Operator News

US – Michigan’s horse racing sector given more than $8.1m in taxes in 2021

By Phil - 15 February 2022

Michigan’s horse racing industry will benefit from more than $8.1m in taxes collected in 2021 on various forms of betting regulated by the Michigan Gaming Control Board, including internet wagering and simulcast wagering on horse races, internet casino gaming and online sports betting.

“Michigan’s horse racing industry has benefited from additional funding to the Michigan Agriculture Equine Industry Development Fund (AEIDF),” said Henry Williams, MGCB executive director. “Fund revenue was $2.3m in 2019, $2 million in 2020 and grew to $8.2m in 2021.”

The fund supports the breeding of horses in Michigan, supports research beneficial to the industry and promotes horse racing and other equine competitions in the state. The AEIDF also supports MGCB’s regulatory expenses, including race personnel, licensing and blood testing.

“The AEIDF promotes economic development by providing funding in Michigan’s rural areas, and the proposed fiscal year 2023 budget includes continued opportunities to invest in our rural communities,” Williams said.

Simulcast wagering — wagering at a Michigan horse track on live races occurring at other venues — produced $1.8m in tax revenue in 2021. The tax rate is 3.5 per cent.

Michigan’s horse racing law was amended in December 2019 to allow internet wagering on simulcast horse races through a third-party facilitator. In 2020, three facilitators — Churchill Downs TIC, TVG Network and XpressBet — all received licenses. A fourth facilitator, NYRABets LLC, was granted a conditional license in 2021. Third-party facilitator tax revenue was $839,124 in 2020 and $1.3m in 2021. The tax rate is one per cent.

Sportsbooks in Michigan by law cannot offer pari-mutuel wagers on horse racing.

Internet casino gaming and internet sports betting completed their first nearly full year of operation in 2021 after a Jan. 22 launch. In 2021, taxes on internet casino gaming provided $4.5m, and taxes on internet sports wagering provided $412,498 to the AEIDF. Each year, five per cent of the Detroit casinos’ taxes from internet sports betting and internet gaming is allocated to the AEIDF. The funding is capped at $3m per fiscal year — not calendar year — from each tax source. Tribal operators’ payments on these forms of gaming do not go into the fund.

The State of Michigan received $954,540 in taxes on simulcasting and $839,124 in taxes on third-party facilitator wagering in 2020. Because of COVID-19 health-related concerns, Northville Downs was closed in 2020 from March 18 until August 14 and again from Nov. 18 until Dec. 21 when it reopened for simulcasting. The track could not offer live racing nor simulcasting during the closures.

In 2021, the track operated 53 live race dates and offered simulcasting throughout the year.