Tax revenue from online gaming and sports betting tied to Detroit’s three casinos has become a critical pillar of the city’s finances, emerging as its second-largest revenue source behind income tax and helping fund basic services ranging from policing and firefighters to snow removal, according to city and state data.
For the first five months of the current fiscal year, from July through November, Detroit collected $133 million in wagering tax revenue, about $24 million more than forecast, city officials said in the latest monthly financial report. The outperformance has been driven largely by growth in internet gaming and mobile sports betting, as more residents and out-of-state users wager through smartphone apps.
City officials describe the revenue stream as unusually resilient. Donnie Johnson, Detroit’s deputy chief financial officer and acting budget director, told The Detroit News that online gaming revenue has proven “recession-proof,” citing patterns seen since the COVID-19 pandemic.
“What we learned during the pandemic and during the sort of mini-economic contraction we had then was that actually people tended to gamble at a higher rate, despite unemployment being high, despite economic contraction,” Johnson said, adding: “We are just not seeing any sign right now of real cooling in that space.”
Internet gaming generates significantly more tax revenue for Detroit than sports betting, though both continue to expand. Together, online gaming and sports betting now account for about half of the city’s total wagering tax revenue, with the remainder coming from traditional, in-person casino gambling.
Detroit projects wagering tax revenue will reach $315 million in the fiscal year ending June 30, 2026, representing 22% of the city’s expected $1.41 billion general fund, according to state revenue estimates. In fiscal year 2025, the city collected $306 million in wagering taxes, making it the second-largest source of tax revenue behind income tax, a recent Plante Moran audit showed.
The growth mirrors broader trends in Michigan’s gambling market. In 2025, commercial and tribal operators statewide reported $3.3 billion in adjusted gross receipts from internet gaming and sports betting, a 9.5% increase from the prior year, according to state data. Michigan legalized sports betting in 2021, authorising nine operators to launch online sports betting or combined gaming platforms.
Detroit applies varying tax rates across wagering activities, including 10.9% on casino gambling, 6% to 8.4% on internet gaming, 4.62% on retail sports betting, and 2.52% on online sports betting.
Critics, however, warn that growing dependence on gambling revenue carries social costs. Les Bernal, national director of advocacy group Stop Predatory Gambling, called the reliance by cities like Detroit an “epic public-policy fail,” arguing that expanded online gaming worsens addiction and mental health harms.
Detroit City Council member Denzel McCampbell said the city must balance fiscal benefits with consumer protection. “While the city coffers are benefiting from the increase in wagering taxes, we must also be mindful of the impact of gambling on our people,” he said, adding that safeguards and access to help were essential.
The reliance on wagering taxes has grown as other revenue sources, including corporate income tax and state revenue sharing, have come in below projections amid a slowing national economy. City officials are set to revisit their outlook at Detroit’s next biannual Revenue Estimating Conference on Friday.
Original article: https://www.yogonet.com/international/news/2026/02/09/117512-detroit-leans-on-online-gaming-sports-betting-to-fund-city-services
