Michigan Eyes Sports Betting Tax Hike Following Illinois

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Michigan Considers Following Illinois in Sports Betting Tax Increase

Michigan is reviewing a potential increase in sports betting taxes, mirroring a recent move by neighboring Illinois. Governor Gretchen Whitmer has proposed a tax plan similar to Illinois', aiming to raise more revenue from the burgeoning sports betting sector. This would maintain the current sports betting tax rate but introduce a new fee of 25 cents per bet for the first 20 million bets, escalating to 50 cents thereafter.

This proposal comes as Michigan faces a budget shortfall, partly due to reduced federal funding post-pandemic. The state has traditionally offered a relatively low tax rate for sportsbooks at about 8%, but under the new proposal, this would significantly change. Additionally, the online gaming tax could increase from 24% to 36%.

The adjusted approach in Illinois, which similarly imposed per bet fees and higher tax rates, has shown some shifts in consumer betting behavior, with a slight decrease in betting volumes as costs were passed down to customers. Observations from Illinois may serve as a reference for Michigan, which appears to be grappling with balancing budgetary needs against the potential impact on bettors and the sports betting industry.

While the proposal is likely to meet resistance from sportsbooks, the trend set by Illinois could influence Michigan's decision-making process. The broader implications for sports betting and online gaming taxes in other states facing similar financial challenges will be crucial to monitor moving forward.