Key Moments:
- Chicago officials have been considering a 50-cent local tax on every online sports wager placed within city boundaries.
- The Chicago Financial Future Task Force estimates the proposed tax could bring in up to $17 million annually, factoring in a possible 10 percent reduction in betting activity.
- Industry groups, including the Sports Betting Alliance, have expressed resistance to a city-specific betting tax.
Proposed Tax Targets Digital Betting to Offset Budget Shortfall
Lawmakers in Chicago have been evaluating a new local tax on online sports betting to help shrink the city’s anticipated $1.1 billion Corporate Fund deficit for fiscal year 2026. According to the “Options for Chicago’s Financial Future” report from the Chicago Financial Future Task Force, a 50-cent tax per online sports wager made within city limits is among the revenue-generating options under consideration.
Online Sports Bets Remain Untaxed in Chicago
Online sports betting accounts for 98 percent of all wagers placed by Chicagoans since Illinois approved online wagering in 2020, yet these remain untaxed at the city level. Currently, city revenue is limited to taxes from the 2 percent of bets that occur at retail sportsbooks. The task force projects that with a 50-cent per-wager levy and at least 20 percent of Illinois’ online bets occurring inside Chicago, annual revenue could reach $17 million. This estimation allows for a potential 10 percent decrease in betting activity as some may seek to avoid city taxes.
Policy Pathway and Timeline
In July, members of the City Council pressed Mayor Brandon Johnson to ensure Chicago benefits directly from sports betting activity. In response, Johnson’s office gathered data on the matter. The proposed sports betting tax is expected to be evaluated for inclusion in his fiscal 2026 budget plan. Under the city’s process, departments file budget requests to the Office of Budget & Management by late summer. The mayor’s proposed budget reaches City Council by September, with deliberations following, and the final budget must be approved by December 31. Should the online gambling tax be adopted, it could take effect in January.
Illinois’ Changing Sports Betting Tax Climate
The proposed city tax arrives as Illinois modifies its broader betting tax framework. Beginning in 2024, the state shifted from a uniform 15 percent tax rate to a tiered model, with tax rates from 20 percent to 40 percent based on an operator’s annual adjusted gross revenue. From July 2025, the state began to apply a per-wager tax on online bets: 25 cents for the first 20 million bets in a year, and 50 cents thereafter.
Operators have responded in various ways. DraftKings and FanDuel now collect transaction fees per wager. BetMGM, BetRivers, ESPN Bet, and Hard Rock Bet have increased their minimum bet requirements. The new state-level per-wager tax generated over $5.2 million in its initial month. DraftKings and FanDuel alone contributed nearly $4 million of that total.
| Operator | Response to State Wager Tax |
|---|---|
| DraftKings | Charged transaction fees per wager |
| FanDuel | Charged transaction fees per wager |
| BetMGM | Increased minimum bet amounts |
| BetRivers | Increased minimum bet amounts |
| ESPN Bet | Increased minimum bet amounts |
| Hard Rock Bet | Increased minimum bet amounts |
The Sports Betting Alliance, a gaming consumer advocacy group, has (not surprisingly) come out against a recent proposal to add a $0.50 surcharge to every legal online sports bet in Chicago; Illinois this year became the first state to implement a per-bet charge
— Ryan Butler (@ButlerBets) September 24, 2025
Industry Groups Voice Concerns
The Sports Betting Alliance (SBA), representing operators such as BetMGM, DraftKings, FanDuel, Fanatics, and bet365, has spoken out against the idea of an additional city-level tax.
“The task force proposal comes as Illinois sports fans react with alarm over the state tax,” the SBA said in a Wednesday press release, as quoted by media. “The tax also risks more fans entering the cheaper, illegal market, which is a growing concern of the state’s top consumer advocates: the Illinois Attorney General and the Better Business Bureau.”
- Author
Daniel Williams
