The city of Detroit received a lump sum of $40.5 million earlier this month in a “hold harmless” payment drawn from the state’s Internet Gaming Fund, which is supported by internet casino gaming taxes.
The reason for the payment? COVID-19.
“The Detroit casinos experienced a revenue drop during 2020 and early 2021 because of COVID-19-related shutdowns and capacity limits, which reduced wagering tax and development agreement payments,” said Henry Williams, MGCB executive director.
And according to the 2019 Lawful Internet Gaming Act, a so-called “hold harmless” payment to the city would be paid out if the wagering tax revenue drops below $183 million for any reason during the preceding fiscal year.
“Wagering taxes from internet casino gaming and online sports betting did not begin until both gaming forms launched on Jan. 22,” Williams said. “This was about seven months into the city’s fiscal year, which ended June 30. The provision took effect because of an unusual set of circumstances caused by the casinos’ closings and reduced capacity due to COVID-19 health concerns.”
Sixty-five percent of all internet gaming taxes collected goes to the Internet Gaming Fund. Of that money, 65% is supposed to go to the Michigan School Aid Fund, 30% to policing and other public safety measures, and the remaining 5% to the state’s horse racing industry. It is unclear how much of a financial hit those sectors will take in the wake of the $40.5 million payment.