Michigan Governor Gretchen Whitmer has proposed a package of tax increases projected to generate nearly $800 million annually to help fund the state’s Medicaid program as federal support faces uncertainty. Part of the plan is targeted on gambling, including higher online casino taxes and new per-bet sports wagering fees.
Whitmer’s plan would increase taxes on Michigan’s iGaming industry, drawing comparisons to recent changes enacted in Illinois that introduced a per-wager sports betting tax.
Operators would pay 25 cents on each of the first 20 million wagers placed, with the rate rising to 50 cents per bet beyond that threshold. The per-wager system is estimated to generate roughly $39 million per year. In addition, the proposal would eliminate deductions for free promotional bets, which is expected to bring in an additional $21 million annually.
Under the proposal, online casino operators would also see an 8 percentage-point tax increase on revenue exceeding $185 million, a change projected to raise approximately $136 million annually.
If enacted, the proposed tax changes would have a negative impact on sports bettors in Michigan. Higher operating costs for sportsbooks, particularly from the new per-wager tax and the elimination of deductions for promotional bets, may prompt operators to adjust their pricing and marketing strategies.
One likely impact could be a reduction in promotional offers. Sportsbooks often use sign-up bonuses, odds boosts, and other incentives to attract and retain customers. With fewer opportunities to deduct promotional credits from taxable revenue, operators may scale back the frequency or scale of these offers.
Bettors could also see less favorable odds over time. To offset higher tax expenses, sportsbooks may widen margins slightly, which can translate into lower payouts compared with previous pricing.
While no immediate changes have been announced, similar tax increases in other states have led operators to trim promotions and refine pricing models. For example, FanDuel was one of several operators to impose fees in Illinois in response to tax hikes.
This means that Michigan bettors could experience comparable adjustments if the proposal becomes law.
Republican leaders in the Michigan Legislature have quickly pushed back against Whitmer’s proposed tax increases. GOP lawmakers have described the package as overly broad and potentially harmful to businesses, particularly those in iGaming.
Since Republicans control both chambers of the Legislature, this is a big deal. Enacting new or increased taxes in Michigan requires legislative approval, so unified GOP resistance could block or significantly reshape the governor’s proposal.
Lawmakers may insist on scaling back or eliminating some components, such as the gambling elements, before advancing any budget or tax package.
With that in mind, it could take a while before this is fully resolved.
