Michigan Governor Proposes Online Casino Tax Increase, Per-Bet Charge For Sports Betting

Michigan Gov. Gretchen Whitmer is proposing an increase to the current online casino tax rates that operators are subjected to, as well as a new per-bet charge for sports betting.

Whitmer unveiled her 2027 fiscal year budget proposal last week and she is targeting an extra $200 million in tax revenue through gambling.

Along with these two proposed changes, Whitmer also is looking to eliminate promo deductions for the online sportsbooks.

These moves are in hopes to add revenue to the state to protect access to Medicaid coverage, per her budget message.

“In the wake of devastating federal cuts to health care that have already raised premiums and could close hospitals and clinics, crowd emergency rooms, cut jobs, and kick hundreds of thousands of Michiganders off their health care, the budget recommendation takes decisive action to protect access to coverage and ensure the future sustainability of Medicaid,” Whitmer said in the report.

Michigan iGaming Tax Could Rise to 36%

Michigan already operates on a sliding tax rate for online casino operators based on their adjusted gross revenue (AGR). Currently, operators can pay anywhere from 20-28% on their AGR.

Whitmer’s proposal would see any operators that surpass $185 million in AGR see their rate then kick up to 36% afterwards. The budget proposal says this could create $135.5 million in new tax revenue for FY2027.

Even with this jump by 8%, Michigan would still be well behind Pennsylvania, which charges 54% on online slot revenue.

In 2025, four Michigan online casino operators surpassed $185 million in AGR. They were:

• FanDuel Casino: $768.1 million AGR
• BetMGM Casino: $735.5 million AGR
• DraftKings Casino: $434.1 million AGR
• BetRivers Casino: $212.1 million AGR

In addition, Hard Rock Bet Casino debuted in December with $33.6 million in AGR, a new record for a debuting online casino operator in the state. That would certainly put them on track to reach $185 million in a year.

Collectively, Michigan iGaming generated $2.90 billion in AGR in 2025 and $3.09 billion in gross revenue. That led to $597.5 million in state tax revenue and an additional $224.5 million in city/local tax revenue.

Fee for Michigan Sports Betting

When it comes to Michigan online sportsbooks, Whitmer is proposing a per-bet charge for each wager placed.

The budget calls for a $0.25 per-bet tax to be placed on each operator’s first 20 million annual bets. After reaching that threshold, the tax would jump up to $0.50 per-bet.

Whitmer believes that can generate nearly $39 million in added tax revenue.

The budget also eliminates free play deductions for the online sportsbooks, which impacts their AGR, which leads to less tax revenue. If eliminated, Whitmer believes the state can bring in an added $21 million in FY2027.

Plenty of Opposition to Whitmer’s Budget Plans

Whitmer’s proposed budget is already drawing plenty of criticism from state lawmakers and gambling proponents in the state.

Illinois established a per-bet fee last year that many operators passed on to customers with surcharges for betting. That led to a 15% decline in sports wagers year-over-year according to the Illinois Gaming Board.

The Sports Betting Alliance, a coalition of online gambling companies like FanDuel, DraftKings, and BetMGM, told Crain’s Business Detroit that these moves would only make it hard for Michigan residents to gamble legally and urged lawmakers to reject the proposed budget changes.

“Instead of strengthening the legal market, Whitmer’s tax hikes encompass new per-bet taxes and dramatically higher iGaming rates that will raise prices for Michiganders and make it harder for legal operators to compete,” the Alliance told Crain’s.

“Let’s be clear: The only people cheering today are the illegal and unregulated operators that don’t seek licenses, don’t follow state rules, operate in the shadows, and aggressively target Michigan consumers without paying a dime in taxes or investing in responsible gaming protections.”

The Michigan House is controlled by Republicans, and they have come out against Whitmer’s budget, stating they will not support the gambling tax increases.

The Michigan Senate is controlled by Democrats, which may be more supportive of Whitmer’s plan. Both will need to submit a FY2027 budget of their own, so these current gambling proposals may not see the light of day when all is said and done.