After three years of relative success for sports betting in Michigan, state officials started wondering whether 2023 would be a year of regression. But it turns out they needn't have worried, at least so far. Michigan sports betting is doing just fine.
Actually, it's doing more than fine. The Mitten State just saw their sports betting revenue climb for the month of April, per the most recent reports.
As many will also point out, regressive outlooks are currently beyond rare in this industry. Legal sports betting in the United States is still in its infancy. Most markets are experiencing exponential growth. Even those that have been around since the country's sports betting laws changed a half-decade ago are still largely on the climb. Their growth may be more incremental now that the market has settled. But most states with legal sports betting continue to see steady gains no matter how long their gambling systems have been up and running.
To that end, why would Michigan be any different? Were state officials actually concerned about sports betting revenue in 2023 suffering a pullback? Or was that worry superficial?
Believe it or not, the answer lies with the launch of sports betting in Ohio.
Michigan Sports Betting Concerns are Absolutely Valid
Michigan is not the only state worried about the potential decline of sports betting revenue this year or in the near future. As legalized gambling becomes more common across the country, the competition for business grows fiercer.
That might seem counterintuitive at first consideration. The spread of legal sports betting increases accessibility. And shouldn't increased accessibility translate to more business?
Not necessarily. Revenue streams, like sports betting laws, are broken up by state. And for years, many markets have reaped the benefits of more restrictive sports betting laws elsewhere. In essence, states that were quicker to legalize sports betting enjoyed additional profitability by getting business from residents of neighboring locations that hadn't legalized wagering.
This applies to Michigan sports betting. They launched legal gambling all the way back in March 2020. At that time, sports betting was illegal in both Wisconsin and Ohio—two of the states that border Michigan. Residents in those locations had only two options at their disposal if they wanted to gamble on sporting events: They could sign up with off-shore sites that let them submit wagers, like many of those that appear in our reviews of the best online sportsbooks. And if they didn't want to do that, they could travel across state lines and bet on sports in Michigan.
It isn't clear how substantial those revenue streams were for The Great Lake State. But Ohio, specifically, is considered a top-five or top-six sports betting market in the United States. You have to imagine Michigan received a ton of business from their neighbors after the legalization of gambling. That revenue stream is now (mostly) closed. Ohio sports betting launched at the start of 2023. Wisconsin sports betting, meanwhile, went live in late 2021.
Sports Betting Revenue Remains Steady in Michigan Amid More Competition from Neighboring States
For the time being, it doesn't appear Michigan has much to worry about. They turned a larger profit from sports betting tax revenue in April than they did in March. And their numbers have been strong all year. However, if you dig a little deeper, there might be some longer-term red flags. Consider the following excerpt from a piece by Legal Sports Report's Pat Evans:
"Michigan sports betting revenue is rising, even as the neighboring Ohio market picks up steam. Michigan sportsbooks took less in wagers year-over-year for the sixth consecutive month in April, handling $338.1 million, down 15 percent from $396.0 million in April 2022, according to Michigan Gaming Control Board information released this week. It is not all bad news for MI sportsbooks, as revenue grew 12 percent year-over-year, from $32.4 million (8.2 percent hold) in April 2022 to $36.3 million (10.7 percent hold) last month. While Michigan’s market shows signs of a shift toward profitability for sportsbooks, the January launch of Ohio sports betting also likely contributes to shrinking handle. Ohio sportsbooks took $2.5 billion in bets in their first three months of wagering."
A shrinking handle (i.e. the total amount of money spent on sports bets) is definitely something Michigan must monitor. Not everyone gambling in Ohio was previously submitting wagers with Michigan. But again, the people who were are no longer doing so anymore.
Eventually, the math will have to give. If Michigan continues take in fewer total bets, it will be more susceptible to down months.
The Future of Sports Betting in Michigan is Still Solid
Even with Ohio sports betting infringing upon the market, Michigan has little reason to lose sleep. Major online sportsbooks like DraftKings and FanDuel are still fully operational inside the state and consistently churning out profits. PointsBet also just sold their United States operations (which include Michigan licensing) to Fanatics Sportsbook—a larger company, with a bigger reach, that's been steadily growing within the industry.
On top of all that, Michigan has some wiggle room to increase their sports betting taxes. They currently charge only 8.4 percent to both retail sportsbooks and online sportsbooks. That's lower than the national average in both categories.
Indeed, Michigan shouldn't be doubling their tax rates in an attempt to rival a bigger market like New York. But they certainly have the runway to explore 10 percent across the board or maybe a 15 percent tax rate for online operators. Even jacking up the tax rates to percent can recoup some of the money lost to Ohio sports betting.
To be fair, we don't know exactly what the future of Michigan sports betting actually olds. Ohio has complicated things. But they haven't ruined anything. Michigan sports betting remains a growth market.
Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs:
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