After recording some eye-popping online gambling numbers over the final ten days of January, Michigan kept the momentum going in February. The Wolverine State’s debut has been nothing short of remarkable, easily surpassing its peers’ debuts.
The February numbers from the Michigan Gaming Control Board speak for themselves:
- Sports betting handle: $301.9 million
- Sports betting revenue: $9.5 million
- Online gambling revenue: $79.7 million
That said, here’s a deeper dive into the state’s online gambling numbers and how they fit into the larger US sports betting and online casino narrative.
Sports Betting Fails to Deliver
$300 million in wagers is a substantial number, but revenue failed to hit $10 million, which works out to a hold rate of just over 3%.
But it’s the state that should be banging its fists on the table.
Operators can write-off promotional spend, which in February was around $20 million. The result is adjusted gross revenue of -$10.8 million, with only two operators landing in the black and sending tax revenue to the state:
- BetMGM = $140,840
- William Hill = $1,398
A similar scenario played out in January when the state collected a total of $111,695 from sports betting operators (with the Barstool Sportsbook responsible for $99,856 of the total).
Overall, In just over a month, Michigan sportsbooks have taken $417 million of bets and generated $22.8 million in revenue.
Those are topline numbers. The real numbers are as follows:
- AGR = -$16 million (thanks to nearly $40 million in deductions)
- Tax Revenue to the State = $253,935
The expectation is the numbers will improve as operators pull back on marketing spend, but when that might happen is at least many months away in the hyper-competitive market.
An Online Gambling Market Birthed at Full Maturity?
How fast has Michigan’s online casino start been? So fast that it’s already overtaken the more populous Pennsylvania for the #2 spot behind New Jersey in terms of online casino revenue.
In its first full month, Michigan achieved what took New Jersey and Pennsylvania 77 and 18 months to accomplish.
|Launch Date||First $80m Month||Time Between|
|New Jersey||November 2013||April 2020||77 months|
|Pennsylvania||July 2019||January 2021||18 months|
|Michigan||January 2021||February 2021||First full month|
The lingering question is, what will growth in Michigan look like? The market cannot follow New Jersey or Pennsylvania’s trajectories, and based on the February numbers, the ceiling is likely already in sight.
The Big Takeaway
Michigan’s sports betting industry follows a typical trajectory, with a cadre of sportsbooks engaging in massive marketing campaigns to gobble up market share. Like another recent market launch, Tennessee, the current attention on sports betting has helped sports betting hit the ground running, as recent survey results intimate.
If sports betting hit the ground running, the state’s online casinos came out of the blocks at a full sprint, and even if future growth is possible, that growth will likely be modest.