Michigan Gambling Tax Rate Poised For Huge Increase

You had to figure that something like this was bound to happen to the gambling tax in The Wolverine State.

Michigan Governor Gretchen Whitmer shared her ideas for the 2027 state budget.

One of the big ticket items is increasing the gambling tax rates to raise more money. She hopes these changes will bring in $195–200 million more each year.

We’ve seen similar moves made in states like Illinois and New Jersey.

Why Change the Gambling Tax in Michigan?

Michigan needs money to fill a big budget gap of about $1.8 billion.

This gap is mainly because the state is getting less money from the federal government for things like Medicaid, a program that helps people pay for healthcare. Costs are going up for healthcare, and inflation is making everything more expensive.

Governor Whitmer plans to use the extra money from gambling taxes to help pay for Medicaid and other health programs.

What Are the Proposed Changes?

The gambling tax proposal would affect each arm of the industry differently.

Higher Taxes for Online Casinos: Right now, Michigan charges online casinos a tax that goes up as they make more money. The highest rate is 28% for big earnings (over $185 million a year). Whitmer wants to raise this top rate to 36% for really big earners. This change would mostly affect big names like BetMGM, DraftKings, and FanDuel and could bring in around $135.5–136 million each year.

New Charge for Sports Bets: A new idea is to charge sportsbooks 25 cents per bet for the first 20 million bets a year, then 50 cents for each bet after that. This is similar to something Illinois started in 2025. Michigan hopes to make about $38.8–39 million from this new charge.

No More Promotional Deductions for Sportsbooks: Currently, sportsbooks can reduce their taxable income by the value of free bets and promotions. Whitmer’s plan would stop this, adding about $21.1 million in tax revenue each year.

In total, these changes might give Michigan an extra $195.4 million for the 2027 budget.

What Do People Think?

Michigan has been doing well with online gambling since it started in 2021, thanks to its relatively low tax rates. The new plan takes cues from Illinois, especially with the per-bet charge. But not everyone is happy with these changes.

Some industry groups, like the Sports Betting Alliance, worry these changes could make gambling more expensive for players, push people toward illegal gambling markets, or make Michigan less attractive compared to other states.

Critics, including some politicians who helped legalize online gambling, think these tax hikes could reduce the amount of gambling people do in Michigan. Others are against the general idea of raising taxes.

What Comes Next For The Gambling Tax Proposal?

Governor Whitmer’s budget proposal is just the first step—it needs approval from Michigan’s Legislature. They might make changes before anything becomes law. Discussions are still happening, and nothing is decided yet.

Overall, if these changes happen, big gambling companies would pay more taxes, and the state would get more money based on how many bets people place, not just on how much money they make.

• SCCG Management. The Gambling Industry’s Global Connector. Access Here.
• Source: https://sportshandle.com/michigan-gambling-tax-rate-poised-for-huge-increase/