Balotelli, halfway through his second season with Premier League leaders Manchester City, has now settled into life under manager Roberto Mancini after some initial teething problems.
"Mario has no intention of leaving City. He has started to understand certain systems on how to get along there," Raiola told Sky Sport Italia.
"Strangely for him, he is admitting that Manchester isn't as bad as he thought or said. Is Milan a better city? It depends on your point of view, but right now Manchester is better for him."
While Balotelli is happy at City for the time being, Raiola says a move to AC Milan remains a possibility further down the line.
Raiola also represents Milan striker Zlatan Ibrahimovic and would one day like to see the two play together at the San Siro.
"Will Balotelli be Ibra's future team-mate? That would be great, as it'd mean Ibra will carry on playing for many years," added Raiola.