Everyone remembers how battered and bruised the city of Detroit’s economy was a few years ago, but few people are talking about the remarkable turnaround. Back in 2013, the city filed for Chapter 9 bankruptcy. Nowadays, the economy is back on its feet and one of the bigger reasons has been the performance of the city’s casinos.
Detroit has three casinos and they have shown some impressive year-over-year growth that is going to generate the city millions more in tax revenue than originally projected. 2015 proved to be a very profitable year as the casinos reeled in $1.38 billion in revenues, which marks the first time since 2011 that they’ve had year-over-year gains.
2015 was also the best year for the casinos since 2012, which is a very good sign for other sectors of the economy.
Typically, the gambling business is fueled by consumer’s discretionary income, so the fact that so many people feel comfortable enough with their financial situation to play at the casino means that they are in better fiscal shape than in previous years.
There have been a number of factors that have helped starting with the low gas prices. Savings at the pump have translated into spending elsewhere as gas has dropped from about $3.50 a gallon to under $2. The economy has also gotten much stronger as the unemployment rate in Detroit was at 5.1% in November, which is a significant improvement over the 6.5% in November 2014.
Diving into the numbers, the year-over-year gain in revenue for the casinos was 3.3% with 83% of those gains coming at the slot machines and only 17% from table games. In total, the city will collect $174.3 million in taxes for 2015, which is a hefty number, but one that is $5.2 million more than the city was expecting.
MGM Grand Detroit saw the best returns as they made $582 million in 2015 while MotorCity Casino Hotel was at $464.5 million and Greektown Casino-Hotel was at $329.9 million. In previous years, the three casinos provide about 16% of all city revenue but they produced a bigger piece of the pie in 2015.
Although nobody is talking about it, the city of Detroit’s economy is on the rebound. They exited bankruptcy in 2014, and with the car industry on the rise and casino revenues continuing to grow the city is in much better shape than most people perceive.