Chicago legislators’ efforts to implement a local tax on sports betting in the city are gaining momentum.
The Chicago Financial Future Task Force published its Options for Chicago’s Financial Future report, which provides a series of recommendations to address the city’s projected $1.1 billion deficit in its Corporate Fund for FY 2026, including potential revenue-generating and cost-saving measures.
One proposed revenue-generating option includes implementing a local 50-cent tax on all online bets placed in the Windy City as part of Chicago Mayor Brandon Johnson’s next budget proposal.
The report notes that while 98% of all sports betting in Chicago takes place online, since Illinois opened its online sports betting market in 2020, Chicago has not taxed online wagers. Only the 2% of sports wagers that take place at retail locations are taxed by the city.
The task force projects that a 50-cent per-wager tax on online sports betting would generate up to $17 million in additional annual revenue for the city, assuming that at least 20% of all online sports bets in Illinois are placed in Chicago. The estimates accounts for a 10% loss rate due to some individuals avoiding the tax by betting from outside the city.
The task force recommendation comes after Chicago City Council members expressed a desire in July for Chicago to benefit directly from sports betting through a local tax. That led Johnson to gather information by leveraging his office to collect data on the matter. The mayor could formally include a local tax on sports wagering in a new budget plan for 2026.
Cook County, which contains Chicago, already applies its own 2% tax on sports betting revenue.
Pathway to a local sports wager tax in Chicago
The budget approval process in Chicago for Johnson can be an arduous process. State departments are required to submit budget requests to the Office of Budget & Management (OBM) between June and August. Once requests are received, the OBM is tasked with publishing a budget forecast.
Johnson must submit budget recommendations to the City Council in September. The Committee on the Budget & Government Operations then holds hearings on the budget with council members and the council must approve the proposed budget by Dec. 31 of any given year. If approved, Johnson’s budget would go into effect on Jan. 1.
Recent tax changes in Illinois
A local tax on sports betting in Chicago would add to multiple recent tax-related changes in Illinois.
Last year, the Land of Lincoln introduced a sliding tax scale for sportsbooks based on their adjusted gross revenue. Operators that generate over $200 million in annual revenue are taxed on that revenue at a 40% rate, and even the lowest bracket of 20% is higher than the previous flat 15% rate.
Most recently, a per-wager tax was added to all online wagers placed throughout Illinois. Licensed online sportsbooks in Illinois are charged at least 25 cents per bet as part of the new state budget signed in 2025, rising to 50 cents per wager after the first 20 million bets they take in a year.
Operators including DraftKings and FanDuel responded to the per-wager tax by adding transaction fees on all online wagers. BetMGM, BetRivers, ESPN Bet and Hard Rock Bet took a different approach by raising minimum bet amounts.
In its first month in place, the per-wager tax raised more than $5.2 million for the state.
Sports Betting Alliance hits out
Just like the state-wide tax changes, the potential of a local tax in Chicago drew opposition from the Sports Betting Alliance (SBA), a coalition of BetMGM, DraftKings, FanDuel, Fanatics and bet365. The SBA opposes a local tax following the recent tax adjustments in Illinois.
“The task force proposal comes as Illinois sports fans react with alarm over the state tax,” said the SBA in a press release issued on Wednesday. “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.”
