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Michigan officials are weighing a major tax-and-fee overhaul for online casinos and sports betting, betting that the state’s fastest-growing gambling verticals can help close looming budget gaps. The measures sit inside Gov. Gretchen Whitmer’s FY2027 budget package and are pitched as a way to stabilize funding tied to healthcare and Medicaid.

State forecasts put the gambling component at roughly $195 million in added annual revenue starting in fiscal 2027 (which begins Oct. 1, 2026), driven by higher iGaming taxes, a new per-wager charge on sportsbooks, and tighter rules around promotional deductions.

36% iCasino tier puts DraftKings, FanDuel, BetMGM on notice

The headline change for iGaming is a new top bracket: operators would pay the current rate up to $185 million in annual adjusted gross receipts, then 36% on revenue above that mark an eight-point jump from the existing maximum tier.

In practice, the state expects only the biggest brands to feel it most. Budget reporting around 2025 results points to BetMGM, DraftKings, and FanDuel as the operators that cleared the $185 million threshold, and the tax tweak alone is projected to deliver about $135.5 million in FY2027 money largely earmarked for the Medicaid Benefits Trust Fund.

A fee on every bet and a fight in Lansing

For sportsbooks, Whitmer’s plan mirrors Illinois with a per-bet levy: $0.25 per wager on an operator’s first 20 million bets each year, then $0.50 per bet beyond that. The state projects roughly $38.8 million a year from the fee, plus another $21.1 million by ending the ability to deduct promotional free play from taxable revenue.

But the proposal is already running into resistance. Michigan House Speaker Matt Hall has publicly rejected tax increases, while industry voices warn the Illinois model pushed betting volume down (with reports citing fewer wagers after the fee) and is even facing repeal efforts in that state fuel for critics arguing Michigan could be repeating a costly experiment.

Source: https://next.io/news/regulation/michigan-seek-gambling-tax-hike-budget-shortfalls/