Chicago Sports Betting Tax Set to Take Effect After Mayor Declines Budget Action
Chicago Mayor Brandon Johnson said Tuesday he will neither sign nor veto the city's $16.6 billion budget, allowing it to take effect automatically.
The budget includes a 10.25% tax on revenue generated by sports betting operators based in Chicago. The levy is scheduled to begin on January 1. Johnson originally proposed the sports betting tax in his October budget plan as part of a broader effort to close a fiscal gap.
He lost control of the budget process after the city council rejected his proposal for a corporate head tax. Aldermen instead advanced an alternative budget that preserved the sports wagering levy.
The ordinance passed over the weekend includes a requirement that operators hold a city license. However, it does not establish a licensing framework or process. Industry groups say that omission could prevent operators from legally continuing to offer services within the city.
The Sports Betting Alliance sent a letter to Johnson last week warning that operators could be forced to shut down in Chicago. The group said the licensing requirement lacks a clear path to compliance. It urged the city to delay implementation to avoid disruptions.
The new levy would push the minimum tax on Chicago-based sports betting revenue to 32.25%. Illinois already applies progressive state tax rates ranging from 20% to 40%, depending on annual revenue. Cook County imposes an additional 2% tax on sports wagering revenue.
State lawmakers are also challenging the city's authority to impose the tax. Illinois House Gaming Committee Chairman Daniel Didech introduced legislation in October that would prohibit local governments from taxing or regulating gambling. The bill would prevent Chicago from using home-rule powers in this area.
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Lawmakers Fight to Offset Tax
A separate proposal introduced by Sen. Patrick Joyce would essentially offset Chicago's share of the Local Government Distributive Fund by an amount equal to any sports betting revenue collected through the new tax. The bill has not yet advanced.
The mayor's office has estimated the tax would generate $26.3 million annually, based on Chicago accounting for roughly 40% of Cook County's sports betting revenue. Using 2025 revenue data through October, that same assumption would have produced about $25 million. Illinois sportsbooks are reporting adjusted gross revenue running more than 20% ahead of last year's pace.
Large operators such as FanDuel and DraftKings are projected to reach the state's highest tax bracket before the end of the year. That would subject them to a combined effective tax rate of at least 52.25% on Chicago-based revenue for part of the fiscal year. The burden increases further due to a per-wager surcharge enacted in July.
Illinois reported a record $1.6 billion sports betting handle in October, according to state regulators. The shift to progressive tax rates generated $261.9 million in sports betting tax revenue during fiscal year 2024-25. Receipts this year are already running $65 million ahead of last year's total.
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