Michigan’s iGaming Market – Secrets to Its Online Gambling Success

Author: Matthew Haynes

As the saying goes, ‘the first year in business is usually the toughest’. The Michigan iGaming market could easily counter that point.

When the state legislature passed laws in late 2019, little did they realize it would not be until over 12 months later that this would go live, with the global pandemic bringing the world almost to a standstill.

There was also a significant amount of doubt for operators surrounding how successful this market would be when it came to iGaming, in terms of the amount of interest and whether there was the requisite volume of customers for this to be a success on a regular basis.

Indeed, prior to the official launch of online gambling in the state, DraftKings co-founder and president Matt Kalish commented at the time: “We’ve been working really hard, and we are ready to go as soon as the process is complete and the boxes are checked on the Michigan Gaming Control Board side.“

When this was finally launched in the state in February 2021, in terms of figures, it exceeded all expectations of what industry insiders believed it was capable of. Online casino revenues totalled $79.7 million, with state taxes from this topping $14 million. Online sports betting, though, despite having a handle of $301.8 million and $9.5 million in revenue when taking into account the promotions that helped draw in players, generating a loss of $10.7 million. Worth it.

In terms of operator figures in the first month of Michigan gambling being legal, it was MGM Resorts International and Entain joint-venture, BetMGM, that had the Lion’s share of the market in the ‘Wolverine State,’ with 34%, translating to $26.9 million. An impressive statement for an emerging operator.

Meanwhile, FanDuel posted a $16.6 million revenue handle, while DraftKings came in at $14.5 million. Interestingly, speculating about the anticipated performance in the Michigan market before its launch, an analyst for Michigan Sharp, Geoff Fisk predicted: “I think we’ll see upwards of 90% of sports betting handle come from mobile betting.“

This essentially set the scene for what was to follow. At a time when the NFL season was starting to wind down, with the Super Bowl coming in the first week of February, operators wanting to focus on this particular betting market in the state would effectively have to wait until September to find out how much demand there would be.

For those who were paying attention, though, there had been more than enough to suggest that Michigan could be a serious contender in what was swiftly becoming one of the biggest iGaming markets in the US.

Already with the likes of Nevada, New Jersey, and Pennsylvania proving that there was a clear demand for iGaming, it could be said that Michigan was effectively a litmus test in terms of whether it could be successful.

With a population of 10 million and a median household income of nearly $60,000 annually - Detroit is its most populous city by some distance, with the top five industries encompassing trade, transportation and utilities, education and health services, professional and business services, government and manufacturing. Arguably the city’s main sports franchise is the Detroit Lions NFL side which attracts considerable betting interest.

Laying the Foundations to a Secure and Responsible Gambling Experience

There were many key aspects to consider for the state in order to ensure success in the online gambling industry, which have all been vital contributors to its story so far. Of course, vitally important was the quality of the broadband available in the state, especially in and around its major cities.

It so happens that 76.3 percent of all residents in Michigan have a high-speed internet supplier in their home, while 99.8 percent of the population is able to get access to wireless internet. Detroit, meanwhile, has 23 internet providers to choose from.

For the online gambling industry to be able to operate at its maximum potential, one of the most important factors is fast and reliable internet, especially considering that the vast majority of customers at online gambling operators use their mobile handsets for their iGaming experience.

Another key factor was making sure that residents in Michigan were able to gain access to the relevant resources available from a problem gambling perspective. Each operator was required by gambling jurisdictions, to have its own KYC (Know Your Customer) policy in place so that they could undertake relevant background checks, especially when it comes to affordability and identity.

A number of European-based operators experienced problems with this, which subsequently resulted in fines because customers were over-extending themselves and getting into financial difficulties. Responsible gambling policies have become a major factor in being able to offer customers the support and advice that they need in order to help them overcome gambling addiction.

The Michigan Gaming Control Board (MGCB) is ultimately responsible for making sure that the relevant online operators are adhering to the laws that are set in relation to responsible gambling, while they can also impose any relevant fines.

In connection with Detroit’s commercial casinos, the MGCB has also established the Disassociated Person’s program, which was set up so that anyone who feels that they have a gambling problem can voluntarily add themselves to the list. It means that anyone on the list is then banned from both online and land-based casinos for a minimum of five years.

Having such measures in place has been crucial in helping Michigan both police gambling companies and monitor the level of gambling problems occurring in the state - very important prior to the launch of online gambling in the state.

When quizzed about its responsible gambling policy, a spokesperson for DraftKings revealed the protocol that the operator advises on its site, stating: “It’s important to remember that you should only bet what you can afford and always set reasonable limits for yourself. From the second you open your account to the moment you collect your winnings, our number one priority is to make sure you’re playing safely and responsibly.”

While it may seem like fast, reliable internet access, in addition to responsible and safe gambling policies, are perhaps obvious when it comes to the foundations that are required to have in place, this helps to form the bedrock of a market that can thrive with accountability.

These also help to foster trust between customers and operators and ensure that the company’s reputation stays intact. Because the iGaming market in the US is still relatively new, it is also key that employees within an operator have received industry-first training - particularly those on the frontline, such as customer service staff.

While Michigan does not have the biggest potential market in the US, the volume in the first month alone shows that there was a significant proclivity for Michigan online gaming - an industry that can move rapidly and prompt many inquiries from customers.

Ensuring that multiple customer service channels were available should any problems arise - even something as simple as queries about registration - was fundamental. Live chat, for a number of years, especially in Europe, has proven to be the most popular method for players to make contact with a gambling company.

Upon launch, operators had to make sure that they had to requisite staff in place to be able to deal with any problems efficiently and effectively in order to preserve their reputation within the industry.

Stay tuned for Part 2 of Michigan’s Secrets to Online Gambling Success.