An Illinois state senator has proposed legislation designed to blunt the financial impact of Chicago’s newly approved sports betting tax by adjusting how state funds are distributed. The move comes as the city prepares to implement a 10.25% tax on sports betting revenue generated within Chicago.
State Sen. Patrick Joyce filed Senate Bill 2760 earlier this month. The bill would reduce Chicago’s allocation from the Local Government Distributive Fund by the same amount the city collects through its sports betting tax, with those funds redistributed to other municipalities and counties. The proposal aims to keep the change revenue neutral for the state.
Chicago’s $16.6 billion budget is set to take effect Thursday after Mayor Brandon Johnson said he would neither sign nor veto the ordinance, allowing it to become law. Johnson originally proposed the sports betting tax as a way to raise an estimated $26.3 million annually. While the city council rejected his plan for a corporate head tax, it retained the wagering levy in an alternative budget that passed without a veto-proof majority.
State-Level Response To Local Taxation
Joyce’s bill would amend the State Revenue Sharing Act to address local sports wagering taxes directly. The proposed language states:
“Not withstanding any other provision of law, if a municipality imposes fees, surcharges, or other costs for the privilege of conducting or participating in sports wagering, then the total amount of those fees, surcharges, or other costs shall be deducted from that municipality’s allocation under this subsection and redistributed to the other municipalities and counties in this State in accordance with the allocation formula set forth in this subsection.”
The bill text has not yet been posted on the Illinois General Assembly website. Joyce’s action follows earlier legislation filed in October by Rep. Daniel Didech, chair of the House Gaming Committee, which seeks to prevent local governments from taxing or regulating gambling. The General Assembly is scheduled to reconvene on Jan. 14, 2026.
Operator Concerns Over Added Costs
The sports betting industry has criticized Chicago’s ordinance, arguing that it creates a third layer of taxation in a short period. The Sports Betting Alliance has warned that the measure could create operational challenges for Illinois’ 10 mobile operators.
In a letter sent to Johnson, the group said sportsbooks might have to shut down in Chicago because the ordinance requires city-issued licenses without explaining how operators can obtain them.
Mounting Tax Pressure Statewide
Since legalization in 2019, Illinois has steadily increased taxes on sportsbooks. A 15% flat tax was replaced in 2024 by progressive rates between 20% and 40%, and lawmakers added a per-wager surcharge in July. DraftKings and FanDuel currently pay the highest rates due to their revenue levels.
With the Chicago tax and Cook County’s 2% levy, some operators expect combined city-based tax rates exceeding 50%. Even so, Illinois reported a record $1.6 billion betting handle in October and generated hundreds of millions in additional tax revenue over the past year.
Source:
“Second Illinois Bill Filed To Challenge Chicago Sports Betting Tax“, ingame.com, December 29 2025
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