Michigan governor wants to mirror Illinois’ per-wager tax flex
Michigan could become the second state to implement a per-wager tax on online sportsbooks.
The latest executive budget drafted by Michigan Gov. Gretchen Whitmer aims to mimic the measure that Illinois introduced last year.
Under Whitmer’s $88.1 billion Executive Budget for FY2027, Michigan’s licensed sports betting operators would be taxed at 25 cents per wager on the first 20 million bets in a year, rising to 50 cents per wager beyond that threshold.
The budget, the governor’s last in her role, aims to find ways to generate revenue for the state to help close a $1.8 billion budget gap amid rising costs and federal funding cuts.
Michigan hits copy and paste on Illinois’ per-wager tax
That proposed structure is the exact same as the per-wager tax scheme that Illinois implemented last year under Gov. J.B. Pritzker’s budget. Michigan’s budget projects that the per-bet charge would generate approximately $38.8 million in revenue in FY2027 for the Medicaid Benefits Trust Fund.
Michigan’s sports betting tax rate is just 8.4%.
“The same tax was enacted in Illinois last year,” reads State Budget Office briefing papers. “Michigan’s sports betting tax rate currently ranks 28th out of the 30 states that have legalized the activity. Michigan’s tax rate remains the lowest among neighboring states.”
Illinois raised more than $60 million in new tax revenue from its own per-wager fee in the first six months of its existence.
How has Illinois’ per-wager tax panned out?
The Illinois move was an unprecedented tax move when it was implemented in July 2025. It led to immediate pushback from licensed operators in the state and all 10 licensed Illinois sportsbooks reacted to the change by introducing measures to offset it, with half imposing or raising bet minimums and the other five adding per-wager transaction fees for Illinois users.
While Illinois’ tax revenue soared post-implementation, the number of wagers placed with Illinois sportsbooks dropped by 15% in three consecutive months in the second half of last year.
Illinois is a notable case study as it also changed its standard revenue-based tax rate in 2024 to a sliding scale. That scale starts at 20% and goes as high as 40% on all adjusted gross revenue above $200 million. Any online bets taken in Chicago also incur an additional 10.25% local tax as part of Mayor Brandon Johnson’s FY2026 budget.
Earlier this month, Rep. Daniel Didech introduced House Bill 5143 to end the per-wager tax requirement in Illinois, with the bill making the change effective July 21.
Sports Betting Alliance fiercely opposed
Eight of Illinois’ 10 licensed online sportsbooks are also operational in Michigan: FanDuel, DraftKings, BetMGM, Fanatics, BetRivers, Caesars, Hard Rock Bet and theScore Bet (formerly ESPN Bet). The first four of those are members of the Sports Betting Alliance (SBA) which has continuously opposed the Illinois per-wager charge.
“Instead of strengthening the legal market, Whitmer’s tax hikes encompass new per-bet taxes and dramatically higher iGaming rates that will raise prices for Michiganders and make it harder for legal operators to compete,” the SBA said in a statement to SBC Americas about the new Michigan proposal. “Let’s be clear: the only people cheering today are the illegal and unregulated operators that don’t seek licenses, don’t follow state rules, operate in the shadows and aggressively target Michigan consumers without paying a dime in taxes or investing in responsible gaming protections.”
Online casino tax hike also on agenda
The projected new revenue from the per-wager tax is part of the $192.8 million in new revenue for Medicaid resources in Michigan that Whitmer hopes to derive from new taxes.
The FY 2027 budget also proposes a new tax rate for online casinos. It aims to increase the tax ceiling for iGaming from 28% to 36% for operators that generate over $185 million in annual gross revenue. According to briefing papers, only three iGaming operators met that threshold last year.
The new tax rate for online casinos is projected to bring in more than $135 million in revenue in FY2027, with the majority of the funding also allocated toward the trust fund.
Meanwhile, the budget also aims to ban sportsbooks from deducting free bets from their tax base. The change in deduction rules is estimated to generate $21.1 million in new tax revenue.
Michigan proposal follows Arizona’s idea
Michigan is the second state to include a gambling tax change in its fiscal budget in recent days.
Arizona’s governor proposed taxing operators who average $75 million in handle per month at a new rate of 45%, more than quadruple that state’s current rate of 10% of revenue. FanDuel, DraftKings and BetMGM would be the most likely candidates to pay the 45% rate. Operators that do not eclipse $75 million in monthly handle would still be taxed at 10% of revenue.
https://sbcamericas.com/2026/02/11/michigan-budget-wants-per-wager-tax/