Illinois has become one of the costliest places in the U.S. to bet on sports, and Chicago officials are now weighing whether to add another layer of taxation.
State lawmakers this year raised Illinois’ online sports wagering tax from 15% to as high as 40%, creating one of the steepest rates nationwide and the highest in the Midwest. They also introduced a per-wager fee of 25 cents, which increases to 50 cents once a sportsbook processes more than 20 million bets in a year. Operators such as DraftKings and FanDuel have passed those costs directly to bettors by adding transaction fees, while others like BetMGM and BetRivers raised minimum bet amounts.
In the first month alone, the new levy generated more than $5.2 million for the state. Illinoisans lost $1.12 billion betting on sports in 2024, including $700 million on parlays. With added charges now in place, consumer losses are expected to rise further. Critics caution that rising costs could push some bettors toward unregulated markets where no taxes are collected and player protections are absent.
Chicago Explores Additional Revenue
The Chicago Financial Future Task Force has suggested a local tax of 50 cents on every online wager placed within city limits as a way to help close an anticipated $1.1 billion shortfall in the city’s Corporate Fund for fiscal year 2026. According to the report, 98% of sports bets in Chicago are placed online, but the city currently collects revenue only from retail wagers, which account for just 2% of the market.
If enacted, the new fee could raise up to $17 million annually, assuming that at least one-fifth of all Illinois online wagers are made in Chicago. The estimate factors in a 10% decline as some players may avoid the fee by betting outside the city. Cook County already imposes a 2% tax on sports betting revenue, meaning the city’s proposal would add to multiple layers of existing charges.
Budget Process and Next Steps
Mayor Brandon Johnson must present his proposed budget to the City Council this September, with approval required by the end of December for implementation on January 1. City departments submitted funding requests earlier in the summer, and Johnson’s office has been gathering data on potential revenue sources, including the proposed betting tax.
The idea of a city-specific tax follows calls from council members in July for Chicago to benefit directly from the sports wagering industry. Johnson’s administration convened the task force to examine options for new revenue and cost savings, and the online betting tax was one of several recommendations.
Industry Pushback
The Sports Betting Alliance (SBA) – a coalition representing BetMGM, DraftKings, FanDuel, Fanatics, and bet365—has voiced strong opposition. “The task force proposal comes as Illinois sports fans react with alarm over the state tax,” the group said in a recent statement. “The tax also risks more fans entering the cheaper, illegal market, which is a growing concern of the state’s top consumer advocates: the Illinois Attorney General and the Better Business Bureau.”
Source:
“Chicago task force recommends city add 50-cent tax on online bets”, cdn.prod.website-files.com, August 31, 2025
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