots, would cannibalize revenue for the Michigan Lottery, which has offered online gambling for years. The lottery contributes handsomely to the Michigan School Aid Fund. Whitmer campaigned as a guardian of public education.
The legislation passed the House last week by a relatively slim margin and is now with the Senate for additional work. It’s unclear how negotiations between proponents and the governor’s administration will ultimately pan out. It doesn’t appear there’s enough support in the Republican-controlled legislature for sports betting and online casino to override a potential veto.