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The Michigan Senate and Michigan House of Representatives each advanced budgets for the 2026/2027 fiscal year without increasing taxes for gambling operators in the state.
Michigan Gov. Gretchen Whitmer proposed tax hikes for Michigan online casinos in February. However, legislators did not implement those ideas into their budget as of yet.
Whitmer also suggested a per-bet tax that would apply to Michigan sportsbooks. That, too, was not included in the budget.
‘Sin taxes’ not included
State Sen. Sarah Anthony, Senate Appropriations Committee chair, considered Whitmer’s plans to raise taxes, which includes in the gambling industry, as “tone deaf.” She also considered them a “sin tax.”
Despite that, Anthony did reveal her openness to further discussions, according to Bridge Michigan:
“We have not contemplated new revenue, particularly those sin taxes the governor has put forward, but we’re open to that conversation.
“We want to be sure that we’re being mindful of what revenue options are there and whether they’re impacting working families.”
The Legislature has until July 1 to implement any sports wagering or iGaming tax increases.
Whitmer’s ideas for iGaming
There has been talks about tax hikes in recent years, however, nothing has materialized through legislation. Whitmer was hoping for a change.
Online casino operators pay a 28% tax, which is much lower than the 54% rate Pennsylvania operators pay.
Whitmer said in February:
“Pennsylvania casinos, one of the nation’s largest markets, generated 10% less casino profits
from online gaming but paid roughly 50% more tax, compared to the internet casinos in Michigan.”
Whitmer explained how the tax would work:
“The governor’s budget proposal introduces a new higher marginal tax rate that applies only after a casino operator earns more than $185 million in AGR within a year. For revenues above this threshold, the tax rate on online games would increase by 8 percentage points, bringing the total rate to 36%.
“The majority of internet casino profit comes from online slot machines, and Michigan’s new 36% tax rate would remain significantly lower than Pennsylvania’s 54% rate for internet slots.”
Only FanDuel, BetMGM, and DraftKings would be affected, according to 2025 revenue.
Sports wagering tax proposal
Sports operators in Michigan are taxed at 8.4%, which is 28th out of 30 legal states, according to the governor. Whitmer explained a similar structure that was introduced in Illinois last year.
“A new 25 cents per-bet tax would apply on a licensee’s first 20 million wagers annually. For wagers after 20 million, the tax on those would increase to 50 cents per bet.”
Proposals for each vertical would generate nearly an additional $175 million in revenue, which would benefit the Medicaid Benefits Trust Fund.
While Michigan lawmakers seem skeptical, the idea of a hike doesn’t appear to be a non-starter with them.
A hike, however, could impact promotions that operators offer, which could, in turn, drive customers away from the industry.
New programs and increases
While lawmakers’ budget does not have tax increases, reinforcements for sports wagering and iGaming are included.
The Senate is proposing an additional four full-time positions and $900,000 in Restricted Gaming Revenue to support operations.
Of the total, $600,000 would support oversight of iGaming and sports wagering and $300,00 for responsible gambling initiatives focused on the youth.
