A new bill presented to the Michigan Senate aims to increase taxes on commercial earnings from online casino gambling as well as from both retail and mobile sports betting. 

At the beginning of this month, state Senators Sam Singh (D-East Lansing) and Jeremy Moss (D-Southfield) introduced Senate Bills 1193 and 1194. The regulations suggest raising taxes on commercial operators in sports and iGaming. 

SB1193 would increase the tax on total sportsbook winnings for both online and retail operations by 0.1%, raising it from 8.4% to 8.5%. SB1194 aims to raise the levy on gross gaming revenue (GGR) generated from commercial iGaming websites and applications by 1%. 

Michigan imposes taxes on iGaming based on a tiered structure. For iGaming operators with yearly GGR below $4 million, the tax rate would increase from 20% to 21%. For revenue between $4 million and $8 million, the tax rate would rise from 22% to 23%, while for revenue between $8 million and $10 million, it would increase from 24% to 25%. 

iGaming earnings ranging from $10 million to $12 million would incur a 27% tax, while revenue exceeding $12 million would face a 29% rate. 

SB1193 and SB1194 have both been assigned to the Senate Government Operations Committee. Singh is the principal vice chair, and Moss serves as a member of the committee composed of five senators. 

Operator Resistance 

The bills proposed by Singh and Moss would not affect the amount tribes are required to pay on their online gaming as well as their retail and online sports betting earnings. The actions would solely raise tax rates for business activities. To modify the tax rates for tribal sports betting and iGaming, changes to the Class III gaming compacts of Native Americans would be required. 

Detroit is the sole location in Michigan that has commercial casinos. In December 2019, state legislators broadened gaming regulations to allow the three establishments — MGM Grand Detroit, MotorCity, and Hollywood Casino at Greektown — to establish online platforms for interactive casino games, poker, and sports wagering. 

The gaming expansion package of 2019 permitted every Detroit casino to operate one iGaming and sportsbook platform. MGM collaborates with BetMGM, MotorCity teams up with FanDuel, and Hollywood Greektown joins forces with ESPN Bet. 

BetMGM, FanDuel, and ESPN Bet naturally resist the proposed tax hikes by Singh and Moss. While the proposed tax hike is merely 1% on iGaming income and 0.1% on sports betting, the commercial gaming companies argue that the elevated rate will disadvantage them competitively against iGaming and sports betting platforms affiliated with Native American tribes. 

Both retail and online tribal sports betting winnings are also subject to an 8.4% tax. Tribal iGaming also reflects the existing commercial tax framework, which varies between 20% and 28%. 

Business vs. Indigenous 

During the first 10 months of 2024, the GGR from commercial iGaming at FanDuel, BetMGM, and ESPN Bet reached $1.058 billion. The 12 Native American tribes together earned approximately $913 million from their iGaming enterprises. 

Prominent iGaming and sportsbook operators allied with Michigan tribes include DraftKings, Caesars Sportsbook, Golden Nugget, and BetRivers. 

Regarding online sports wagering, BetMGM, FanDuel, and ESPN Bet generated $247.4 million from internet gamblers from January to October 2024. Tribal literature contributed $134.6 million. 

The state’s treasury has gathered just over $363 million from iGaming and more than $12.5 million from online sports wagering this year to date.