Detroit Casinos Benefit From Caesars Windsor Strike in Ontario

Detroit three casinos produced a combined $124.6 million in revenue last month, representing a 3.9% increase compared to the $119.9 million collected in May of 2017. The city of Detroit was subsequently paid $14.8 million by way of wagering taxes and development agreement payments, while the state of Michigan received a further $10 million in gaming taxes.

As a result, Detroit’s casino market is currently 1.2% higher in terms of revenue versus the first five months of 2017, according to the latest figures released by the Michigan Gaming Control Board.

Caesars Windsor Strike

Helping to explain some of Detroit’s solid growth last month was a two month long strike that had been taking place at the Caesars Windsor casino in Ontario just across the Canadian border. For the past 60 days the venue had stayed shut after members of Unifor Local 444 walked out over a wage dispute, with Canadians then forced to travel a few miles south to Detroit casinos in order to gamble.

The length of the strike may also have caused some long term damage to the venue’s reputation, and as Alex Calderone, Managing Director at Calderone Advisory Group, explains: “Management should be concerned about some measure of erosion or loss of patron loyalty.”

Detroit Market

Leading Detroit’s casino market in May was the MGM with $54.3 million in revenue, or 7.6% more then the same month last year, followed by MotorCity with $41.5 million (+2.2%), and Greektown with $28.8 million (+0.02%). Consequently, MGM commanded a 44% share of the market in May, while MotorCity held a 33% share, and Greektown the remaining 23%.

iGambling and Sports Betting

While Detroit’s casinos have temporarily wrestled business away from Caesars Windsor in Ontario, these venues may be in a position to grow their businesses long term if Michigan pushes forwards with its plan to legalize and regulate internet gambling and sports betting in the state.

Last week, for instance, the Michigan House of Representatives approved HB 4926 by a vote of 68-40, with the piece of legislation now awaiting a similar vote in the state Senate after it reconvenes following a summer break. In the event of a positive outcome, Governor Rick Snyder would then have to sign off on HB 4926 before it passes into law, and as the bill’s sponsor, State Representative Brandt Iden, noted after the legislation was passed in the House:

“We all know that sports betting is coming and this sets the framework… It will allow internet gaming as it pertains to all the games currently allowed in a brick and mortar casino. If a casino doesn’t have a physical presence here, they’re not going to be able to do it.”

Once fully legalized in Michigan, the state’s three commercial casinos in Detroit would be permitted to apply for licenses to offer online gambling and sports betting services, although Michigan’s 23 tribal gaming facilities would first have to renegotiate their compact with the state.

Gaming establishments would then have their gross gaming revenue (GGR) taxed at a rate of 8%, of which 55% would be used to support Detroit’s casinos, 35% earmarked for the internet gaming fund, with 5% going towards the state school aid fund, and 5% to the Michigan transportation fund.

Supreme Court Decision

After last month’s decision by the U.S. Supreme Court to lift the federal sports wagering ban, Delaware and New Jersey have already passed sports betting legislation, with numerous states across the country also considering following suit. Meanwhile, various gambling markets may also feel compelled to embrace the industry in order to help stave off competition from their nearest neighbors, with Ontario likely to consider such an action if Michigan does manage to regulate its market.

One thing worth considering, however, is that even if Governor Rick Snyder does eventually lend his signature to HB 4926, licensees will be prohibited from offering online gambling services for one year after final approval is given.