Detroit’s casino revenue collections continue to post strong results although city officials say they are conservative with projections because the income stream is volatile.

Casino taxes are one of Detroit's largest revenue sources.

Detroit casino revenues were up to $125 million in April an increase of 2.5% compared to April 2017, according to the Michigan Gaming Control Board. April revenue, however, was 10.5% lower than the all-time aggregate monthly revenue record of $138.6 million set in March.


Mandalay Resort Group's MotorCity Casino is seen in Detroit, Michigan Wednesday, June 16, 2004.
Casino taxes are one of Detroit's largest revenue sources. Bloomberg News

The current tax rate in effect is 10.9% for the city's three casinos and the revenue represents 15% to 20% of total general fund revenues.

Despite its prominence in building the city’s coffers, the revenue stream has a volatile history. Increased competition from casinos in Ohio saw casino revenues decline from 2012 to 2014. In fiscal year 2013, casino taxes brought in $174.6 million, down 3.7% from the year before.

The revenue source has since rebounded but the city says it will continue look for opportunities to help predict wagering tax revenues.

“Of the city’s major revenues, wagering taxes continue to be the most volatile due to macroeconomic factors and factors outside the city’s control,” according to the city’s four-year financial plan. “New casinos or gaming operations opened within a 50 to 150 mile radius of the City could exert negative pressure on Detroit casino revenues.”

A city official said that the revenue source is conservatively forecasted during its biannual revenue conferences. The estimated wagering tax revenues for fiscal 2018 are budgeted at $179 million and the city projects only a 1% increase over the course of the four-year plan.

The city gets daily wire transfers and quarterly audited financial statements from all three casinos. In addition the Michigan Gaming Control Board audits the revenues monthly and sends a confirmation to the city to verify it’s received the proper amount.

Detroit emerged from active state oversight last week, three years after exiting bankruptcy.

The citys has predicted steady growth for its income tax collections.

Income-tax collections for fiscal 2017 were $284.5 million, up from fiscal 2016 collections of $263.2 million. Income tax collections for fiscal 2018 are expected to reflect this upward trend with further growth of 2.7%. Projected revenues for Fiscal 2019 through Fiscal 2022 maintain a growth rate of 2.5% reflecting a forecast of modest increases in salary and wages.

The February 2018 Revenue Estimating Conference estimates property tax increase of 1.5% per year over the course of the four-year plan. Residential property values have increased across the city for the first time in 17 years.

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