Michigan · MGCB · Lawful Internet Gaming Act read 23 October 2026 · Board revenue tables to September 2026
Michigan Online Casino Tax 2027: Free Play Stops Being Deductible, Worth $30m in Nine Months
Michigan's iGaming tax rates are not changing in 2027. The base is. Free play has been deductible from the taxable amount at 10%, then 6%, then 4% of gross receipts, and from 1 January 2027 the deduction is zero for every operator that launched in 2021. I put a number on it using the Board's own monthly tables.
Michigan's internet gaming tax is a graduated levy of 20% to 28% on each licence holder's adjusted gross receipts for the calendar year, applied band by band (MCL 432.314), where adjusted gross receipts are gross receipts minus a free-play deduction that falls to zero in the operator's sixth year (MCL 432.303(a)).
Quick facts
| Parameter | Value |
|---|---|
| Regulator | Michigan Gaming Control Board (MGCB), under the Lawful Internet Gaming Act, 2019 PA 152 |
| Tax schedule | Per calendar year of adjusted gross receipts: 20% below $4m, 22% from $4m, 24% from $8m, 26% from $10m, 28% from $12m (s.14). Applied band by band, so above $12m it equals 28% of AGR minus $680,000 |
| Free-play deduction | Capped at 10% of gross receipts in years 1-3, 6% in year 4, 4% in year 5, nothing from year 6 (s.3(a)). Year 1 starts on the 1 January after launch |
| When it ends | 1 January 2027 for the 14 operators that launched in 2021; 1 January 2028 for Soaring Eagle (launched 14 April 2022) |
| Cost of the change | Applied to January-September 2026 receipts: statutory tax $718.05m becomes $748.18m, +$30.13m (+4.20%). Computed from MGCB figures |
| Detroit operators | Also pay a 1.25% city fee on AGR (s.14(5)); 30% of their tax goes to the city, 65% to the state fund, 5% to the equine fund (s.15) |
| Who can hold a licence | Only the three Detroit casino licensees and Michigan tribes running class III casinos, one licence each, two brands at most (ss.4(7), 6(1)-(2)). The MGCB table lists 15 holders |
| Licence fees | Operator: $50,000 application, $100,000 on issue, $50,000 a year after; supplier: application fee up to $5,000, $5,000 on issue, $2,500 a year after. Both run 5 years (ss.6, 8) |
The rates stay, the base grows
Nothing in the Michigan tax schedule changes on 1 January 2027. The 20% to 28% bands in section 14 of the Lawful Internet Gaming Act stay where they are. What changes is the amount the bands apply to.
Michigan taxes adjusted gross receipts. Section 3(a) defines them as gross receipts minus the free play that players were given and wagered, and it lets that deduction shrink on a timetable: up to 10% of gross receipts in years 1 to 3, 6% in year 4, 4% in year 5, and nothing from year 6. Year 1 is the 1 January after the operator launched. Fourteen of the fifteen licence holders went live in 2021, so their year 1 was 2022 and their year 6 starts on 1 January 2027.
Free play is not a side issue here. Section 3(l) counts “free play or promotional credits” that are actually wagered as part of gross receipts in the first place. The deduction was the only thing taking them back out. From 2027, a promotional dollar that is wagered and lost is taxed like a real one.
I read sections 3, 4, 6, 7, 8, 14 and 15 of the Act on the Michigan Legislature site (compiled through PA 114 of 2026) and the Board’s Internet Gaming workbooks for 2025 and 2026 on 23 October 2026. The 2026 file is dated 22 October 2026 and runs to September. The arithmetic is in a script, not done by hand.
Every operator uses the whole allowance
The deduction is worth something only if operators actually hand out that much free play. The Board’s tables show they do. Across the market the deduction tracked the cap almost exactly:
| Year | Cap (s.3(a)) | Gross receipts | Deduction taken | Share of gross receipts |
|---|---|---|---|---|
| 2024 (year 3) | 10% | $2,441.15m | $242.78m | 9.95% |
| 2025 (year 4) | 6% | $3,087.03m | $185.76m | 6.02% |
| 2026, Jan-Sep (year 5) | 4% | $2,709.88m | $108.99m | 4.02% |
| 2027 (year 6) | 0% | — | — | — |
For January to September 2026, twelve of the fifteen holders sit between 3.95% and 4.01%. Greektown is at 4.15%, Pokagon at 3.61%, and Soaring Eagle at 5.97%, because it is a year behind: it launched on 14 April 2022, so 2026 is its year 4 and its cap is 6%. It drops to 4% in 2027 and to zero on 1 January 2028. The Board’s 2025 sheet shows the same offset, with Soaring Eagle at 10.00% when everyone else was near 6%.
How the bands actually work
Most guides print “20% to 28%” and stop. The schedule in section 14(1) reads like a table of brackets, and the question is whether an operator over $12 million pays 28% on everything or each band at its own rate.
The Board’s figures answer it. For January 2026 MGM Grand Detroit reported adjusted gross receipts of $63,199,133.20 and a state tax of $11,911,030.11. The state’s share of a commercial operator’s tax is 70%, being 65% to the internet gaming fund plus 5% to the equine fund under section 15(1); the other 30% goes to the city. Tax the first $4 million at 20%, the next $4 million at 22%, the next $2 million at 24%, the next $2 million at 26% and the rest at 28%, take 70%, and you get $11,911,030.11 to the cent. A flat 28% would give $12,387,030.11.
I ran the same calculation on every operator for January to September 2026, on receipts accumulated over the calendar year. All fifteen reproduce the Board’s figures to the dollar: the three Detroit operators at 70% of the schedule, and the twelve tribes at 80%, where the remaining 20% appears in the Board’s column for payments to the governing body of the jurisdiction. Tribes pay under section 7(1)(f), not as tax under section 14, but the schedule is the same. I could not open the section that allocates tribal payments, so the 80/20 split here is what the table shows, not a reading of the statute.
Two things follow:
- The bands are worth exactly $680,000 a year. Above $12 million of adjusted gross receipts, the tax equals 28% of the total minus $680,000. Every large operator gets the same discount; it does not grow with size.
- January is the cheap month. The low bands fill in the first weeks of the year. After that, a large operator pays 28% on every additional dollar until 31 December.
The Detroit operators pay one more charge on the same base. Section 14(5) adds a 1.25% fee on adjusted gross receipts where the city charges casinos a 1.25% municipal services fee. In January 2026 the Board’s column for city wagering taxes and municipal service fees was $13,140,254.98, which is exactly 30% of the three operators’ tax plus 1.25% of their adjusted gross receipts.
What 2027 would have cost on 2026 receipts
To size the change, I took each operator’s actual gross receipts for January to September 2026 and taxed them twice: once with the deduction they actually took, once with none (and with 4% for Soaring Eagle, which is still allowed a deduction in 2027). This is the 2027 rule applied to the same business. It is not a forecast: operators may cut free play once it stops being deductible.
| Holder | Gross receipts, Jan-Sep 2026 | Deduction taken | Tax as filed | Tax under 2027 rule | Difference |
|---|---|---|---|---|---|
| MotorCity Casino | $674.96m | 4.00% | $180.75m | $188.31m | +$7.56m |
| MGM Grand Detroit | $591.91m | 4.00% | $158.42m | $165.05m | +$6.63m |
| Bay Mills Indian Community | $371.31m | 4.00% | $99.13m | $103.29m | +$4.16m |
| Little River Band of Ottawa Indians | $206.16m | 4.00% | $54.73m | $57.04m | +$2.31m |
| Hannahville Indian Community | $188.44m | 4.00% | $49.97m | $52.08m | +$2.11m |
| Lac Vieux Desert Band | $174.94m | 3.95% | $46.37m | $48.30m | +$1.93m |
| Grand Traverse Band | $149.20m | 4.01% | $39.42m | $41.10m | +$1.67m |
| Keweenaw Bay Indian Community | $81.48m | 3.95% | $21.24m | $22.14m | +$0.90m |
| Greektown Casino | $71.19m | 4.15% | $18.43m | $19.25m | +$0.83m |
| Little Traverse Bay Bands | $51.49m | 4.00% | $13.16m | $13.74m | +$0.58m |
| Gun Lake Band | $40.75m | 4.00% | $10.27m | $10.73m | +$0.46m |
| Soaring Eagle Gaming | $34.35m | 5.97% | $8.36m | $8.55m | +$0.19m |
| FireKeepers (Nottawaseppi Huron Band) | $34.30m | 4.00% | $8.54m | $8.92m | +$0.38m |
| Sault Ste. Marie Tribe | $22.33m | 4.00% | $5.32m | $5.57m | +$0.25m |
| Pokagon Band | $17.07m | 3.61% | $3.93m | $4.10m | +$0.17m |
| All holders | $2,709.88m | 4.02% | $718.05m | $748.18m | +$30.13m |
“Tax as filed” is the full statutory amount, before the state, city and tribal splits. It matches the Board’s columns as described above. The 2027 rule adds 4.20% to the bill and lifts the effective rate on gross receipts from 26.50% to 27.61%. For the two largest holders, the effective rate moves from about 26.8% to 27.9%, which is close to the 28% ceiling the rate schedule implies at their scale.
The Detroit fee comes on top. The three Detroit operators deducted $53.63 million over those nine months; at 1.25%, that is about $670,000 of city fees that would have been due without the deduction.
The same change at different sizes
For an operator that takes the full deduction each year, here is the statutory tax at five levels of annual gross receipts, before any Detroit fee:
| Gross receipts a year | 2025 (6% deductible) | 2026 (4%) | 2027 (none) | Effective rate 2025 → 2027 |
|---|---|---|---|---|
| $5m | $954,000 | $976,000 | $1,020,000 | 19.08% → 20.40% |
| $20m | $4,584,000 | $4,696,000 | $4,920,000 | 22.92% → 24.60% |
| $50m | $12,480,000 | $12,760,000 | $13,320,000 | 24.96% → 26.64% |
| $100m | $25,640,000 | $26,200,000 | $27,320,000 | 25.64% → 27.32% |
| $250m | $65,120,000 | $66,520,000 | $69,320,000 | 26.05% → 27.73% |
Between 2025 and 2027, any operator whose adjusted gross receipts stay above $12 million pays 1.68 points more of gross receipts, because 6% of the base is now taxed at 28%. Only operators small enough to sit in the lower bands lose less: 1.32 points at $5 million.
Who can hold the licence, and what it costs
None of this is open to a new entrant as a licence holder. Section 6(1) lets the Board issue an internet gaming operator licence only to a holder of a Detroit casino licence under the Michigan Gaming Control and Revenue Act, or to a Michigan tribe that conducts class III gaming in a casino in the state. Each is eligible for one licence (s.6(2)), and each licence may run at most two brands, one for poker and one for other casino games (s.4(7)). The Board’s 2026 table lists fifteen holders: three Detroit casinos and twelve tribes.
A tribe keeps its licence only while it runs a class III casino in Michigan with at least 50% of the gaming positions it had on 20 December 2019 (s.7(1)(e)).
The international brands Michigan players know take part as internet gaming suppliers. Section 8 bars anyone without a supplier licence from providing goods, software or services to an operator as a supplier, and section 3(w) defines suppliers as those the Board’s rules identify as affecting wagering, play and results, platform providers included. The operator remains responsible for its platform provider’s conduct (s.4(7)).
| Fee | Operator licence (s.6) | Supplier licence (s.8) |
|---|---|---|
| Application | $50,000, plus investigation costs the Board may assess | Set by the Board, at most $5,000, non-refundable, plus investigation costs |
| On issue | $100,000 | $5,000 |
| Each year after issue | $50,000 | $2,500 |
| Term | 5 years, renewable | 5 years, renewable |
| Total over the first term | $350,000 | up to $20,000 |
The fees are small next to the tax. Nine months of the free-play change for MGM Grand Detroit, $6.63 million in the table above, is about 19 times an operator licence’s fees for a full five-year term.
What this page does not cover
Internet sports betting is licensed and taxed under a separate statute, the Lawful Sports Betting Act, with its own base and deduction rules; none of the figures above apply to it. I did not check proposals to change the rates, and nothing here models them. Corporate income tax, the federal wagering excise tax and player-side tax are outside this page.
For the licensing route, products and timeline, see the Michigan gambling licence profile. The New Jersey online gambling licence guide covers the state whose casino-partner model Michigan follows, and the gambling licence cost comparison sets out fees and tax for the offshore and European licences, which Michigan’s table above can be read against.
Regulator, fees, tax and status in one place: Michigan gambling licence.
Pitfalls and nuances
1 Keeping a 4% free-play deduction in the 2027 budget
Section 3(a) allows no deduction from year 6, and year 1 began on 1 January 2022 for operators that launched in 2021. Free play is part of gross receipts under s.3(l), so from 2027 every promotional dollar wagered is taxed at the operator's marginal rate, usually 28%.
2 Modelling the tax as a flat 28%
The schedule taxes each band at its own rate. Above $12 million of adjusted gross receipts the tax is 28% of the total minus $680,000. A flat 28% overstates the bill by exactly that amount every year.
3 Applying the bands to each month
Bands run on receipts for the calendar year to date. January carries the low bands, and every later month of a large operator is taxed at 28%. Reading the bands monthly would put MGM Grand Detroit's January 2026 state share at $12,387,030.11 instead of the $11,911,030.11 the Board recorded.
4 Assuming every operator moves on the same date
The clock starts on the 1 January after launch. Soaring Eagle launched on 14 April 2022, so its year 6 starts on 1 January 2028. Its 2026 figures show a 5.97% deduction, consistent with the 6% year-4 cap.
5 Forgetting the Detroit fee follows the base
The 1.25% city fee in s.14(5) is charged on adjusted gross receipts too. Without the deduction, the three Detroit operators' January-September 2026 base would have been $53.63 million larger, about $670,000 more in fees.
6 Planning to hold the licence yourself
Section 6(1) limits operator licences to the Detroit casino licensees and Michigan tribes with class III casinos, one each, and s.4(7) caps each holder at two brands. An outside brand needs a supplier licence and a contract with a holder.
Frequently asked questions
What is the online casino tax rate in Michigan?
20% to 28% of adjusted gross receipts per calendar year, applied band by band: 20% to $4m, then 22%, 24%, 26%, and 28% above $12m. Detroit operators also pay a 1.25% city fee.
When does Michigan's iGaming free-play deduction end?
On 1 January 2027 for the 14 operators that launched in 2021, which then reach year 6 under MCL 432.303(a). Soaring Eagle launched in April 2022 and keeps a 4% deduction in 2027.
How much more tax will Michigan operators pay in 2027?
On the same receipts as January to September 2026, about $30.13 million more over nine months, or 4.20%. The effective rate on gross receipts rises from 26.50% to 27.61%.
Is the 28% Michigan rate charged on all revenue?
No. Each band is taxed at its own rate on year-to-date receipts, so an operator above $12 million pays 28% of adjusted gross receipts minus $680,000. The Board's monthly figures match this.
Can a foreign operator get a Michigan iGaming licence?
Not as an operator. Only the three Detroit casino licensees and Michigan tribes with class III casinos qualify. Outside brands enter as licensed internet gaming suppliers working for one of them.
How much does a Michigan internet gaming licence cost?
$50,000 to apply, $100,000 on issue and $50,000 a year after, so $350,000 over the 5-year term before investigation costs. A supplier licence costs up to $20,000 over 5 years, also before investigation costs.
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Sources cited
- Lawful Internet Gaming Act, MCL 432.303 (definitions: adjusted gross receipts, gross receipts), Michigan Legislature — regulation
- Lawful Internet Gaming Act, MCL 432.314 (graduated tax; 1.25% city fee), Michigan Legislature — regulation
- Lawful Internet Gaming Act, MCL 432.306 (operator licence: eligibility, fees, 5-year term), Michigan Legislature — regulation
- Lawful Internet Gaming Act, MCL 432.307 (tribal operators: conditions and payment schedule), Michigan Legislature — regulation
- Lawful Internet Gaming Act, MCL 432.308 (internet gaming supplier licence and fees), Michigan Legislature — regulation
- Lawful Internet Gaming Act, MCL 432.304 (two-brand limit) and MCL 432.315 (allocation of tax), Michigan Legislature — regulation
- MGCB: revenues and wagering tax information (Internet Gaming 2026 and 2025 workbooks; 2026 file dated 22 October 2026) — regulator