With higher state taxes and new per‑wager fees already impacting Illinois sports betting, a bloc of state lawmakers is urging Chicago officials to shelve Mayor Brandon Johnson’s proposed 10.25% city tax on online wagers.
Thirty Illinois representatives have warned Chicago’s 50 alderpersons that layering a steep city levy on top of the state’s new tiered and per‑bet taxes risks driving bettors to untaxed offshore sites and shrinking overall revenue.
Their intervention comes after a full month of per‑wager fees led to fewer bets but higher average stake. It also resulted in a slight increase in tax revenue, underscoring how fragile the balance has become between maximising tax collections and keeping the legal market competitive.
Johnson proposed the local tax in his $16.6 billion budget last month, projecting it would help boost the city’s revenue by $26 million.
State lawmakers suggest Illinois could lose out on tax revenue, however, as the increasing costs of betting could cause bettors to go offshore.
“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,” Rep. Dan Didech, chair of the House Gaming Committee, told the Chicago Sun-Times. “That’s a direct loss in tax revenue for the state. That impacts our ability to invest in infrastructure.”
Didech introduced a bill prohibiting local taxes on sports betting after Johnson’s initial proposal.
The City Council Finance Committee has already rejected a new corporate tax that Johnson hoped to implement. That was projected to help generate $100 million in revenue.
Illinois sports betting taxes already an issue
When Illinois launched sports betting, lawmakers implemented a 15% flat tax on sportsbook revenue. In 2024, however, lawmakers changed it to a tiered system of 20% to 40%, depending on revenue volume.
This year, the state added a per-wager tax. Sportsbooks pay 25 cents for each of their first 20 million bets taken, and 50 cents for every bet thereafter. The sportsbooks have come up with various tactics to mitigate their losses, such as charging per-bet fees or imposing minimum bet values.
Sportsbooks were responsible for their first full month of per-wager taxes in September.
Bettors placed 30.6 million bets statewide in September. That was approximately 5 million fewer bets compared to September 2024, or about 15% less. But bettors are wagering more per bet, with the average size climbing 28% and the overall handle growing to $1.42 billion, a 9% year-over-year increase.
The state collected $28.7 million in taxes in September, with $10.6 million coming from the new per-wager tax. Ultimately, the state gained $740,920 in taxes, as sportsbooks generated $103 million in revenue compared to $135 million last September.
Flutter CEO Peter Jackson said the fees had “no impact” on FanDuel during his recent third quarter earnings call.
“As you’d expect, we’re seeing a reduction in the number of bets but increasing handle per bet,” Jackson said during the call. “When we look to the September data, Illinois is definitely behaving in line with other states.”
Tax increases pile up
Recent legislative sessions have seen multiple states reexamine their tax rates, with several of them increasing their burdens on sportsbooks.
In Maryland, lawmakers raised the sports betting tax from 15% to 20% after Governor Wes Moore proposed a jump to 30% in his budget.
In 2023, Ohio Governor Mike DeWine successfully pushed to double the state’s tax rate from 10% to 20%. He wanted to double the rate again this year, but legislators denied that move. DeWine has since come out against sports betting following several recent scandals, including one involving Cleveland Guardians pitchers Emmanuel Clase and Luis Ortiz.
New Jersey lawmakers scaled back Governor Phil Murphy’s proposed jump to a 25% tax rate, instead raising the rate from 13% to 19.75%. Louisiana, meanwhile, increased the sports betting tax from 15% to 21.5%.
Industry stakeholders tell iGB that with states needing to increase revenue, they expect lawmakers to propose more tax increases in the 2026 legislative sessions.
Illinois’ revamped sports betting tax structure is already reshaping the market, with a new per‑wager fee contributing to fewer bets but a record $1.42 billion September handle.