The new year has ushered in a new level in the fight between the city of Chicago and Illinois sports betting operators.
Chicago Mayor Brandon Johnson did not sign the city’s budget prior to the 1 January effective date but also did not veto the amended budget sent to him by the city council. The budget included the 10.25% local tax on sports betting that Johnson proposed in the fall, which went into effect last week.
“I want to announce I will not veto the budget approved by the Chicago City Council. I will not add my signature affirming the budget as presented,” Johnson said in a statement. “In this moment I will not add the risk and speculation of a government shutdown to the profound worries Chicagoans face.”
The budget included several other tax measures, including a social media amusement tax, liquor tax and checkout bag tax.
The sports betting tax piles onto Illinois’ already steep sports betting levies, including a graduated rate of 20% to 40% on adjusted gross revenue and last year’s new per‑wager fee. Sportsbooks have sued in Cook County court, claiming the city lacks constitutional power to impose its own levy, but the operators withdrew their injunction request after receiving last‑minute city licences. Meanwhile, state legislation has been proposed aiming to slam the door on local sports betting taxes. Lawmakers reconvene in Springfield 14 January.
Illinois sports betting lawsuit
Before the Chicago tax took effect, the Sports Betting Alliance filed a complaint in Cook County court last week. The SBA represents Bet365, BetMGM, DraftKings, Fanatics and FanDuel.
In the complaint, the SBA said the new tax structure exceeds Chicago’s “constitutional authority”. It further said the Illinois Constitution does not permit a “home rule unit such as Chicago” to require a licence for revenue or to impose taxes “unless the General Assembly has expressly granted that power to the home rule unit”.
SBA operators previously threatened to pull out of Chicago if the tax were implemented. In the complaint, the SBA asked for an injunction to stop enforcement of the tax. However, the alliance withdrew its request for injunction last week after the city rolled out its licences.
State lawmakers look to help sportsbooks
Rep. Dan Didech, the chair or the House Gaming Committee, filed a bill, HB 4171, in October that would prevent municipalities from creating their own sports betting taxes.
“When the legislature legalised sports betting in 2019, it was never our intent to allow local governments to create their own rules for this industry,” Didech said at the time. “Chicago’s proposal will hurt consumers, drive vulnerable people to predatory illegal markets and reduce state tax revenue. The city should work collaboratively with the state to ensure sound, informed policy decisions are made on this issue.”
Senator Patrick Joyce filed a separate bill that would reduce Chicago’s state income tax distributions relative to how much the city brings in through its sports betting tax.
Illinois lawmakers heavily increased the state tax burden on sportsbooks in the past two sessions. In 2024, lawmakers increased the sports betting tax from a 15% flat fee to a graduated system ranging between 20% and 40% based on revenue.
Last year, lawmakers included a per-wager tax in the state budget. Sportsbooks instituted various ways to mitigate the wager fees.
At the National Council of Legislators from Gaming States winter conference last month, an Illinois lawmaker warned other legislators about the potential consequences of raising sports betting taxes. Rep. Jehan Gordon-Booth said the financial burdens can become too much for the operators.
“[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.
New city tax piles onto Illinois’ already heavy sports betting burdens, including a 20%–40% graduated rate and per‑wager fees.