Casino revenue decline delivers wallop to Detroit tax collection
Detroit casino revenue plunged 59.3% through the end of June as doors continue to remain closed amid the COVID-19 pandemic.
First closed on March 16, the three casinos — MGM Grand Detroit, MotorCity Casino and Greektown Casino — have struggled to book revenue during the continuing lockdown because of state mandates.
MGM Grand is down 40% year-to-date through June when compared to revenue of 2019, falling to $126.5 million from $315.1 million. Similarly, MotorCity slid 41% to $102.6 million from $250.5 million. And Greektown revenue slipped 41% to $70.1 million from $169.8 million.
The revenue losses by the three casinos also are slamming casino wagering taxes collected by the city, yielding only $35.6 million through the first half of this year compared to $87.5 million in the first six months of 2019. As the casinos continue to suffer, so does a major source of the city's tax revenue.
Through the first six months of this year — more than half of it affected by the pandemic — revenue for all three Detroit casinos totaled $299.2 million, down 59.3% from the $735.4 million recorded for the first half of 2019.
According to the Michigan Gaming Control Board, the state of Michigan receives 8.1% of a casino's net winnings, and the city of Detroit receives 10.9%. Both the state and the city have completely lost this tax submission, given that all three casinos received $0 in April, May and June combined.
In 2019, those three months (April, May, June) yielded just shy of $44 million dollars for the city of Detroit.
In March, Gov. Gretchen Whitmer ordered casinos closed along with gyms, bars and theaters to help flatten the infection curve of COVID-19 by limiting person-to-person contact and promoting social distancing — measures harder to accomplish while in a casino.
The casinos are currently awaiting the green light from Whitmer for reopening, but the governor's recent lockdown extension and rising case numbers may defer reopenings even longer.
The Michigan Gaming Control Board released a plan in June for safely reopening Detroit casinos. Under that plan, the casinos would operate at an initial 15% legal capacity upon reopening, and will not allow smoking or poker. Typical COVID-19 reopening protocols also would be implemented, such as limited entry points with temperature checks, social distancing and heightened cleaning protocols. Self-service buffets and live events or shows also would be eliminated.
Despite Detroit's three casinos remaining closed, tribal casinos have no legal obligation to state law and are regulated by their own gaming commissions. The 23 tribal casinos in the state began reopening in late May, having shut down voluntarily in March.
Kathy George, CEO of FireKeepers Casino Hotel in Battle Creek, defended the decision to reopen in May, saying the facility has been deemed essential by its tribal council.
"They deemed us an essential business for the survival of the tribe," she said. "We're going to be following the CDC guidelines obviously."