Michigan to Raise Gambling Taxes?

Proposed Tax Hikes in Michigan

The senators aim to amend the tax structure for sports betting and online gambling operators in Michigan. Separate bills for each sector were introduced last week, outlining slight increases in tax rates.

Michigan has traditionally been viewed as a tax-friendly market, with sports betting operators allowed to deduct promotional spending from gross revenue before taxes. Online casinos in the state can also take similar deductions but within certain limits.

Currently, Michigan sports betting operators pay a tax rate of 8.4%, but after accounting for promotional deductions, the effective tax rate drops to 5%. Singh and Moss propose a minor increase to the base tax rate, raising it by 0.1% to 8.5%.

Higher Taxes for Online Casinos

Senate Bill 1194, sponsored by Singh and Moss, proposes a more substantial increase for online casino gaming. Each revenue tier would see a one-percentage-point rise, resulting in the following tax brackets:

• Under $4 million: 21%
• $4 million to under $8 million: 23%
• $8 million to under $10 million: 25%
• $10 million to under $12 million: 27%
• $12 million or more: 29%

The bill also proposes adjustments to how funds are allocated to specific initiatives.

Next Steps

No timeline has been established for the potential adoption of these bills. For now, they have been referred to the Senate Committee on Government Operations for review.