A budget proposal released by Chicago Mayor Brandon Johnson seeks a local tax on sports wagering, adding to a slew of recent tax changes on gambling in the Land of Lincoln.
Johnson presented the Protecting Chicago Budget plan for FY2026, establishing a framework to protect investments, foster economic opportunity and provide fiscal stability.
The budget is aimed at closing a $1.15 billion budget gap without increasing property taxes in Chicago. Instead, the budget takes measures, like levying a local tax on online sports wagers, to generate additional revenue to support the city’s government and people.
“To make Chicago more affordable for working families, the Protecting Chicago Budget advances a fair and balanced revenue strategy—one where everyone contributes in line with their capacity,” said Johnson. “Based on our citywide Budget Engagement Survey results, residents prioritized new revenues from a community safety surcharge, online sports Wagering, and increased vacant building fees.”
Johnson’s budget proposes applying a 10.25% tax rate on adjusted gaming receipts reported by licensed operators in Chicago. As of October 2025, Illinois is home to 10 online sports betting operators with more than half of the group tied to retail partners.
Chicago is considering a local tax on sports wagering after City Council members discussed the matter earlier this year. Several City Council members called for a local tax on sports betting to generate additional revenue and to have Chicago directly benefit from the growing popularity of wagering. The discussion of a local sports betting tax sparked action by Johnson, leading the mayor and his office to collect data on a potential local tax.
Pathway to imposing a local tax in Chicago
Johnson’s budget proposal requires state departments to submit budget requests to the Office of Budget & Management (OBM). Once the requests are received, the OBM is responsible for publishing a budget forecast. Johnson is then required to submit budget recommendations to the City Council with the Committee on the Budget & Government Operations holding a hearing with council members on the matter. Council members are then allowed to either deny or approve the budget for its implementation.
A budget needs 26 votes from council members to pass with 50 elected alderpersons.
Chicago task force recommended betting tax
Johnson’s new budget plan proposes a local tax after the Chicago Financial Future Task Force provided a series of recommendations to address the city’s projected budget gap.
The task force published its Options for Chicago’s Financial Future report, which proposed implementing a local 50-cent tax on all online wagers placed in the Windy City.
The task force projected the per-wager tax to generate up to $17 million in additional revenue with roughly 98% of all sports betting in Chicago taking place online. The estimate assumes that at least 20% of all online sports bets in Illinois are placed in Chicagoland.
The projection also considers a 10% loss rate due to bettors avoiding the local tax.
Johnson’s budget would add to tax changes in Illinois
Johnson is calling for a local tax on sports betting after Illinois implemented a sliding scale for taxes on sports betting last year. The state requires online operators to be taxed based on their adjusted gross revenue, with operators that generate over $200 million in revenue to be taxed at a 40% rate. Operators under that threshold are taxed at a 20% rate.
Before the sliding scale was introduced, Illinois levied a flat 15% tax rate.
In 2025, Illinois made additional tax-related changes by charging online operators at least 25 cents per wager as part of the state’s budget. The plan requires operators to pay 50 cents per online wager after the first 20 million bets they receive in a year.
Operators responded to the per-wager tax by introducing transaction fees and raising minimum bet amounts in the state. The Sports Betting Alliance (SBA), a coalition of sportsbooks, also responded to the per-wager tax by voicing its opposition to the change.
The coalition’s membership includes BetMGM, DraftKings, FanDuel and Fanatics.
SBC Americas reached out to the SBA about the potential local tax on Chicago proposed by Johnson and will update this story if a response is received.
The two tax changes, along with existing recreation taxes and a new $2 per-unit tax on certain new hemp products are projected to generate roughly $429.5 million in revenue. The estimates are a $58.5 million increase compared to the 2025 fiscal budget.
