Casino revenue in Detroit took a giant nosedive in June, showing yet again how crippling the global pandemic has been to the gambling industry.
Figures released by the Michigan Gaming Control Board (MGCB) show city tax revenue of only $35.6 million through the first six months of the year, compared to $87.5 million over the same time period in 2019. With no reopening plan in sight, the city could be in for more months of hardship.
Michigan casino revenue takes a dive
The coronavirus pandemic has spared no industry, gambling included. Tax revenue from the three nontribal commercial casinos in Michigan — all located in Detroit — is down 59.3%, which could lead to significant budget implications should doors remain closed.
So far, the numbers look like this:
- MGM Grand Detroit — $126.5 million, down 40% year over year.
- MotorCity Casino — $102.6 million, down 41% year over year.
- Greektown Casino — $70.1 million, down 41% year over year.
Governor Gretchen Whitmer has yet to move forward with a plan to reopen essential businesses. In fact, she has moved in the opposite direction by tightening restrictions amid a second wave of infections.
All three casinos combined for a total adjusted gross revenue (AGR) of $299.2 million, down from $735.4 million over the same time period in 2019. Although the MGCB has released safety protocols for casino reopening, Whitmer has yet to announce any sort of timeline to do so.
Reopening path forward
When Motor City’s three commercial casinos do reopen, the safety and health standards in place will be similar to those at other casino properties across the US.
Some new protocols include:
- Temperature checks
- Mandatory face masks for all guest and employees
- Limited operating capacity
- No indoor dining
Las Vegas initially reopened without mandating face masks, but after cases of COVID-19 continued to rise, the city changed course. Similarly, casino operators such as Caesars Entertainment and MGM Resorts International have implemented a mask mandate across all US properties.
Since tribal casinos do not fall under the jurisdiction of the MGCB, they will be reopening on a case-by-case basis.
Budget implications and the relaunch of team sports
Detroit collects 10.9% of the casino’s aggregate revenue, which is costing the city roughly $600,000 every day doors remain closed. The City Council also estimated an economic loss of $348 million for the year, which would result in a massive $194 million budget cut to offset.
One plan to bring back a sliver of revenue has been the push for Michigan online sports betting. Lawmakers and gaming regulators are currently working on a plan to launch mobile wagering later this fall. In addition to the slow reopening of tribal casinos, retail sports betting is now live minutes from the Indiana border.
The launch of sports betting couldn’t be better, as MLB, the NBA and the NHL are all set to resume play.
Although Detroit has been able to keep the lights on, should closures roll into their fifth and six months, it could be disastrous for all involved.