Michigan’s Gambling Taxes: Small Changes, Big Conversations

Incremental Adjustments with Local Impact

The proposed changes come via Senate Bills 1193 and 1194, introduced on December 5th. These bills aim to amend Michigan’s 2019 gambling laws with minor adjustments that target both sports betting and iGaming tax rates.

For sports betting, SB 1193 proposes raising the tax on commercial operators from 8.4% to 8.5%. While this increase only applies to non-tribal operators, it includes an important tweak to revenue distribution. Cities hosting land-based casinos partnered with these operators would see their share jump from 30% to 31%. The state’s general fund allocation would drop slightly to 63.5%, and the Michigan agriculture equine industry development fund’s slice would increase from 5% to 5.5%.

Meanwhile, SB 1194 focuses on online casinos and introduces a tiered tax hike, raising each revenue bracket by 1%. Here’s what that looks like:

• Revenue under $4 million: 21% (up from 20%)
• $4 million to $8 million: 23% (up from 22%)
• $8 million to $10 million: 25% (up from 24%)
• $10 million to $12 million: 27% (up from 26%)
• Over $12 million: 29% (up from 28%)

Maybe most notably here, the iGaming bill won’t increase the city share, leaving it at 30%. However, the state fund will take 64.5%, with the equine fund also receiving a bump to 5.5%.

A National Balancing Act

Compared to the bold tax moves happening in other states, Michigan’s proposed changes are relatively modest. In Ohio, lawmakers are considering a sharp reduction in sports betting taxes, from 20% back down to 10%, in an effort to remain competitive. Illinois, on the other hand, recently introduced a progressive tax system that scales up to 40% for the state’s most profitable sportsbooks. Meanwhile, Louisiana briefly entertained a proposal to raise its sportsbook tax rate to 51%, a figure rivaling New York, before tabling the idea for future discussion.

So where does Michigan sit in all this? Somewhere in the middle, and that seems deliberate. The National Council of Legislators from Gaming States (NCLGS) recently suggested keeping tax rates between 15% and 25% to avoid scaring off smaller operators. Michigan’s iGaming top rate of 29% does creep above that range, but the step-by-step increases seem designed to avoid rocking the boat too much.

What’s clear is that Michigan’s online gambling market is already pulling its weight. In October alone, iGaming brought in $41.5 million in taxes. Heavy hitters like FanDuel, BetMGM, and DraftKings are already thriving at the highest tax tiers, so lawmakers are banking on these modest hikes to bring in more cash without sending operators running for the hills.