Michigan lawmakers’ proposal to raise online casino and sports betting taxes has caught the attention of the U.S. market’s leading operators.
FanDuel, DraftKings and BetMGM all told SBC Americas that they pushed out emails to users in the Wolverine State this week to ask them to oppose the legislation.
SB 1193 and SB 1194, respectively, call for Michigan’s sports betting tax rate to increase by 0.1% and the progressive online casino rate to rise by 1% for each tax bracket. FanDuel’s email reportedly noted to players that promotional offers and strong betting odds lines could be at risk if the “surprise tax hike” becomes reality.
FanDuel’s email prompts its Michigan customers to fill out a form on the Sports Betting Alliance (SBA) website to voice their concerns about the tax hike. FanDuel, DraftKings and BetMGM are all members of the SBA, alongside Fanatics.
SBC Americas also reached out to the SBA for comment but had not heard back at the time of writing. A Fanatics spokesperson wrote by email that “while we did not engage our customers directly on this issue, we support the advocacy efforts of the other member companies,” noting that major legislative policy discussions like increasing tax rates should require extensive deliberation and discussions.
The communication about the proposed Michigan legislation came around the same time that FanDuel appointed two new directors of government relations to aid their communications with regulators and legislators.
Trio of operators pay state’s highest iGaming tax rate
The Michigan bills, both co-sponsored by Sen. Sam Singh and Sen. Jeremy Moss, were each introduced to the state Senate on Dec. 5 and have been referred to the Senate Government Operations Committee.
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, ranging from a minimum of 20% to a maximum of 28%. The proposals would raise the sports wagering rate to 8.5% and the online casino range from 21% to 29%.
FanDuel, DraftKings and BetMGM all generate monthly revenue in Michigan that exceeds the cutoff for the highest iGaming tax rate, so would be on the hook to pay 29% under the new proposal.
SBA previously opposed Illinois hike
While the Michigan senators are only proposing a sliver of an increase, other states have made bolder moves in 2024. Illinois implemented a similar sliding tax scale for its sports betting market, with a highest rate of 40%, nearly tripled the previous flat rate of 15%.
Illinois went ahead with that hike despite opposition from the SBA members and executives including FanDuel owner Flutter’s CEO Peter Jackson. Jackson warned that the measure could “drive customers to offshore operators or potentially to onshore operators who are offering unregulated” betting options.
