Detroit's total gambling revenue slipped 4.7 percent to $1.35 billion (all funds US) last year, according to figures released by the Michigan Gaming Control Board on Tuesday.
The decline means Detroit will receive less revenue from gaming taxes, a key source of income for the bankrupt city. The three casinos took in $1.42 billion in 2012.
The falloff in revenue, occurring in a year when Detroit filed for bankruptcy even as its downtown and some nearby neighbourhoods showed signs of revival, was the steepest decrease since the first casinos opened in 1999.
While it is not yet known how much casino tax revenue came in to Detroit during the 2013 calendar year, the city took in $174.5 million in casino tax revenue in its 2012-2013 fiscal year which ended on June 30, a 3.8 percent decrease from the previous fiscal year, according to an August 2013 report to the Detroit City Council.
A spokesman for Detroit Emergency Manager Kevyn Orr did not immediately respond to a request for comment.
Detroit filed the largest bankruptcy in U.S. municipal history on July 18, saying it had more $18 billion in debt. A judge officially declared the city bankrupt in December.
Richard Kalm, executive director of the Michigan Gaming Control Board, said "it wasn't a surprise at all" that revenue dropped, adding that the city has been following the revenue data closely.
"We've been reporting those revenue figures to the city of Detroit, and they've been watching them really close because obviously they're in bankruptcy and they're looking at all the areas where they generate revenue."
"They've been on top of it," he said.
Orr has said the casino tax revenue is the city's most stable source of income. The revenue has been tied up since 2009 as collateral in a costly interest-rate swap deal that Detroit is fervently trying to end.
Last week U.S. Bankruptcy Judge Steven Rhodes, who is managing Detroit's case, rejected a deal that would have seen the city end the swaps for $165 million, a price he called "too high."
The gaming market has been relatively stagnant in recent years, said gaming analyst Jake Miklojcik, and increased competition from casinos in neighbouring Ohio and elsewhere in Michigan have drawn gamblers away from Detroit.
"If you're not growing the market, you're just fighting for the same patrons, which has some immediate value I suppose, but when new competition comes in you're going to wane a little bit."