While some Illinois state lawmakers attempt to prohibit city-level taxes on sports betting, a revised Chicago budget still includes a 10.25% tax on sportsbook operators.
Twenty-seven of the 50 Chicago alderpeople filed a revised budget last week, including a 10.25% tax rate on sports betting in the city limits. Mayor Brandon Johnson’s proposed budget introduced this fall first included the rate. The city is facing a $1.2 billion budget deficit.
If adopted, Chicago’s 10.25% city levy would go into effect 1 January and be on top of the state’s 20–40% tax on gross gaming revenue, in addition to per-wager fees. Sportsbooks also pay a 2% tax in Cook County, where Chicago is located.
Illinois Rep Dan Didech, chair of the House Gaming Committee, introduced a bill prohibiting local taxes on sports betting after Johnson’s initial proposal. A group of 30 representatives signed on to a letter sent to Chicago’s council opposing any new local tax. Illinois lawmakers have increased state taxes on sportsbooks the previous two sessions.
“If you increase the tax so it becomes cost prohibitive for gamblers, they will seek out overseas sites that … are more dangerous, more predatory, untaxed and unregulated,” Didech told the Chicago Sun-Times. “That’s a direct loss in tax revenue for the state. That impacts our ability to invest in infrastructure.”
Johnson’s budget estimated the 10.25% tax could generate up to $26 million. The Chicago City Council Finance Committee rejected a corporate tax rate Johnson had proposed. That tax could have generated $100 million.
The revised budget also includes a variety of other fine, fee and tax increases, including on inspections, false alarms to 911 and alcohol.
Illinois sports betting tax hikes
Illinois lawmakers initially saddled the industry with a 15% flat tax rate. Legislators in 2024 raised that to a tiered system of 20% to 40% based on operator revenue.
This year, as the state looked to increase revenue, it added a per-wager tax on sports bets. Sportsbooks pay 25 cents on each of the first 20 million bets placed, then 50 cents for each bet thereafter. Sportsbooks have implemented various mitigation measures, including per-wager fees for bettors and minimum bet values.
The first month with a full month of fee-per-bet wagers was September. Bettors placed 30.6 million bets in September, which was 5 million fewer than September 2024. However, bettors wagered 28% more per bet and the overall handle grew to $1.42 billion, a 9% year-over-year increase.
Illinois collected $28.7 million in taxes in September, including $10.6 million from the per-wager fees. It amounted to a $740,920 year-over-year increase in state tax revenue.
Illinois lawmaker warns against tax increases
At the National Council of Legislators from Gaming States winter conference last week, Illinois Rep. Jehan Gordon-Booth discussed tax rates during a legislator-regulator roundtable.
Gordon-Booth said states will look for new ways to generate more revenue next year as budget deficits increase because of the One Big Beautiful Bill, the sprawling federal tax and spending legislation President Donald Trump signed earlier this year. She said raising existing sports betting tax rates is a “short-term view” that could harm the industry.
“[Lawmakers] need to understand, what you think you’re going to get from raising taxes, you’re not going to get,” Gordon-Booth said. “We want this industry to continue to strike the right balance. This will be a problem in budgets for the foreseeable few years in budgets. I don’t want to see us continue to deteriorate the industry.”
Pat Evans
Pat covers the legislation and regulation of online gambling in North and South America, having covered the US sports betting industry extensively since 2019.
After raising sports betting taxes twice in two years and adding a per-wager fee, Illinois is now wrestling with whether cities can carve out their own slice of the market.