Michigan Governor Gretchen Whitmer has put forward a proposal that’s quickly drawing attention from both lawmakers and the gambling industry. As part of her Fiscal Year 2027 budget plan, she’s calling for notable changes to how online casinos and sports betting operations are taxed in the state.
At the center of the proposal is a plan to raise Michigan’s top online casino tax rate to 36%. That’s an eight-point jump from the current maximum rate of 28%. Right now, online gaming operators pay taxes on a sliding scale based on adjusted gross revenue (AGR). Rates start at 20% and increase as revenue climbs, eventually capping at 28%.
Under Whitmer’s plan, the largest operators would face a new top tier of 36%, a move that state officials estimate could bring in close to $200 million in additional annual revenue.
Another key change would limit operators’ ability to deduct promotional credits from their gross revenue. In the early years of Michigan’s regulated online gaming market, those deductions have helped companies attract and retain players through bonuses and special offers. Removing or restricting that deduction could significantly impact marketing strategies, and several operators have already expressed concern that it may erode their competitive edge.
Michigan’s Offshore Casino Market
Online MI casinos operating from offshore often attract players by leaning into convenience and variety, two areas that can strongly influence where people choose to play.
One of their biggest selling points is flexible banking. Many offshore platforms accept a wide range of payment methods, including credit cards, cryptocurrencies, e-wallets, and even alternative transfer systems that may not always be available at locally regulated Michigan sites.
Another powerful incentive is the size and structure of welcome bonuses. Offshore casinos frequently promote large sign-up offers, sometimes advertising deposit matches of 200% or more, along with free spins or cashback deals. These promotions are often more aggressive than those offered by regulated Michigan online casinos, which must comply with stricter state guidelines around advertising, promotional credits, and responsible gaming standards.
Game selection is also a key differentiator. Offshore operators typically partner with a broad mix of international software providers, enabling them to offer expansive libraries that may include thousands of slot titles, niche table game variations, and specialty offerings such as crash games or international lottery-style draws.
What The New Tax Hike Means For Local Online Casinos
If Michigan moves forward with higher online casino taxes, industry analysts believe there could be ripple effects beyond operator balance sheets. When tax burdens increase, operators often look for ways to offset those costs, whether through tighter promotional offers, adjusted loyalty programs, or changes in pricing structures such as higher wagering requirements.
That dynamic may create an opening for offshore casino sites, which operate outside Michigan’s regulatory and tax framework. Because they are not subject to state-imposed tax increases, offshore platforms can sometimes advertise larger welcome bonuses, ongoing cashback deals, and expansive rewards programs.
When combined with broad game libraries and flexible banking options, those incentives could become more appealing if local Michigan operators scale back promotions to manage higher tax obligations.