- Chicago is moving forward with a 10.25% sports betting tax to help fill a $1.2 billion budget hole despite major pushback from state lawmakers.
- Illinois already cranked up sportsbook taxes in 2025, and Chicago’s addition would push the total rate above 54% for city operators.
- State politicians warn the extra taxes could backfire by pushing bettors to illegal sites and hurting Chicago’s ties with Springfield.
CHICAGO — City officials are doubling down on a plan to tax sports betting despite growing pushback from state lawmakers and the gambling industry.
Mayor Brandon Johnson pitched the 10.25% tax this fall when he rolled out his 2026 budget proposal. Now, even as an alternate budget from 27 aldermen tries to chart a different course, the sports betting tax is still hanging around. The city is facing a huge financial deficit of $1.2 billion, and officials are committed to keeping the $26 million they believe this tax could generate.
Springfield Pushes Back Hard
Thirty Illinois House Democrats urged City Council members to raise the tax in a letter, which sparked harsh criticism of the plan in Springfield. The House Gaming Committee head, State Representative Dan Didech, has even gone so far as to propose legislation that would completely remove Chicago’s authority to impose local gambling taxes
His reasoning is based on a well-known worry: if taxes are too high, bettors will just move to unregulated offshore locations with no legal sports betting safeguards. Illinois would lose a lot more state revenue as a result of that change than Chicago would benefit.
The city has long sought to increase revenue from sports betting. During a City Council session back in July, Chief Financial Officer Jill Jaworski acknowledged that the Johnson administration had already examined the viability of a municipal tax on online Illinois sportsbooks.
Timeline: Illinois Sports Betting Tax Battles
- May 2025: Illinois passes HB 2755 (71-43 vote), creating tiered taxes up to 40% plus per-bet fees
- September 2025: DraftKings and FanDuel add bettor surcharges; bets placed drop 15% despite handle hitting $1.42 billion
- October 2025: Mayor Johnson releases 2026 budget with 10.25% Chicago sports betting tax
- December 2025: 27 aldermen propose alternate budget but keep the 10.25% sports betting tax
Operators Already Squeezed
For operators already struggling with recent state-level increases, the timing couldn’t be worse. Before adding a per-wager surcharge earlier this year, Illinois lawmakers increased the state tax from a flat 15% to a tiered scheme that will reach 40% in 2025. Chicago-based sportsbooks would be subject to an effective tax rate of more than 54% on income earned within city limits when combined with Cook County’s current 2% charge.
The communication failure between Springfield and Chicago is what makes this scenario especially difficult. State Representative Curtis Tarver pointed out that by straining ties with state officials who oversee the city’s home-rule authority, raising taxes could end up costing Chicago more than it brings in. The message is clear: Chicago might prevail in this financial battle, but it will lose the bigger battle with Springfield.
