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Michigan Governor Gretchen Whitmer has proposed a new per bet tax on sports wagering as part of the fiscal year 2027 state budget. Budget papers outline several gambling tax changes that could reshape online sports betting and internet casino revenue across Michigan.
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Michigan sports betting operators would face a structure identical to the Illinois model introduced last year. Under the plan, license holders would pay 25 cents on each of their first 20 million wagers annually. After crossing that mark, every additional bet would carry a 50 cent charge.
Budget documents project the per bet tax could raise $38.8 million in fiscal year 2027. Funds would flow into the Medicaid Benefits Trust Fund, supporting health and wellness programs across the state.
“The same tax was enacted in Illinois last year,” budget briefing papers say. “Michigan’s sports betting tax rate currently ranks 28th out of the 30 states that have legalized the activity. Michigan’s tax rate remains the lowest among neighboring states.”
Illinois offers a recent example of how operators respond. After implementation of the per bet levy, several sportsbooks introduced transaction fees and increased wagering minimums to offset higher costs. Public data from Illinois also shows total bet counts declined following the new tax. Analysts continue to debate whether lower volume reflects pricing adjustments, consumer pullback, or broader market trends.
Michigan already hosts one of the more mature online gambling markets in the Midwest. Online sportsbooks and internet casinos generate steady adjusted gross receipts, yet the current sports betting tax rate ranks near the bottom nationally. Budget writers argue a per bet structure would align Michigan more closely with regional peers.
Beyond sports wagering, Whitmer budget proposal targets free bet deductions. At present, operators may deduct promotional credits from taxable revenue. The new plan would remove that option and is forecast to generate an additional $21.1 million.
“Free play is an incentive for gamblers, allowing them to begin placing sports wagers at no initial cost,” the papers say. “Under the budget proposal, sports betting providers would no longer be able to deduct those wagers.”
Internet casino taxation would also change. Operators reporting more than $185 million in adjusted gross receipts would face a higher marginal rate. Revenue above that threshold would be taxed at 36 percent, representing an eight percentage point increase on the top tier.
“Last year, only three of Michigan’s internet casinos met the threshold for the higher tax rate to apply,” the papers say. “It is forecast to generate $135.5 million in new tax revenue in FY27, with the majority going directly to the Medicaid Benefits Trust Fund in support of health and wellness programs.”
Combined, the per bet tax, free bet deduction removal, and higher online casino rate could generate hundreds of millions in new revenue. However, gambling industry stakeholders may resist the changes. Trade groups often argue that higher tax burdens lead to reduced promotional offers, tighter odds, and potential migration to unregulated offshore platforms.
Legislative negotiations still lie ahead. Budget proposals often evolve before final approval, and some measures may be revised or removed during committee debate. Michigan lawmakers will weigh projected Medicaid funding gains against potential market impacts on licensed sportsbooks and online casino operators.