Michigan Betting Taxes Increase Planned By Governor Gretchen Whitmer
Posted on: February 11, 2026, 05:37h.
Last updated on: February 12, 2026, 03:45h.
- Michigan governor wants to duplicate the per bet tax scheme employed by nearby Illinois
- The Illinois policy resulted in fewer bets being placed and operators passing costs onto bettors
- Whitmer also wants to scrap promo spending deductions and raise taxes on iGaming
Add Michigan to the list of states where sports wagering and other betting taxes could climb this year. Potentially worse for bettors and gaming companies is the fact that Gov. Gretchen Whitmer (D-MI) wants emulate a plan used in nearby Illinois.
In 2025, Illinois enacted a new levy of 25 cents per wager on an operator’s first 20 million booked bets, with that rate doubling to 50 cents per bet for each wager placed after that initial 20 million. In a bid to raise $38.8 million for the Medicaid Benefits Trust Fund, that’s the scheme Whitmer wants to bring to Michigan. In fact, that state’s budget briefing overtly mentions Illinois.
The same tax was enacted in Illinois last year,” according to a briefing on the Whitmer budget. “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.”
Michigan’s current sports betting tax rate of 8.40% is the second-lowest in the nation behind only Iowa and Nevada, both of which are at 6.75%, according to The Tax Foundation.
Whitmer Also Wants to Scrap Promo Deduction
Michigan is also joining the list of states that have or are examining eliminating tax deductions offered to sportsbook operators for their promotional spending.
Free bets offered by sportsbook are typically used as a customer acquisition and retention tool. Many states allow for those wagers and promotional spending to be deducted from net sports betting proceeds. There’s a downside for states in that those deductions lead to lost revenue.
Whitmer’s budget proposal indicates Michigan would raise another $21.1 million by eliminating those tax incentives. If that happens, the likely outcome would be reduced promotional spending by operators.
“Free play is an incentive for gamblers, allowing them to begin placing sports wagers at no initial cost,” according to the proposal. “Under the budget proposal, sports betting providers would no longer be able to deduct those wagers.”
iGaming in Crosshairs, Too
Michigan is one of just seven states where iGaming is live and legal and it’s a thriving online casino market at that. That’s not lost on Whitmer as the governor wants to boost the tax rate on operators with more than $185 million in adjusted gross receipts to 36% from 28%.
“Last year, only three of Michigan’s internet casinos met the threshold for the higher tax rate to apply,” as noted in the budget briefing. “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.”
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