Online gambling tax hikes proposed by Senators Sam Singh and Jeremy Moss are expected to fall by the wayside once the world rings in the New Year on Dec. 31 at midnight, according to multiple reports.
Singh and Moss made a last ditch effort to slightly raise taxes for Michigan sports betting operators and Michigan online casinos earlier this month. However, without any action, the bills will die on the vine.
It appears that the bills will not carry over into 2025, either. Singh and Moss would have to re-introduce new legislation, and there’s no indication that either of them will.
Singh and Moss proposed minor tax hikes
Michigan is one of the most tax-friendly states when it comes to gambling, especially for sportsbook operators. Senate Bill 1193 would have raised the tax rate from 8.4% to 8.5%. A hike that small is not likely to impact operators on a significant level.
Under Michigan gambling laws, the state allows operators to deduct promotional spend from revenue, which actually lowers the tax rate. The effective rate is 5.0% lifetime, and 4.7% year-to-date.
The bill would have changed the allocation of tax dollars. The current set up is as follows:
- 65% to the Internet Gaming Fund
- 30% to Detroit services
- 5% to the Michigan agriculture equine industry development fund, up to $3 million
The bill proposes the following allocation structure:
- 63.5% to the Internet Gaming Fund
- 31% to Detroit services
- 5.5% to the Michigan agriculture equine industry development fund, up to $3 million
Now, operators don’t need to worry about a potential tax hike, which would have been minimal to begin with.
Bill would have impacted iGaming, too
The proposed legislation would have affected online casinos to a minimal extent as well. Operators are tiered into the following tax brackets:
- Less than $4 million: 20%
- $4 million to less than $8 million: 22%
- $8 million to less than $10 million: 24%
- $10 million to less than $12 million: 26%
- $12 million or more: 28%
According to Senate Bill 1194, the bill would adjust the tax rate to the following:
- Less than $4 million: 21%
- $4 million to less than $8 million: 23%
- $8 million to less than $10 million: 25%
- $10 million to less than $12 million: 27%
- $12 million or more: 29%
The current tax structure will remain in place throughout 2025, unless another bill is re-introduced and passed.
Michigan is also on the tax-friendly side for iGaming, too. Operators are allowed to deduct promo spend up to 10% of gross revenue. However, starting in 2025, according to the law, most operators dip to 6% in promo deductions.
Singh and Moss proposed a minor tweak to the allocations of the funds as well. The Internet Gaming Fund would have received 64.5% while the agricultural fund bumped to 5.5%.
These tax hikes and allocation of funds are now moot once the calendar changes to 2025. We’ll see if lawmakers re-introduce another way to raise taxes next year.
