Facing a budget deficit of $1.2 billion, the city of Chicago is trying to get a share of the booming sports betting market. Despite strong opposition from the state legislature, a revised budget still insists on imposing an additional 10.25% city tax on sports betting operators operating within the city. If passed, this means that operators will bear state, county, and city taxes, and the pressure can be imagined.
Chicago's calculation: Use new taxes to fill the budget hole
Chicago Mayor Brandon Johnson first proposed this sports betting tax in the budget this fall, and the latest revised budget signed by 27 city council members retains this provision. The mayor's budget estimates that this new tax could bring in up to $26 million a year for Chicago. With a $1.2 billion budget gap, the pressure is enormous. Although a corporate tax proposal that could have brought in $100 million in revenue has been rejected, the government is clearly reluctant to let go of this "fat meat" of gambling taxes.
Triple attack: State, county, and city taxes all included
Once this local bill takes effect in January next year, Chicago's sports betting operators will be caught in a "triple tax" siege. First, they need to pay Illinois' progressive tax rate of 20% to 40% (based on total gambling revenue). Secondly, they also have to pay a "betting fee" of 25 to 50 cents per bet. Moreover, as part of Cook County, they are already bearing a 2% county tax. Now, they may have to bear an additional 10.25% city tax. Dan Ditch, chairman of the Illinois House Gambling Committee, has proposed a bill that explicitly prohibits local governments from levying such taxes, and 30 legislators have jointly written to the Chicago City Council expressing opposition. They believe that excessive taxation will only push players to unregulated overseas sites, ultimately causing state tax revenue to suffer.
Market reaction: Fewer players but bigger bets
Illinois has never stopped increasing taxes on the gambling industry in recent years. The state tax rate has risen from the initial 15% to the current progressive system, and a new betting fee per bet has been added. Operators have also taken various measures to cope, such as passing some of the costs onto players and setting minimum bet amounts. Data shows that the effects are already apparent: in the first full month after the implementation of the betting fee (September 2025), the number of bets statewide decreased by 5 million compared to the same period last year, but interestingly, the average bet amount increased by 28%, resulting in a total betting amount increase of 9% to $14.2 billion. As a result, the state government's tax revenue for that month increased by more than $740,000. This shows that the market is adjusting in another way.
Future outlook: Increasing taxes is a double-edged sword
At the recent National Gambling Legislators Winter Meeting in the United States, Illinois legislator Jenhan Gordon-Booth also expressed concerns about continuous tax increases. She pointed out that many states may seek new sources of revenue next year due to financial pressures brought by federal legislation, but "killing the goose that lays the golden eggs" with existing sports betting tax rates is shortsighted and could harm the healthy development of the entire industry. She warned, "Legislators need to understand that you think raising taxes will get more, but the result is often the opposite." This game of tax balance not only concerns Chicago's finances but also affects the future direction of Illinois' gambling market. For more in-depth analysis of the global gambling industry, please follow PASA's official website.
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