Michigan Most Likely State to Raise iGaming, Sports Betting Taxes in 2026

Posted on: February 19, 2026, 01:31h. 

Last updated on: February 19, 2026, 01:31h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Trio of states proposed raising gaming taxes this year
  • Michigan viewed as most likely to do so, according to a research firm
  • Whitmer is seeking Illinois-style sports betting tax scheme as well as increased iGaming levies

To this point in the 2026 legislative sessions, Arizona, Michigan, and West Virginia are mulling increasing iGaming and/or online sports wagering taxes. A research firm believes Michigan is the most likely bring its plan to life.

Detroit casinos Michigan gambling
Michigan Gov. Gretchen Whitmer (D). The state is viewed as the most likely to raise sports betting taxes this year. (Image: Office of Governor Gretchen Whitmer)

In her fiscal 2026 budget proposal released last week, Gov. Gretchen Whitmer (D-MI) pitched an Illinois-style online sports betting tax plan under which Michigan would implement 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. That’s aimed at generating $38.8 million for the Medicaid Benefits Trust Fund.

Whitmer is also proposing eliminating the promotional spending deduction, which is currently unlimited, that’s offered to online sportsbook operators in the state as well as adding a new top marginal tax rate on iGaming operators of 36% of gross gaming revenue (GGR). Like the sports betting tax, the weight of the internet casino proposal would likely be felt the most by the largest operators.

In a report out today, Eilers & Krejcik Gaming (EKG) said that because there are multiple points of bargaining and discussion, Michigan is the state “most likely to enact the change.”

Michigan Sports Betting Tax Plan Faces Hurdles

Republicans have a slight majority in Michigan’s House of Representatives, indicating it’s not a foregone conclusion that Whitmer will get her wishes in terms of higher gaming taxes.

The Republican-controlled House is the primary hurdle, with leadership having publicly rejected the increases,” notes EKG. “However, the GOP majority is narrow (58R–52D), meaning just four Republican votes would be required if Democrats remain unified.”

The research firm adds that due to the political importance of Medicaid and the multiple levers bargaining contained in Whitmer’s budget, the possibility of “sufficient crossover support” exists.

Additionally, there’s room for Michigan’s sports betting tax to rise without becoming onerous. As The Tax Foundation notes, the state’s tax rate on that form of betting is just 8.40%, good for the second-lowest in the nation behind only Iowa and Nevada.

What About Arizona and West Virginia?

Last month, Delegate Adam Burkhammer (R-WV) proposed boosting that state’s online sports betting tax to 25% from 10% while increasing the iGaming levy to 25% from 15%. The current rates are among the lowest in the US, indicating there’s room for negotiation, but it’s not clear how much momentum the Burkhammer proposal has.

Arizona is likely a different ballgame. There, Gov. Katie Hobbs (D) wants to more than quadruple the online sports betting tax to 45% from 10%. Like her counterparts in Illinois and Michigan, Hobbs is proposing a tax scheme that would be most burdensome to the largest operators, in this case those doing at least $75 million in monthly turnover.

Republicans control both houses of the Arizona legislature, perhaps signaling headwinds to the Hobbs proposal.