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Michigan Gov. Gretchen Whitmer’s plan to squeeze more tax money out of online casinos and sports betting has officially hit a roadblock.
And not from Republicans this time.
Even Michigan’s Democratic-controlled Senate decided to leave the proposal out of its latest budget version.
Last week, the Senate passed an $88.1 billion budget for FY 2026/27, but the final package dropped Whitmer’s proposed $800 million in new taxes, including the much-talked-about gambling tax hike.
Governor’s game plan
Whitmer’s plan is expected to pull in an extra $195 million annually.
- The iGaming “mega-tax”: Currently the top tax rate for online casinos is 28% for revenue above $185 million. Whitmer wants to hike that by eight percentage points to 36%.
- The per-bet fee: Borrowing a page from the Illinois playbook, Whitmer wants to tax every single sports wager placed. The proposal is $0.25 per bet for the first 20 million wagers and $0.50 per bet thereafter regardless of if the sportsbook actually makes a profit on the game.
- No more freebies: She is also looking to kill the tax deduction operators get for “free bets” or promotional credits. That alone would get back roughly $21.1 million.
Why the proposition?
The state is currently looking at a $1.8 billion budget gap, and Whitmer needs fresh cash to keep programs like Medicaid and the Medicaid Benefits Trust Fund healthy.
And you already know the operators that will likely be responsible for funding this feat. We are talking about the big three, FanDuel, BetMGM, and DraftKings, which are the only ones consistently clearing that $185 million revenue bar. So, the wellness programs get the needed funding without taxing the average Michigander’s paycheck.
The budget briefing even pointed out that while Michigan’s online casino market is the biggest in the country, states like Pennsylvania are collecting roughly 50% more in taxes. In Whitmer’s eyes, it is simply time for the largest online casinos to pay up.
House Speaker Matt Hall thinks it’s a bad idea.
“We’re not going to do any of that. … There will be no tax increases in this budget when we do this deal.”
Who else is doing this?
Michigan isn’t the only state treating sportsbooks like a piggy bank.
Illinois recently moved to a sliding scale that tops out at 40% and introduced its own per-wager fee last year.
Arizona Gov. Katie Hobbs has also floated a plan to jack up rates for big operators from 8% to 45%.
Where does Michigan stand now?
At this point, nothing is final.
The House and Senate versions of the budget now head into final negotiations, where lawmakers will attempt to get a balanced spending plan before the deadline.
That means Whitmer’s gambling tax proposal is technically still on the table.
Lawmakers now have two choices. Approve some version of the tax hikes. Or find another way to seal that $1.8 billion budget hole.
