Five Illinois Democrats have put their names to an effort to block Chicago from taxing sports betting at the city level.
Chicago Mayor Brandon Johnson’s budget plan for FY2026, published last week, proposes adding a 10.25% tax on online sportsbooks’ revenue generated from bets placed within the city.
Online sports wagering was identified as one of several priority avenues for generating new revenue to help close Chicago’s budget gap of more than $1.1 billion without increasing property taxes. Democrat Mayor Johnson estimated that adding the new betting tax could raise $26.2 million in extra annual revenue for the city.
Within days of the proposal coming to light, several state lawmakers filed a bill opposing the idea.
On Monday, Oct. 20, Rep. Daniel Didech introduced HB4171, legislation that would amend the state Sports Wagering Act to specify that “home rule units” may not impose or collect a tax on sports betting or operators’ receipts. The bill ostensibly applies to both online and retail sports betting statewide.
Illinois state of mind
Didech is the Chair of the Illinois House Gaming Committee. In a release issued on Monday, he confirmed that HB4171 is a “direct response” to the City of Chicago’s plan to impose a local online sports betting tax.
He and the bill’s four co-sponsors are adamant that only the state should have the power to regulate sports betting, including its taxation.
“The regulation and licensing of sports wagering, including, but not limited to, the imposition of fees, surcharges or other costs for the privilege of conducting or participating in sports wagering, are exclusive powers and functions of the State,” reads the bill’s text. “A home rule unit may not regulate or license sports wagering.”
Broadly speaking, a home rule unit is defined as either a county that has an elected chief executive officer or a municipality that has a population of more than 25,000. Both the City of Chicago and Cook County, which contains Chicago, would fall under this definition. Cook County currently applies its own 2% tax on sports betting revenue, while Chicago already taxes retail sports betting done in the city. Ostensibly, Didech’s bill would render both of those taxes unlawful.
“When the legislature legalized sports betting in 2019, it was never our intent to allow local governments to create their own rules for this industry,” Didech added in Monday’s public release. “Chicago’s proposal will hurt consumers, drive vulnerable people to predatory illegal markets and reduce state tax revenue. The city should work collaboratively with the state to ensure sound, informed policy decisions are made on this issue.”
Windy City tax efforts have gusto
Johnson’s budget measure, and the new bill that opposes it, follow a Chicago task force’s recommendation that the Windy City emulate the state by amping up the tax burden on online sportsbooks.
After Illinois raised its sportsbook tax ceiling to 40% with its new progressive tax rate last year and subsequently added a per-bet tax charge for all 10 online operators starting this past July, the Chicago Financial Future Task Force suggested the city add its own 50-cent per-wager surcharge for bets made within city limits.
The task force’s report noted that although 98% of all sports betting in Chicago takes place online, the city does not tax those online wagers and is missing out on up to $17 million in annual revenue as a result.
But, if other Illinois state lawmakers agree with Didech and Co. on HB4171, state law could prevent Chicago from following through on its sports betting tax plans. The bill could be taken up once Illinois’ 2026 legislative session begins in January.
