Play at These Top Casinos
Pulsz Casino

Bonus up to 5,000 Free Gold Coins


Bonus up to 250K Gold Coins

Wow Vegas
Wow Vegas

Bonus up to 1.5 million WOW Coins + 34.5 FREE SC

*18+ T&Cs apply to each offer. Click "Play Now" for more information.

Michigan iGaming Success - Continued Demand Sees Monthly Records Broken Consistently

Despite the initial doubts about what the Michigan market is capable of, gambling-wise, it has more than held its own, as we revealed in Part 1 of Michigan’s Success article. Online gambling in the “Great Lakes State” acted as somewhat of a catalyst for other states to propose bills of their own. Illinois can certainly be considered to be one of those that fall into that particular category.

Following on from February, the month of March saw even more impressive figures posted by online gambling companies operating in the state as interest continued to grow. The market witnessed a 42.8 percent increase from February, with $127.4 million in revenue generated, with the NCAA basketball tournament understood to be a substantial contributing factor in this.

While $32.3 million was generated from online sports betting, it was online casinos that once again proved the most popular, with $95.1 million generated in revenue.

At the time, Michigan Gaming Control Board's (MGCB) director Richard S Kalm revealed the impact that such figures had, stating: “It looks like March Madness added a bounce to the sports betting handle, which jumped 19.1 percent from February, and internet gaming seemed to increase in popularity with monthly adjusted gross receipts going up 18 percent from February.

This led to increases in taxes and payments, which means more funding for the City of Detroit, K-12 education, economic development, and tribal communities.

Indeed, $5.2 million was raised from the taxation of gambling companies during the month of March. The affiliation of major online sportsbook FanDuel with a number of Detroit-based franchises in April of that year further helped to put the city on the map from a sports betting perspective, subsequently raising awareness and attracting more registrations in the state.

As part of a deal with MotorCity Casino, one of the state's notable land based casinos, the operator agreed to commercial sponsorship deals with Major League Baseball (MLB) franchise, the Detroit Tigers and National Hockey League (NHL) side the Detroit Red Wings, stealing a march on its rivals for key sports betting exposure.

FanDuel chief marketing officer, Mark Raffensberger said at the time: “After a very successful launch in Michigan, we are excited to continue our momentum by partnering in this way with two of the most iconic sports organizations in the country”, indicating the start of what promised to be two very potentially lucrative partnerships.

After a period of increased consolidation and building, Michigan continued to witness impressive figures throughout the spring and summer, and with the commencement of the NFL season in September, a new record was set, with $126 million in revenue generated across both sports betting and casino. This beat August’s record by 5.3 percent.

October propelled Michigan to new heights, really sending a signal out to the rest of the US market, with New York having recently approved a mobile sports betting bill, as the gross gaming revenue breached $134 million - $24.3 million of which was generated from online betting, with the NFL, NBA and NHL seasons all being in full swing. Consequently, $463 million in online bets were handled in the state - a 30.8 percent increase on the previous month.

At the 12 months mark, online gambling in the state was all-time high, with $155.92 million generated in revenue, marking what was a superb debut year for Michigan, providing plenty of promise for the ensuing decade.

Key Catalysts for Success in the State

While online gambling clearly showed plenty of encouraging potential during its first few months of going live in Michigan, in addition to there being certain drivers that helped, there was one that stood out considerably that was somewhat of a game-changer to the market, especially from a revenue perspective.

With the required infrastructure in place, operators started offering live casino games to their customers - a move that proved to be the ‘ace up their sleeve’ as far as operators were concerned, having struck supplier deals with premier live gaming provider Evolution.

For players, this was what they had been waiting for, and the numbers showed it. Indeed, PlayUSA analyst Eric Ramsay commented in October: “Live dealer games have pushed online casino gaming to a new level.

The state’s industry will almost certainly reach $1 billion in revenue in its first year of existence, which is a remarkable milestone for such a young market.

Since, more live dealer providers have entered what has swiftly proven to be a lucrative sector of the industry in Michigan, with heavy-hitters Playtech establishing a hub in December with their first studios in the state.

Another factor that has been somewhat overlooked is the infrastructure that Michigan provides to serve the online gambling market. The cheap land prices have paved the way for numerous technology companies to launch, with many of them focused solely on the iGaming industry, while the access to talent and proximity to the University of Michigan proves to be a fruitful hunting ground.

Due to the favorable rental prices, in addition to the lucrative nature of the industry, it also means that they can pay top talent above market-leading rates and offer them a better working lifestyle, swaying them from other industries such as finance, where working hours are typically much longer.

To illustrate the point, office space in Michigan peaks at just over $35 per square foot, compared to that of New York, which for the same class of office (Class A) is almost $94 for the same.

For the online gambling software niche industry, in particular, there is considerable value to be had from focusing on Michigan - a market that has already proven to be robust, attracted all of the top operators, and offers a better quality of life.

What Else Can We Expect from Michigan?

Over the next few years, the midwestern state could prove to be one of the most consistent in the wider US online gambling market, especially from a revenue perspective when weighing up overall value and the margins.

It could be argued that states such as New York and California (if the pending bill is passed) may have the muscle to outperform Michigan. However, a lot has to be said about cost and resources.

New York and California are two of the most populous and expensive states in the union, and while salary levels may be higher in addition to bigger volumes of disposable income, high costs of living must be accounted for, which can seriously eat into the bottom line. In addition, there are more activities to keep target customers busy and distracted from placing wagers.

When taking into account the cost to acquire new customers in terms of marketing spend by operators in the state of Michigan will make a significant difference compared to New York. Third parties, such as New York-based marketing agencies, will charge more compared to Michigan, and as a result, the margin for the latter is bigger.

Michigan has proven that it can hold its own over the last 12 months, in what was a calculated risk by state regulators, though one which has paid off considerably. The first 12 months of the market saw a gross gaming revenue of $1.4 billion posted, equating to a very healthy $208.94 million paid in taxable revenue to Michigan, which provides a considerable boost to the economy and infrastructure in a state with a population of 10 million people.

For context, the taxable income for the UK (a mature market with nearly two decades of activity and a population of 65 million) generated by online gambling companies was £3.1 billion/$3.88 billion - relatively speaking, a comparison that speaks volumes about the hidden value and potential of the Michigan online gambling market. It should also be noted that the tax rate imposed on operators in the state is one of the lowest in the country - 8.4 percent, compared to 15 percent for operators in the UK.

What has essentially been a fact-finding mission over the last 12 months for the Michigan market, when looking at the numbers and weighing up contributory variables, there appears to be a lot of potential for start-up software or marketing companies in the state that exclusively support the online gambling industry.

This could especially apply to boutique game studios, which can conduct the necessary market research based on industry data already provided about customer trends in terms of the types of games that they like and then develop more unique offerings based on this.

A proportion of the taxable revenue paid by operators could see more commitment to technology in the form of education, which could see an increase in the amount of talent emerging from institutions in the state, who may be convinced their future lies in online gambling software development.

What remains to be seen is exactly where the Michigan online gambling market will level out, though there is one thing that is for sure; the key to business is minding your own - Michigan has certainly done that.

Leave a Comment

user avatar
My Name United States of America
Your Comment

User Comments

comments for Michigan iGaming Success - Continued Demand Sees Monthly Records Broken Consistently