A pair of bills recently introduced in the Michigan Senate propose small increases to online casino and online sports betting taxes in the state.
SB 1193 and SB 1194, both co-sponsored by Sen. Sam Singh and Sen. Jeremy Moss, were each introduced to the chamber on Dec. 5 and have referred to the Senate Government Operations Committee. The bills propose amending the Lawful Sports Betting Act, 2019, and the Lawful Internet Gaming Act, 2019, respectively, to raise taxes by a sliver.
Currently, Michigan sportsbooks are taxed at a rate of 8.4% of adjusted gross sports betting revenue, while online casino operators are taxed on a graduated scale depending on their annual AGR:
- Less than $4 million: 20%
- $4 million to less than $8 million: 22%
- $8 million to less than $10 million: 24%
- $10 million to less than $12 million: 26%
- $12 million or more: 28%
In addition, to those rates, the three Detroit casinos pay an additional 1.25% in city tax.
SB 1193 would raise the online sports betting tax rate by 0.1% to 8.5%, while SB 1194 would add one percent on to each of the above rates on the sliding tax scale.
The distribution of tax revenues would also be slightly tweaked. For sports betting tax revenue, the amount that goes towards the city in which the operator is located would be raised from 30% to 31%, 63.5% (down from 65%) would go into the state fund, and 5.5% (up from 5%) would go to the Michigan agriculture equine industry development fund. For iGaming, the city’s slice would remain at 30%, the state fund would get 64.5% and the agriculture equine industry development fund would receive 5.5%.
The bills do not detail the reasoning behind the small proposed tax increases.
The Michigan lawmakers’ proposals come just two weeks after the National Council of Legislators from Gaming States (NCLGS) published its full draft model legislation for iGaming, recommending an online casino tax rate of between 15 and 25% of operators’ AGR. Michigan’s two highest brackets already exceed the high end of that scale.
The Michigan Gaming Control Board’s most recent revenue report, released in mid-November, shows that the state’s online casino gaming yielded $41.5 million in taxes in October. The top five Michigan online casinos — FanDuel, BetMGM, DraftKings, Caesars and BetRivers — all exceeded the $12 million AGR cutoff for the highest iGaming tax bracket in the state, so would each be liable to pay 29% under the new proposals.
Michigan efforts follow more dramatic measures elsewhere
While the Michigan senators are only proposing a fractional increase, other states have made bolder moves in 2024.
Most notably, in June, Illinois rubber-stamped a new progressive sports betting tax that established a sliding scale ranging from 20% to as high as 40% for any AGR above $200 million. That high-bracket rate is nearly triple the previous flat rate of 15% and made Illinois’ tax ceiling the second-highest for sports betting, behind New York’s 51% rate.
Illinois went ahead with that hike despite opposition from the Sports Betting Alliance (SBA) and leading operators’ executives.
Last month, in Louisiana, lawmakers deferred a measure that aims to raise the tax rate on GGR for online sportsbooks from 15% to 51% to match New York’s rate. The bill will undergo amendments before being reassessed in 2025, amid pushback from leading in-state operator Caesars.
Also in November, the Ohio politician who authored the bill that legalized sports betting in Ohio in 2022 filed legislation to lower the state’s sports betting tax rate back down to its original 10% from 20%. The levy was doubled last year under a move originally proposed by Ohio Gov. Mike DeWine.
