Michigan Still Losing Out On Stalled Sports Betting

There hasn't been much movement on the sports betting front in Michigan, causing it to miss out on tens-of-millions in potential tax revenue.
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With summer ending and football season begun, the state of Michigan has officially missed its opportunity to get ahead of the pack with sports betting. Though the state legislature has at least partially returned to work, its immediate priorities are adjusting labor regulations and posturing for the upcoming elections.

As a result, there is still no forward movement on any gambling-related legislation. This is a shame, as Michigan could stand to reap massive economic benefits from swift action on legalizing sports wagers.

Projected revenues

It is, of course, very difficult to predict exactly how valuable the industry could become, but even conservative estimates are impressive. Even early on, tens of millions of dollars in economic activity could be generated in year for a state the size of Michigan (pop. ~10 million). If the market matures quickly that grows to hundreds of millions.

Early projections have comparable states like New Jersey and Pennsylvania expected to generate several hundred million dollars each (nearly $400 million for Pennsylvania). Thanks to New Jersey’s head start in preparing for legalization it has hopes to quickly overtake the long-established Nevada as the top market.

Even the NFL, which has strongly opposed the legalization of sports betting, is now estimated to benefit roughly $2.3 billion dollars when and if legal betting should spread nationwide. Adjusting for population, that’s roughly $70 million they would earn from fans and gamblers from Michigan alone.

Consider that a state the size of West Virginia – less than a fifth of the population of Michigan – was able to generate $640,000 in bets ($32,000 tax revenue for the state) in just its first four days with a single sportsbook. That’s with several bugs to still be worked out of the system, and before football season was officially open.

Backlash and opposition

Several obstacles still stand in the way of Michigan swiftly getting sports betting. The foremost of this is remaining opposition from the tribal casino owners.

Tribal casinos are in a difficult legal position, as they operate via very specific contracts with the state. Adding sportsbooks will require complicated renegotiating of these contracts, and the casino owners need assurances from legislators that these new arrangements will not put them at a disadvantage. The most recent attempt at legislation made efforts to address this, but more work is still necessary.

Additionally, the general public does not all agree with legalizing sports wagers. This should be a minor concern as Michigan already has a thriving lottery system, but for some reason many people do not count lottery gambling in quite the same way.

Objectively, it is widely known that illegal sports betting is already going on in every state in the nation, an industry that is estimated at $150 billion dollars. In many ways shifting this economic activity to a safe and regulated market would decrease crime while providing a better experience for the bettor, but many still fear the consequences of legitimizing gambling.

The way forward

All the opposing factors add up to an environment where politicians may not wish to risk even a small amount of votes in the upcoming elections on the issue of sports betting. Sadly, this means that there is very little chance of passing a bill in the small window between election day and the end of the year.

Overall, the state of Michigan has greatly improved its economy of late, largely thanks to shifting its focus towards finance after years of losing its manufacturing base. Unfortunately, sustaining this recent growth may be difficult. Developing a blossoming industry could provide new tax revenues from previously untapped areas.

Obviously the first states to establish sports betting markets will benefit the most, especially in terms of local geography. Beating neighboring states like Indiana and Ohio (both of which are currently working on their own legislation) will have a big impact in the economic results.

If the state of Michigan wants to benefit as much as possible, it is vital to get a market running quickly.

Editorial credit: Cynthia longhair Douglas / Shutterstock.com

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