Chicago’s approved 2026 budget will impose new taxes and regulatory requirements on sports betting operators within city limits after Mayor Brandon Johnson said he would neither sign nor veto the measure. His decision allows the $16.6 billion budget to take effect, including a 10.25% tax on sports betting revenue generated in Chicago beginning Jan. 1.
Johnson proposed the levy in October, though he lost control of the budget process after the city council rejected his plan for a corporate head tax. Aldermen advanced an alternative budget that kept the sports betting tax and added language requiring wagering businesses to hold city-issued licenses. The ordinance, however, does not specify how operators would obtain those licenses.
Licensing Language Raises Industry Concerns
The Sports Betting Alliance warned that the lack of a licensing framework could prevent sportsbooks from operating in Chicago. In a letter sent to Johnson, the group said the ordinance’s requirements could leave operators without a legal path to continue offering online wagers in the city.
“The new Chicago tax on sports wagering will drive more sports fans to illegal, predatory websites and bookies that are thriving online without any oversight or consumer protections, while avoiding tax obligations entirely,” the Sports Betting Alliance said in a statement. “Further penalizing players in the City of Chicago pushes more sports fans to unregulated, illegal alternatives and has serious implications for the sustainability of the legal market.”
The city tax would apply on top of existing state and county levies. Illinois uses a progressive tax structure that ranges from 20% to 40% based on revenue, and Cook County already collects a 2% tax. Combined, the new city charge would push the minimum tax rate on Chicago-based sportsbook revenue to 32.25%.
State-Level Response and Revenue Projections
Illinois lawmakers have challenged Chicago’s authority to impose the tax. State Rep. Daniel Didech introduced legislation that would prohibit local governments from taxing or regulating sports betting. Separately, a bill filed by state Sen. Patrick Joyce would reduce Chicago’s share of the Local Government Distributive Fund by the amount collected through a sports wagering tax.
City officials estimate the levy could raise $26.3 million annually, based on Chicago generating 40% of Cook County sportsbook revenue. Applying that same share to the $610.5 million in county adjusted gross revenue reported through the first 10 months of 2025 would result in roughly $25 million.
Added Pressure on Major Operators
FanDuel and DraftKings could face effective tax rates exceeding 50% once the city levy stacks with Illinois’ top 40% rate, which applies after $200 million in revenue. Operators also continue to pay a per-wager surcharge introduced in July.
“We urge city leaders to delay the new online sports betting license infrastructure given the extremely truncated timeline caused by the budget process,” the Sports Betting Alliance added. “The new licensing process creates regulatory hurdles that could significantly constrain sportsbook operations in Chicago and may force companies to explore all legal options.”
Illinois reported a record $1.6 billion betting handle in October, though wager volume declined, leaving questions about how the city’s new rules may affect future activity.
Source:
“Chicago 2026 Budget Set To Include Sports Betting Tax”, ingame.com. December 23, 2025
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