- Michigan proposes a 25–50 cent per-bet tax modeled after Illinois, projecting $38.8 million in annual revenue for Medicaid funding.
- Illinois saw a 15% drop in betting volume after implementing the same tax as operators passed costs to bettors through fees.
- Republican legislators and betting operators have voiced firm resistance to the plan, making approval before the July 1 deadline seem improbable.
DETROIT – This week, Governor Gretchen Whitmer introduced her fiscal year 2027 budget plan, which includes a per-bet tax approach based on Illinois’ controversial gambling fee structure. The budget aims to generate nearly $200 million in new gambling taxes and has quickly drawn opposition from sportsbook companies and Republican officials in the state legislature.
The plan calls for sportsbooks to pay 25 cents for each of their first 20 million wagers per year, and then 50 cents for each additional wager. This per-wager tax is expected to bring in about $38.8 million, based on state budget papers, with money going to Michigan’s Medicaid Benefits Trust Fund.
With the proposed tax structure, Michigan would become the second state to adopt Illinois’ July 2025 model. However, Illinois data raises questions about how effective it is. Illinois Gaming Board reports show betting volume fell 15% compared to the previous year in the months after the tax took effect, with December 2025 posting an even steeper 25% decline.
In response to the increasing tax burden, Illinois operators acted quickly. In June 2025, FanDuel declared that it would begin charging Illinois residents a 50-cent fee each wager on September 1. All ten licensed operators raised minimum wager requirements or imposed transaction fees to offset costs as a result of the per-bet operator fee and Illinois’ tiered revenue-based taxation.
Industry Response and Market Impact
If the legislation is passed into law, Michigan sportsbooks may have to deal with similar rulings. The Sports Betting Alliance has voiced significant opposition to Illinois’ 10 licensed operators, eight of whom also operate in Michigan.
The proposed budget goes beyond legal sports betting. Additionally, Whitmer wants to stop operators from deducting free bets from taxable revenue by outlawing promotional deductions. Furthermore, the tax rate for internet casino operators who make more than $185 million a year would rise from 28% to 36%.
The idea was deemed underwhelming by Brandt Iden, a former state lawmaker from Michigan who assisted in creating the regulated sports betting framework in the state. Now with Fanatics Betting & Gaming, Iden questioned why Michigan would replicate Illinois’ struggling tax structure.
House Speaker Matt Hall has stated that there would be no tax increases in the budget, indicating strong political resistance to the proposal. The measures’ chances of being implemented before the July 1 fiscal deadline are uncertain considering Republicans control the Michigan House.
