Michigan bettors now have the opportunity to place a legal sports bet with the opening of two Detroit-area sportsbooks, a momentous first step in the state's fledgling industry. But with online sports betting and internet casino operations still a year away, the most significant leap forward is still months away, according to PlayMichigan analysts.
"Today is something that sports bettors across Michigan have been waiting for for years, which makes it a moment to celebrate," said Dustin Gouker, chief analyst for PlayMichigan.com. "But much work remains, particularly with the launch of online sports betting still months away, if Michigan is to reach its potential as a market."
Greektown Casino and MGM Grand Detroit accepted their first sports wagers, and MotorCity Casino likely won't be far behind. The launch comes less than three months after HB 496 was signed into law and just in time for the tip of the NCAA Men's Basketball Tournament, one of the largest sports betting holidays in the country.
Michigan, which was the 13th state to legalize online sports betting nationwide and just the fifth state to legalize online casino gambling, should eventually be one of the nation's largest markets. Once mature, PlayMichigan expects the Wolverine State to generate $7 billion to $8 billion in sports bets each year and produce $500 million in annual gross operator revenue.
But until online sports betting launches, which appears unlikely to happen until 2021, Michigan won't come close to those targets. More than 85 percent of all sports bets in New Jersey, the nation's largest sports betting market, are made online. In neighboring Indiana, 77.9 percent of sports wagers were made online in February.
"With the NCAA Tournament just ahead, the timing of the launch is good, but it would have been better if both retail and online sports betting could have launched together," Gouker said. "The high expectations for the market should remain relatively muted until online sportsbooks get off the ground. Once that happens, though, Michigan should ramp up rapidly."
Michigan is well-positioned for its future once the state finalizes regulations for online sportsbooks. With a rate for sports betting gross revenue at 8.4 percent, in addition to 1.25 percent city tax for Detroit casinos, the tax structure is reasonable. And Michigan casinos have already struck partnerships with sports betting brands in the country, including FanDuel, PointsBet, and William Hill.
"Michigan has put together a balanced framework that is fair to operators and should yield significant tax revenue for the state," Gouker said. "By being thoughtful in their approach, Michigan lawmakers avoided some of the growth-stunting policies that will likely slow down states such as Illinois."