Michigan Budget Targets Sports Betting and iGaming with New Tax Measures
The proposed sports betting levy would charge $0.25 per bet on a licensee’s first 20 million wagers each year, rising to $0.50 per wager thereafter.
Michigan Governor Gretchen Whitmer has unveiled budget proposals that would introduce a per-wager sports betting tax and increase iGaming tax rates for operators exceeding a US$185m revenue threshold.
The proposed sports betting levy would charge $0.25 per bet on a licensee’s first 20 million wagers each year, rising to $0.50 per wager thereafter. Budget documents note that Michigan’s sports betting tax rate “currently ranks 28th out of the 30 states that have legalised the activity”, making it the lowest among neighbouring states.
The governor estimates the new wager tax would raise $38.8m in FY27, with proceeds directed to the Medicaid Benefits Trust Fund to support health and wellness initiatives.
iGaming tax changes
The proposals also target online casinos generating more than $185m in adjusted gross revenue (AGR) annually, increasing their tax rate by eight percentage points to 36 per cent.
“In 2025, casinos generated $2.9bn in adjusted gross receipts (AGR), representing Michigan players’ net losses to the casinos,” the documents state.
They also compare Michigan with Pennsylvania, noting that the latter generated 10 per cent less online casino profit but paid around 50 per cent more tax. “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 per cent rate for internet slots.”
The revised iGaming tax is expected to generate $135.5m for the Medicaid Benefits Trust Fund and the Michigan Agricultural Equine Industry Development Fund.
Promotions under review
A further proposal would remove the ability for sports betting operators to deduct free play from their tax base.
“Currently, providers of sports betting are allowed to deduct free play from their tax base,” the documents explain. “Under the budget proposal, sports betting providers would no longer be able to deduct those wagers.”
This change is forecast to raise an additional $21.1m in FY27 for health and wellness programmes. Other elements of the Michigan budget include investment in literacy, road repairs and higher education.
Related News:
- Drafting Error Wipes Out Estonia’s Online Casino Tax for 2026
- Regulatory Intent vs Economic Reality: Gibraltar Reacts to UK Gambling Tax Hikes
