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Michigan online gambling guide

Written by
Checked by Elena I.

Since MI gambling sites were legalized in 2019, the Great Lakes state is fast becoming one of the biggest players on the online casino and sports-betting front, and Michiganders now have a decent variety of gambling options and establishments.

Understanding the legalities and how to pay your gambling taxes can be frustrating, so our experts have created a guide to online gambling laws and taxes in Michigan to make the job quicker and safer.

Michigan online gambling tax

Online gambling is live and legal in the state of Michigan (MI). This includes online casinos, online sportsbooks, horse racing and pari-mutuel betting, fantasy sports, and the Michigan Lottery. Sweeps casinos however cannot operate in MI.

As it stands, all Michigan players have to pay 24% federal tax on winnings. This applies to casinos, poker tournaments, and sports betting winnings, among bingo and lottery winnings.

MI state additionally taxes any legal gambling money you win at a rate of 4.25%. That said, all gambling winnings that are declared in your federal adjusted gross income (AGI) must be included in your MI state income tax.

Unlike many other states, Michigan charges its own income taxes on gambling money. This is known as local income tax or city income tax. While the tax rate varies from one city to another, Detroit has the highest local income tax at a rate of 2.4% on gambling winnings.

Tax rate for each type of gambling in MI

Since MI does not have a tiered state tax rate; you’ll need to declare and pay 4.25% of all money you won online, whether they were from online casinos, sportsbooks, poker tournaments, or the Michigan Lottery. The only addition to the 4.25% rate is the local income tax rate which depends on the city where you won the money.

The table below will show you how MI state tax combined with city tax effects how much tax you pay in total:

Online gambling typeWinnings thresholdExample calculation (State & Local Tax)
Slots & bingo$1,200+$2,000 win → State tax: $85 (4.25%), Detroit tax: $48 (2.4%) → Total tax: $133
Keno$1,500+$3,000 win → State tax: $127.50 (4.25%), Grand Rapids tax: $45 (1.5%) → Total tax: $172.50
Poker tournaments$5,000+ (net winnings after buy-in)$6,000 win → State tax: $255 (4.25%), Highland Park tax: $120 (2%) → Total tax: $375
Sports betting$600+ if 300x the wager$1,500 win → State tax: $63.75 (4.25%), Saginaw tax: $22.50 (1.5%) → Total tax: $86.25
Online gambling winningsNo set threshold$10,000 win → State tax: $425 (4.25%), Detroit tax: $240 (2.4%) → Total tax: $665

What is MI local income tax?

Local income tax applies to various cities in MI. Besides reporting state tax at a rate of 4.25%, you’ll need to report local tax as well. The rates vary from one MI city to the next.

Here is a list of Michigan cities that charge local income tax, along with their respective tax rates for MI residents and non-residents:

  1. Detroit: Residents – 2.4%; Non-residents – 1.2%
  2. Highland Park: Residents – 2.0%; Non-residents – 1.0%
  3. Grand Rapids: Residents – 1.5%; Non-residents – 0.75%
  4. Saginaw: Residents – 1.5%; Non-residents – 0.75%
  5. Other cities: Residents – 1%; Non-residents – 0.5%

The table below shows the total or final tax rate you would be liable for based on the MI city your winnings came from:

CityFederal taxMichigan state taxLocal taxTotal tax
Detroit24%4.25%2.40%30.65%
Grand Rapids24%4.25%1.50%29.75%
Highland Park24%4.25%2.00%30.25%
Other cities24%4.25%1.00%29.25%

How to pay gambling taxes in MI

All Michigan players must adhere to federal, state, and city tax requirements. The following section will guide you on how to report your gambling taxes, including the required tax forms at each level:

1. Report your winnings to the IRS

You must let the IRS know about all money you’ve won online, by stating it on your federal income tax return. To do this, you need to complete Form W-2G, which will be sent to you by the online casino or other gambling operator if your winnings exceed certain thresholds.

State level

If you win over $5,000, the state may automatically hold back 4.25%. For all amounts between $600 and $5,000, withholding is not required, however, you are still liable for making the IRS aware and paying the state tax too. You will need to complete the relevant forms, which are:

Local level

Out of 276 cities in Michigan, 24 of them impose local income tax in addition to state tax. Each city will have its own tax forms. For example:

2. Withholding requirements

If you win over $5,000 gambling in MI, the state will automatically hold back 4.25% of your winnings. If your winnings are less than $5,000, you must still declare it on MI-1040, but they will not be automatically held back. 

While cities in Michigan do not withhold local taxes on gambling winnings, you are responsible for disclosing and settling any applicable local taxes.

3. MI State deductions on gambling winnings

Michigan does allow you to claim gambling losses, but only if you have deducted them on your federal taxes first. Additionally, losses cannot exceed winnings. As mentioned earlier, you need to complete Form 1040 if you’re claiming gambling losses and attach Schedule A to your MI return.

Unfortunately, MI cities do not allow local taxes to be reduced by claiming losses, so you must pay local or city income tax on all money won online – no exceptions.

What happens if you don’t report gambling winnings in MI?

If you win money in MI and you don’t report or declare it to the relevant tax authorities, which are the IRS as well as Michigan’s Department of Treasury, you may face penalties. 

This means that both the IRS and the state will charge you extra fees on top of what you already owe. In the event that the Michigan Tax Department does an audit, you could end up paying more in penalties and fines.

So, it’s always in your best interest to learn about gambling taxes in the state, keep detailed records of your wins and losses, and report all winnings via the relevant forms and agencies.

Does MI allow gambling winning deductions?

When you win money gambling online, you must state your winnings on your tax forms. Additionally, both the IRS and MI allow you to reduce your taxable winnings by reporting losses; however, this is only allowed under certain conditions:

So, in a nutshell, provided you claim losses on your federal taxes, you may also do the same on your MI state tax return.

Online gambling is legal in Michigan for those over 21. The state legalized casino games, sports betting, and poker rooms back in December 2019 with the Interactive Wagering Act.

Online sportsbooks were then launched in March 2020, followed by online casinos and poker rooms in January 2021. The Michigan Gaming Control Board (MGCB) oversees all online gambling activities in the state, ensuring that all are conducted fairly and responsibly.

Here are some things for players to keep in mind:

Michigan gambling and safety

Online gambling was legalized in Michigan in December 2019, but the regulatory framework wasn’t finalized until January 2021, with the first MI gambling sites being awarded an official license that same month.

Seeing that authorities took a year to create a strong infrastructure, it’s safe to say that the bar for legalized online gambling in Michigan is set pretty high and that obtaining an MGCB license is a solid indication of an operator’s trustworthiness.

MGCB license requirements include a highly secure, almost unhackable connection via SSL encryption, an easily accessible responsible gambling page, and real-time customer support.

Having said that, Time2play experts aren’t satisfied with the minimum license requirements. We look for additional Michigan-approved seals of trust like BMM Testlabs and Gaming Laboratories International. The approval of these organizations shows us that operators have gone above and beyond the minimum standards to protect players.

Gambling age in Michigan

Michigan has put together a two-tiered system for the legal gambling age, with the minimum age varying depending on the type of activity.

18 and up:

21 and up:

Important notes

The table below splits MI gambling by type along with the minimum legal gambling age in Michigan.

VerticalLegal age offlineLegal age onlineLegal since
Casinos2121January 2021
Social casinosN/A21January 2021
Sportsbooks2121January 2021
Betting appsN/A21January 2021
Poker2121January 2021
Lottery1818August 2014
Fantasy sports1818May 2018

Michigan online gambling laws

With the legalization of online gambling in Michigan, doors opened for residents to enjoy online casino games, sports betting, and poker from the comfort of their homes. Let’s explore the legal landscape of online gambling in Michigan within the different sectors.

Online casinos Legal since 2019

It’s been an exciting ride for Michigan online gambling, with operators in the Great Lakes state scrambling to catch up with other states since legalization in 2019.

A global pandemic and two state-wide shutdowns put the brakes on the process, until January 2021 finally brought with it the mass licensing of 15 MI online casinos and gambling sites. In contrast, fantasy sports contests have been legal since May 2018.

Today, there are a total of 16 Michigan gambling sites, offering an assortment of online casino games and poker. One fun fact about online gambling in Michigan is that poker games are offered separately on specific sites.

Sweepstakes gambling

Sweepstake casinos can’t operate in MI. Consequently, popular sweepstakes casinos like Chumba Casino and Luckyland Slots have left the Michigan market to avoid legal challenges.

Michigan’s law regarding sweepstakes casinos follows the same rules as other states like Washington, Idaho, and Nevada, which have also stopped sweepstakes gaming due to various concerns. 

Online casinos view sweepstakes sites as direct competition, and therefore, traditional casino operators will want stricter regulations and even try to acquire sweepstakes operators to reduce or eliminate competition.

Betting sites Legal since 2019

Online sports wagering joined the fray for online gambling in Michigan immediately upon legalization, but went through the same hiccups as online casinos. Although the official green light for Michigan online sports betting given in December 2019, it would take another 13 months for the first sports MI gambling sites to go live.

Clearly, it’s what the Great Lakes state had been waiting for as, within 10 days of the first legal online bet, over $100 million had been laid down in wagers. Interestingly, Michigan sports betting sites are able to legally offer wagering on college sports, although the line is drawn at high school sports. This is unlike the situation within NJ betting, where a referendum that makes provision for such wagers keeps getting shot down.

Online poker Legal since 2021

Real-money online poker joined the rest of the MI online gambling scene the moment the Michigan Gaming Control Board (MGCB) gave the official seal of approval and granted the first licenses in January 2021. 

The first online poker room to go live in MI was PokerStars, bang on the dot before January was over. BetMGM Poker MI followed fast on its heels, with mere hours in between, turning what’s usually a dreary month in one of the coldest US states into a second Christmas for poker enthusiasts. 

Things pretty much reached a stalemate after that, only one new poker license has been granted — to Caesars’ WSOP. Our experts have done the work to check which site offers the best poker all-round experience to determine the top ranking.

Different forms of gambling in Michigan

Players in the Great Lakes state take their games seriously, evident by the popularity of other gambling options even before the legalization of all forms of MI online gambling in 2019.

The oldest is undoubtedly the state lottery in its offline form, millions in winnings paid out since the first lottery ticket was sold in 1972. Daily Fantasy Sports (DFS) also takes up a big chunk of the attention when it comes to online gambling in Michigan since it became legal in October 2018, with a full regulatory framework drawn up in 2020.

Lottery ticket and numbered balls

Lottery

Lottery is a big deal in Michigan, and since the online version became legal on August 11, 2014, its popularity continued to explode. Lottery clubs, which see various players forming a syndicate and splitting the wins, have become the norm and are also viewed as an efficient way for the winners to keep their anonymity. Which, given that some players have landed wins in excess of $5 million, can be an understandable desire.
Fantasy sports betting on a desktop next to sports-themed graphics

Fantasy sports

The DFS market enjoyed a full two years of unregulated legality after it was given the green light by lawmakers in 2018. It took them till 2020 to formalize a regulatory framework, during which time existing providers were pretty much allowed to operate without a license. DraftKings and FanDuel are the go-to options for DFS punters in MI.
Bingo card and numbered balls

Bingo

Bingo falls within the MI gambling framework and is regulated by the MGCB. However, whereas the legal gambling age for MI online casinos is 21, the minimum age to take part in bingo games – as long as they don’t require a casino registration – is 18. Most legal online gambling sites in Michigan offer bingo options for 21+ players, but outside of that, the options are actually rather limited.

Gambling responsibly in Michigan

Although gambling can be a fun pastime for many, it can become addictive for some. If you’re concerned about your gambling habits, there are online resources to help you manage your gambling, including counseling, therapy, local resources, and assistance with setting operator-based restrictions like account limits and self-exclusion.

Here are some organizations in Michigan that can provide support:

FAQs

Is online gambling legal in Michigan?

Absolutely! Since December 2019, residents of the state have been able to enjoy online casino games, sports betting, and poker from the comfort of their homes.

Do I have to be in Michigan to gamble online?

While you don’t need to be a resident of Michigan to place a bet online, you must be physically located within the state’s borders. The Michigan Gaming Control Board (MGCB) uses geolocation technology to verify your location before you can access online gambling sites or apps.

So, if you’re visiting Michigan, you can enjoy some legal online gambling fun! But if you’re out of state, you’ll need to wait until you’re back within Michigan’s borders to play.

What is the legal gambling age in Michigan?

Players must be 21 years of age or older to gamble online in Michigan. This applies to both residents and visitors within the state lines. Make sure you have a valid ID to verify your age when signing up at an online gambling platform.

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