Key Moments:
- Illinois state Sen. Patrick Joyce has submitted SB 2760, which would offset Chicago’s sports betting tax revenue by reducing the city’s allocation from the Local Government Distributive Fund.
- Chicago’s 10.25% tax on sports betting operators is set to take effect with the upcoming 2026 city budget, passing into law without the mayor’s signature or veto.
- The Sports Betting Alliance has publicly warned that the new city tax may push bettors toward unregulated, illegal markets.
Legislative Efforts Target Chicago’s Sports Betting Tax
Illinois legislators are stepping up efforts to challenge the recently enacted Chicago sports betting tax. State Sen. Patrick Joyce has put forth SB 2760, a bill that would reduce Chicago’s share of the Local Government Distributive Fund by any amount the city collects through sports wagering-related fees, surcharges, or costs. These redistributed funds would then be allocated to other municipalities and counties in Illinois according to the existing state formula.
SB 2760 joins an earlier measure from Illinois Rep. Daniel Didech, who proposed barring local governments from taxing or regulating gambling under home rule authority. While Didech’s proposal attempts to preempt municipal taxation power directly, Joyce’s legislation seeks to balance city revenue through financial offsets at the state level.
Market Pressures Intensify for Operators
State-level changes have already restructured the tax landscape for Illinois sports betting operators, replacing a flat system with progressive tax rates and a per-wager charge on mobile bets. Companies like DraftKings have responded by instituting a 50-cent transaction fee on Illinois bets, citing new operational and tax burdens.
The Chicago city ordinance brings further complications, including concerns about unclear licensing requirements for operators. The Sports Betting Alliance has stated, “The new Chicago tax on sports wagering will drive more sports fans to illegal, predatory websites and bookies that are thriving online without any oversight or consumer protections, while avoiding tax obligations entirely.” The group also cautioned about “regulatory hurdles that could significantly constrain sportsbook operations in Chicago and may force companies to explore all legal options.”
Broader Implications for Revenue and Regulation
The introduction of SB 2760 alters the risk calculus for operators considering business in Chicago. Political uncertainty grows as more legislative actors become involved, with every Illinois municipality and county potentially affected by the redistribution of LGDF dollars. The debate may pivot from a city-versus-industry issue to a broader contest between Chicago and other local governments statewide.
There is a greater chance now that a comprehensive state framework for local wagering taxes could emerge, whether following Didech’s preemption model, Joyce’s revenue-offset concept, or a hybrid policy.
Next Steps and Considerations Going Into 2026
The Illinois General Assembly returns for its next session in mid-January 2026. With Chicago’s tax planned to go live at the start of that year, lawmakers are likely to consider state-level actions after the city ordinance has already been implemented. Such a sequence could lead to retroactive or complicated legislative fixes and potential legal disputes between city and state authority.
For operators, the unfolding situation raises significant strategic questions about Chicago as a unique cost environment. Companies must weigh whether to adjust pricing and operational logic specifically for Chicago or continue treating the market as part of a unified statewide approach.
Summary Table
| Key Development | Details |
|---|---|
| SB 2760 Filed | Sen. Patrick Joyce proposes offsetting Chicago’s sports betting tax revenue via the LGDF allocation |
| City Tax Effective Date | Chicago’s 10.25% tax on local sports betting operator revenue begins with the 2026 city budget |
| Industry Response | Sports Betting Alliance criticizes the tax for its potential impact on the regulated market and sees risk of pushing players to illegal options |
| Operational Impact | Market faces mounting tax layers and regulatory uncertainty; business planning grows more complex |
- Author
Daniel Williams
