U.S. Senators Sam Singh and Jeremy Moss have introduced new legislation to revise the tax structure for sports betting and igaming operators in Michigan. The bills that were introduced last week suggest slightly increased tax rates for each sector.
On Thursday, December 5, Senate Bills 1193 and 1194 were introduced and referred to the Senate Government Operations Committee. These proposed measures seek to amend the 2019 Lawful Sports Betting Act and the 2019 Lawful Internet Gaming Act to establish slightly higher tax rates.
Byron Tollefson, NBC affiliate and WOOD-TV reporter mentioned that American gambling companies FanDuel and DraftKings urged their Michigan customers to reach out to state legislators to oppose the proposed legislation.
At present, Michigan imposes an 8.4% tax on sportsbooks’ adjusted gross sports betting revenue. For online casinos, the tax rate follows a tiered system based on their annual adjusted gross revenue (AGR): operators with less than $4 million in AGR pay a 20% tax, while those with $12 million or more face a 28% tax.
Both sportsbooks and online casinos can deduct promotional expenses from their gross revenue before tax calculations, though there are some restrictions for online casinos. This provision, which particularly benefits sportsbooks, helps solidify Michigan’s image as a tax-friendly state for gaming operators.
The proposed legislation seeks to increase the tax rate on online casino revenue by one percentage point, while the tax increase for sports betting revenue would be smaller, at just one-tenth of a percentage point. The bills also suggest slight modifications to the distribution of tax revenue, which currently funds the Internet Gaming Fund, Detroit municipal services, and the agricultural fund.
As part of the proposed changes, the portion of sports betting tax revenue allocated to the city where the operator is based would rise from 30% to 31%. The share directed to the state fund would decrease slightly from 65% to 63.5%, while the Michigan Agriculture Equine Industry Development Fund would see an increase from 5% to 5.5%.
There are no specific reasons provided for the proposed tax hikes in the bills.
On Thursday, December 5, Senate Bills 1193 and 1194 were introduced and referred to the Senate Government Operations Committee. These proposed measures seek to amend the 2019 Lawful Sports Betting Act and the 2019 Lawful Internet Gaming Act to establish slightly higher tax rates.
Byron Tollefson, NBC affiliate and WOOD-TV reporter mentioned that American gambling companies FanDuel and DraftKings urged their Michigan customers to reach out to state legislators to oppose the proposed legislation.
The proposed tax increases for online gambling in Michigan
At present, Michigan imposes an 8.4% tax on sportsbooks’ adjusted gross sports betting revenue. For online casinos, the tax rate follows a tiered system based on their annual adjusted gross revenue (AGR): operators with less than $4 million in AGR pay a 20% tax, while those with $12 million or more face a 28% tax.
Both sportsbooks and online casinos can deduct promotional expenses from their gross revenue before tax calculations, though there are some restrictions for online casinos. This provision, which particularly benefits sportsbooks, helps solidify Michigan’s image as a tax-friendly state for gaming operators.
The proposed legislation seeks to increase the tax rate on online casino revenue by one percentage point, while the tax increase for sports betting revenue would be smaller, at just one-tenth of a percentage point. The bills also suggest slight modifications to the distribution of tax revenue, which currently funds the Internet Gaming Fund, Detroit municipal services, and the agricultural fund.
As part of the proposed changes, the portion of sports betting tax revenue allocated to the city where the operator is based would rise from 30% to 31%. The share directed to the state fund would decrease slightly from 65% to 63.5%, while the Michigan Agriculture Equine Industry Development Fund would see an increase from 5% to 5.5%.
There are no specific reasons provided for the proposed tax hikes in the bills.
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