Michigan Rejects Gambling Tax Increase Proposals
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Key Takeaways:
- The proposed legislation to increase gambling taxes in Michigan has failed.
- Planned changes included a minimal tax rate increase and a redistribution of tax revenues.
- For now, Michigan remains a tax-friendly location for gambling operators.
Background: Failed Legislative Proposals
On January 1, 2025, the legislative proposals Senate Bills 1193 and 1194 in Michigan expired without being passed. Senators Jeremy Moss and Sam Singh had introduced the changes, which proposed a slight increase in tax rates for online casinos and sports betting. However, the legislative session ended before a decision could be made.
Planned Changes in Detail
The legislative proposals aimed to adjust the tax structure. For sports betting, an increase in the tax rate from 8.4% to 8.5% was proposed. Additionally, the distribution of gambling tax revenues was to be modified:
- The share allocated to the Internet Gaming Fund was to be reduced from 65% to 63.5%.
- The allocation for Detroit services was to increase from 30% to 31%.
- Funding for the Michigan Agriculture Equine Industry Development Fund was to be raised to 5.5%, with a cap of $3 million USD.
Changes were also planned for online casinos. The tax rate was to increase by one percentage point across all income brackets. Operators with revenue below $4 million USD would pay 21% instead of 20%, while providers with revenue over $12 million USD would face a rate of 29% instead of 28%.
Why the Proposals Were Not Implemented
Despite the moderate changes, the legislative proposals failed. Michigan is already considered one of the most tax-friendly states for gambling operators. Currently, sports betting operators can reduce their tax burden to as low as 5.0% through deductions for advertising expenses. Similar deductions of up to 10% of gross revenue are allowed for online casinos, although this limit will decrease to 6% in 2025.
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Impact on the Gambling Industry
The rejection of the legislative proposals means that Michigan remains an attractive location for gambling operators. The planned changes would have resulted in only a minimal increase in the tax burden. Future attempts to modify the tax structure will need to be reintroduced, which will not be possible until 2025 at the earliest.
Our Assessment
The failure of the legislative proposals highlights how difficult it is to implement changes in an industry that already benefits from tax advantages. For players and operators, Michigan remains a stable and tax-friendly market for now. Whether future legislative initiatives will be more successful will depend on political priorities and pressure on the industry.
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