- State legislators filed three bills in January to stop Chicago’s 10.25% sports betting tax and keep all gambling rules at the state level.
- City leaders want the tax to fix a $1.2 billion budget gap, but lawmakers say it’ll push bettors to illegal websites instead.
- This fight comes as sportsbooks deal with recent state tax hikes that already caused betting to drop 15-16% last fall.
SPRINGFIELD, Ill. – State lawmakers in Illinois are pushing back hard against Chicago’s plan to impose its own tax on sports betting revenue. On January 13, Senator Patrick Joyce introduced two separate bills aimed at stopping the city from moving forward with a proposed 10.25% tax on sportsbook revenue.
The Illinois Sports Wagering Act would be amended by SB 2800 to make it clear that only the state has jurisdiction over sports betting licensing and taxation. If enacted, the law would prohibit municipalities and counties from imposing any taxes on registered sportsbooks. The bill would immediately take effect, making it impossible for Chicago to collect any taxes.
The second proposal, SB 2760, takes a different approach by creating financial penalties for municipalities that attempt to tax legal sports betting. Any city or county that tries to impose charges would see that amount deducted from their Local Government Distributive Fund.
House Bill Gains Bipartisan Support
The House has joined the campaign with HB 4171, a bill that would prohibit cities and counties from having any authority to tax, control, or grant licenses for sports betting businesses. It has already received the endorsement of twenty-eight parliamentarians from both parties.
Chicago’s Budget Crisis Drives Tax Push
In order to assist overcoming a huge $1.2 billion deficit, Chicago included the tax in its budget proposal for 2026. Last October, Mayor Brandon Johnson proposed the 10.25% levy, claiming it could bring in almost $26 million a year for the city. The sports betting tax remained in place even after 27 alderman presented their own budget proposal in December.
The leader of the House Gaming Committee, State Representative Dan Didech, issued a warning that high taxes will push gamblers to unregulated offshore locations. Chicago-based operators would be subject to an effective tax rate of more than 54% when combined with Cook County’s current 2% fee.
Read More: Chicago vs Springfield: Illinois Sports Betting Tax Showdown
Prominent operators, such as DraftKings and FanDuel, filed lawsuits contesting the tax’s validity on the grounds that it goes against state authority.
The conflict arises at a time when Illinois sportsbooks are already facing higher expenses. In 2024, the state increased its betting tax from 15% to a tiered system that ranged from 20% to 40%. Beginning in July, a per-bet tax was imposed.
According to data from the Illinois Gaming Board, operators passed expenses on to bettors through higher minimum bets and surcharges, resulting in a 15% to 16% decrease in betting volume in September and October over the same period last year.
