Michigan Gaming Tax Hike Falls Through

By John Isaac,
Editor at online-gambling.com

John Isaac Editor at online-gambling.com

John Isaac is an editor with many years of experience in the gambling industry. He writes expert articles on card games like blackjack and poker. In addition, he is also well aware of the US gambling laws and the Indian and Dutch gambling markets. You can rely on verified information and insightful details.

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Last updated: January 8, 2025

Michigan’s Senate Bills 1193 and 1194 failed to advance, leaving Michigan’s gambling tax policies at a standstill. With these bills failing, it leaves the current gambling tax framework intact. If these bills had been passed, it would have seen a slight increase in the tax amount and the allocation of tax revenues.

Senate Bill 1193 Proposed Slight Tax Increases

Senator’s Sam Singh and Jeremy Moss introduced the two bills with hopes to change how gambling in Michigan is taxed and the way the tax money is used. These proposals would have increased sports betting tax by 0.1% up to 8.5%, an amount which was unlikely to dramatically affect gambling operators.

The proposed bill also targeted online casinos tax, which in the state of Michigan is different based on the operator’s revenue. Currently the tax structure for online casinos is as follows:

• Operator’s revenue less than $4 million – 20%
• Operator’s revenue between $4 million – $8 million – 22%
• Operator’s revenue between $8 million – $10 million – 24%
• Operator’s revenue between $10 million – $12 million – 26%
• Operator’s revenue of $12 million and above – 28%

Bill 1193 would have increased each one of these tires by only 1%.

SB 1194 Proposed Changes to Tax Allocation

In conjunction to SB 1193, SB 1194 was set to change how the tax money will be allocated. At present, 65% of the taxes go to the Internet Gaming Fund, 30% to services in Detroit, and 5% is given to the agriculture equine industry development fund.

SB 1194 proposed that these percentages be adjusted to the following:

• The Internet Gaming Fund goes from 65% to 63.5%
• Detroit services to increase to 31%
• Agricliture equine industry development to increase to 5.5%

These Bills Will Not Extend into 2025

These increases were very modest compared to tax hikes in other states, however, these proposed changes didn’t gain enough support. Because of that, these proposals did not carry over into 2025. Those that backed these bills will still be able to re-introduce them, if they wish.

For now, Michigan will retain its status as one of the friendliest states in terms of gambling taxes. Sportsbooks are allowed to deduct promotional spending from taxable revenue, making it a very attractive market for gambling operators.

Individual Gambling Tax in Michigan

Players in Michigan are subject to both federal and state income taxes on their gambling winnings. A federal tax of 24% is withheld on winnings of more than $5,000. In addition, a state income tax of 4.25% is imposed on these winnings. Meaning that quite a substantial amount of a player’s winnings is withheld upfront to cover the tax obligations.

For example, a $10,000 win would result in $2,400 withheld for federal taxes and $425 for state taxes, leaving the winner with $7,175 before considering any potential deductions or additional tax liabilities.