Michigan Gov. Gretchen Whitmer’s plan to follow the sports betting tax plan implemented by Illinois has fallen short.
The Michigan Senate passed an $88.1 billion budget last week. Despite being Democratic-controlled, the Senate’s version dropped the Democratic governor’s $800 million in proposed new taxes, including on Michigan sportsbooks.
The budget now moves on to final budget negotiations. The Republican-controlled House passed its version on April 23.
Whitmer’s Michigan sports betting tax hike
Among Whitmer’s proposed $800 million in hikes were gambling tax increases that could have netted the state nearly $200 million annually. That included a per-bet fee, identical to the system set up in Illinois last year.
If passed, sportsbooks would have paid 25 cents for each bet on their first 20 million wagers per year, and 50 cents for every bet thereafter. That could have brought the state up to $39 million annually.
In Illinois, sportsbooks found ways to offset the fees, including transaction fees for bettors. Since its implementation, bettors have placed fewer wagers year-over-year, according to Illinois Gaming Board reports.
Whitmer also proposed to end promo deductions in Michigan. Estimates suggest that could have netted an extra $21 million from sportsbooks.
Thwarted Michigan online casino increase
Whitmer also proposed an 8 percentage point tax increase for online casino revenue if that revenue is above $185 million.
Operators would have continued to pay the existing 28% tax on revenue up to $185 million, but that would increase to 36% thereafter.
That would have created up to $136 million in new state revenue annually.
Early House pushback
Whitmer’s proposal was immediately met with pushback from House leadership in February.
“We’re not going to do any of that,” House Speaker Matt Hall said at a press conference. “There will be no tax increases in this budget when we do this deal.”
Lawmakers from Whitmer’s own Democratic Party were also wary of raising taxes in tight economic times.
Democratic State Sen. Sarah Anthony said it would be “tone-deaf.”
“We have not contemplated new revenue, particularly those sin taxes the governor has put forward, but we’re open to that conversation,” Anthony said following the budget passage, per Bridge Michigan. “We want to be sure that we’re being mindful of what revenue options are there and whether they’re impacting working families.”
Why raise sports betting, online casino taxes?
Whitmer sought ways to fill budget gaps, particularly amid federal cuts to Medicaid.
Along with gambling, Whitmer looked toward other “sin taxes” including on tobacco, vapes and digital advertising.
Ultimately, the Senate budget version was larger than Whitmer’s proposed $88 billion proposal. Republicans passed a $78 billion budget.
Now, the two chambers must negotiate a final version ahead of a July 1 deadline.
