Opinion: Per-Bet Taxes Do Little More Than Squeeze Than Bettors
Michigan Gov. Gretchen Whitmer wants to squeeze sportsbooks for more taxes. (Credit: Julia Pickett/Wikimedia Commons)
Michigan Gov. Gretchen Whitmer wants to tack a per-bet tax onto online sportsbooks. The Michigan legislature blocked the move, a heartening development at a time when ever-higher taxes are threatening to further drain bettors’ pockets.
State Sen. Sarah Anthony, Whitmer’s fellow Democrat, called the proposed tax “tone-deaf.” Even so, she didn’t close the door on the proposed tax increase, saying the legislature is “open to the conversation.”
Whitmer appears to have taken her cue from nearby Illinois. Illinois implemented a per-bet tax that charged sportsbooks 50 cents per wager taken on every bet after the first 20 million, and half that on bets below the threshold. This came after the state had already raised the regular tax rate on operator revenue to 40%, from 15% the year before. In other words, the state is really putting the squeeze on the books.
Is the per-bet tax paying dividends? It’s hard to see a strong case that the added tax does much besides pile most costs onto the customer.
Additional Taxes Just Get Passed to Customers
Illinois sportsbooks responded in the most predictable way possible. They passed the added costs onto their customers, although they varied in how overtly they did so.
Some books took the direct route and began charging 50 cents per bet to their customers, directing any complaints to the state.
Others, such as Circa, instituted minimum bet limits. Noting that they were “reluctant” to compromise their pricing or charge customers extra, Circa opted to book fewer, larger bets, thereby ensuring their margin covered the added tax.
Passing the added tax onto the customer was the most predictable consequence of the entire situation. Businesses, especially those with shareholders to answer to, will do just about anything within reason — and some things beyond reason — to avoid cutting into their profits. If the goal was to make it costlier to bet, mission accomplished. Bettors, the vast majority of whom lose, see even more money leaking out of their pockets.
Squeezing the operator really just becomes squeezing the gambler. It would be no different in Michigan.
The Counterargument: Discouraging High-Volume Betting
That said, there is one solid argument to adding a flat tax per bet, which is that it disincentivizes the most problematic betting patterns. If the consumer pays, they will want to spread their gambling budget over a smaller number of individual bets to save money. If the operator institutes minimums, it will have the same effect. Either way, there is less temptation to treat the sportsbook like a slot machine, which is one common criticism of the modern trend toward “micro-betting.”
Placing fewer bets is exactly one of the things that could slow the bleeding for problem gamblers, even if the total wager remains the same. High-frequency betting is a risk factor for the temptation to “chase,” or try to win back a loss immediately. Even if the bets begin small, loss-chasing behavior can escalate quickly.
Live betting particularly exacerbates this slippery slope.
Piling up dozens of betting slips in a session is a good way to make the 50-cent charge add up to something meaningful. Bettors seeing the charges on their slips could consciously choose to slow down.
On the other hand, there’s an argument that the type of bettor who engages in problem gambling is not the type who is likely to let a few 50-cent charges change their behavior. They could also simply start with a larger wager in hopes of maintaining discipline, then have these plans fall apart once the bullets start flying, so to speak. In that case, more damage would potentially accrue.
New Taxes Don’t Necessarily Mean More Revenue
The state’s goal isn’t so much to rein in problem gambling, anyway. It’s to increase revenue, and on that front, there’s no evidence that the per-bet tax had the desired effect.
Illinois enacted the added per-bet taxes last September. Gaming America examined the tax revenues from September 2025 through February of this year and compared those to numbers over the same period in the year prior.
While Illinois’ total tax revenue grew from about $247 million to $269 million, that 9% increase lagged behind the national increase of about 17%. That national number comes almost entirely from the growth of existing markets. Only one new market came online in that time frame: Missouri’s, which produced only $4 million in tax revenue and is a rounding error.
According to a local news source, Illinois betting volume dropped by about 5 million from September 2024 to September 2025, a decline of of 15%.
It’s not clear whether customers are reducing their betting or if some are migrating back to illegal sites with lower minimums and no per-bet fees. However, several European countries are currently dealing with a rise in black-market activity as they impose ever-higher taxes and tighter restrictions on operators. Some bettors are more price-sensitive than others, and odds shopping inevitably drives players to offshore operators who are more than happy to welcome them back.
More Regulation Could Be Good, But Whitmer’s Strategy Misses the Mark
I’m certainly not arguing that the sports betting industry is fine and dandy as is, and everyone should happily accept the status quo. Smarter regulations and more education around sports betting can continue to make the industry safer and more hospitable for bettors as it matures.
Focusing on enacting policies that simply milk sports bettors out of more of their dollars isn’t the right way to go about it.
How about redirecting tax revenue to more responsible gambling resources? According to a recent study, $60 million was allocated to responsible gambling measures in 2025. If that sounds like a lot, keep in mind that it’s only about 1.5% of industry spend. Considering the industry spent $1.4 billion on national TV ads, it can probably afford a few more harm-mitigation measures.
For now, I’m glad Michigan bettors have been spared a further pinch. It’s good to see that the race to the top of the tax rate charts has slowed for the moment, between this development and Missouri’s declining to raise rates until it gathers more data.
A delicate balance is required to keep the industry healthy. Simply jacking up betting taxes every time there’s a budget shortfall is a short-sighted strategy that slowly erodes the environment for the bettors. Ultimately, operators pass these increased costs on to them. Eventually, they either burn out or get sick of the pinch and take their business to places that produce nothing positive for society.
Image credit: Julia Pickett/Wikimedia Commons (license)
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