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Michigan Proposes Raising Taxes on Online Casinos, Sports Betting to Stabilize Medicaid

In her budget proposal, Michigan Gov. Gretchen Whitmer is seeking to hike taxes on sports betting and online casinos to shore up a Medicaid shortfall
Michigan governor proposes tax increases for sports betting and online casinos.
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  • Michigan’s 2026 budget plan would levy new gaming taxes – including a per-wager fee on sports bets – to help close an $800 million Medicaid shortfall.
  • The proposal targets sportsbooks and online casinos with tiered levies that state officials say could net hundreds of millions for Medicaid.

Michigan Gov. Gretchen Whitmer unveiled a budget proposal that would raise roughly $800 million to shore up Medicaid, with several gaming-specific measures.

Key elements:

  • A per-wager fee for sports betting: A $0.25 per-bet tax on the first 20 million wagers annually, then $0.50 per bet thereafter (estimated to generate about $39 million a year).
  • An online casino tax increase: Current revenue from online casinos taxed at 28% up to $185 million, then 36% above that threshold, an additional 8% on the top tier (projected to add $136 million).
  • Elimination of promotional deductions from taxable revenue: Expected to raise $21 million from sportsbooks.

State Budget Director Jen Flood emphasized the focus on essentials for Michigan families, saying the governor is focused on lowering costs, supporting kids, and protecting Medicaid.

House Republicans, led by Speaker Matt Hall, immediately opposed tax hikes in the budget.

Michigan sports betting already showing signs of decline

For players, the most immediate risk is cost pass-throughs. Illinois’ experience shows operators often add transaction fees or service charges when per-bet levies rise, a change that correlated with falling wager volumes there.

Michigan’s sports betting handle already showed signs of strain, with online handle down in December.

Operators will face tighter margins on high-volume, low-margin sportsbooks; the tiered casino tax increases and removal of promotional deductions also reduce operators’ flexibility to fund bonuses and free-play incentives. That could mean fewer promotions or higher minimums for players.

From a market perspective, higher taxes increase incentives for operators to prioritize lower-tax states or restructure product offerings, while regulators and lawmakers must balance revenue needs against potential declines in wagering and partner investment.

The budget must clear the Legislature before the July 1 deadline, setting up debates with a Republican-controlled House that has signaled opposition. Lawmakers may amend or reject parts of the plan; similar measures in other states (Arizona, West Virginia) suggest this will be an ongoing national discussion.

Based on reporting by Jefferson Mendoza for Sigma.

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The PlayUSA News Team provides everything you need to know about online casinos, sweepstakes casinos, prediction markets, sports betting, lottery, and all other legal gambling in the US. The content writing process for the PlayUSA News Team includes using an AI application but is edited and fact-checked by real-life humans. No piece of content is published before human eyes take a fine-tooth comb to ensure its accuracy, reliability, and trustworthiness.

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