Illinois is already one of the most heavily taxed states for sports betting in the country. Now, it could get even more expensive in the state’s largest city.
Sportsbooks that accept bets from Chicago bettors could pay an additional tax.
As part of the 2026 budget, Chicago Mayor Brandon Johnson included a 10.25% tax on revenue from wagers placed in the city. If approved by the city council, the tax would take effect on Jan. 1. Johnson estimated the tax would generate more than $26 million for the city, which faces a $1.2 billion budget gap.
Sportsbooks are already pushing back. Operators argue that they may be forced to leave the city if the new levy goes into effect. Chicago would be the first municipality to implement a city tax on sports betting.
No Standards In Place
The Sports Betting Alliance submitted a letter to the city on Dec. 18 outlining its concerns, according to InGame. The industry trade group noted that Chicago doesn’t have a licensing mechanism in place for online sports wagering operators.
“In the absence of defined terms, application standards, required documentation, and administrative procedures, operators would have no meaningful way to comply with the ordinance upon its effective date,” SBA chairman Jeremy Kudon notes in the letter.
“It is urgent that your office takes action to develop a cogent licensing framework and to delay the effective date by at least 180 days to allow operators to understand the requirements, prepare and submit complete applications, and obtain the necessary city licenses prior to enforcement.”
The letter notes that sports betting operators are highly regulated and can’t legally operate without proper licensing. He advised that without published standards and a functioning application process, operators couldn’t legally operate in the city.
That could not only affect potential revenue for Chicago, Kudon warned, but also have a major impact on the state as a whole. Operators leaving the city could leave Windy City gamblers looking for unregulated options.
“A shutdown of online sports wagering in Chicago, however temporary, would undermine the ordinance’s revenue and policy objectives by driving consumers to online platforms that dodge laws that ensure consumer protection, age verification, and responsible gaming protections,” Kudon wrote in the letter.
“A shutdown of legal online platforms will also risk jeopardizing millions, if not tens of millions, of dollars in state revenue.”
Already Highly Taxed
The SBA pointed out that the industry is already heavily taxed by the state. Earlier this year, legislators added to the tax burden by imposing a 25-cent tax on every wager for the first 20 million bets, which then doubles beyond that threshold.
Some operators responded by passing the tax on to bettors via transaction fees and raising bet minimums. The Illinois Gaming Board later reported that the number of legal wagers dropped by five million in September.
Along with the per-wager levy signed into law this year, the state also hiked taxes on operators in 2024. They enacted a tiered scale reaching up to a 40% tax rate.
State legislators have opposed an additional tax on the industry in Chicago and some have even considered legislation to prevent such a move.
In a letter to the city council, House Gaming Committee Chair Rep. Daniel Didech (D) and House Revenue Committee Chair Rep. Curtis Tarver (D) said the plan was “a flawed policy that sets a poor precedent [and] provides minimal fiscal benefit.”
