As Detroit Goes Bankrupt, Casinos Become A City Survival Tool

Posted on: July 21, 2013, 05:30h. 

Last updated on: July 20, 2013, 04:53h.

Detroit’s struggles have been well known throughout the United States for some time now, but they were thrown into sharp relief this week when the city became the largest in the country ever to file for bankruptcy. Now, experts say that the city’s casinos could be the key to keeping Detroit afloat throughout the bankruptcy process.


The move was a controversial one: while Michigan Governor Rick Snyder was in favor of the action, which was made by a specially appointed “emergency manager”, current and retired city workers are worried that the step could lead to their pension benefits being gutted, while those holding city bonds might end up with just a small percentage of their investments back.

Traditionally an industrial city, many outsiders have the impression that Detroit’s recovery from bankruptcy would likely be lead by the resurgent auto industry. But while people associate the city with American-made cars, most auto plants are actually located outside the city limits, and only General Motors has its headquarters in Detroit proper.

Casinos May Save the Day

Instead, Detroit is now relying on a new big three: the three major casinos that operate inside the city’s limits.

According to filings from the bankruptcy, Detroit now makes about $11 million per month from taxes generated by these casinos. The filing said that figure “is roughly the equivalent of 30 percent of the city’s total available cash on hand,” and could pay for Detroit’s fire department, or cover half the cost of the police department on its own.

The information about the importance of the casino cash was brought out because some creditors wanted to stop the city from having access to it, saying that it should instead help creditors receive more of their money back. Earlier this month, Detroit won a court ruling that would allow it to keep using the casino cash, but it will need to do so again in order to continue that cash flow – money the city says it desperately needs to operate essential services.

Detroit has been offering casino gambling since 2007, which has been part of a move to rebrand the city as an “entertainment hub”. The three casinos currently operating there include the MGM Grand Detroit, Motor City Casino, and Greektown Casino.