Chicago Sports Betting Tax Could Compound Illinois Bettors’ Woes, Says SBA

• Intra-city tax increase isn’t official, but task force says it could raise significant revenue
• If approved, levy would be on top of Illinois’ already high OSB taxes
• SBA says it will encourage bettors to wager with unlicensed books

Illinois already has some of the highest online sports betting (OSB) taxes in the country, but bettors in Chicago could feel an added pinch if the cash-strapped city pursues a task force’s recommendation.

In a newly released report, Chicago’s Financial Future Task Force makes a slew of recommendations for a city facing a $1.1 billion fiscal 2026 deficit, one of which is a tax on all internet sports bets placed within city limits. The task force estimates that if the city applies a tax of 25 cents to each bet placed there, it’d raise $8.5 million per year. Double the tax to 50 cents, and estimated receipts double, too.

We recommend the City consider placing a $0.50 tax on all wagers placed via online betting in the City of Chicago. This would generate an incremental $17 million in estimated revenue annually,” according to the task force. “Both ends of the estimated range assume that at least 20% of all bets in the State are placed in the City and assume a 10% loss rate due to some individuals avoiding the tax by placing bets outside of the City.”

The group notes that Chicago currently collects taxes on wagers placed at brick-and-mortar sportsbooks, but that’s a scant revenue contributor because 98% of sports bets placed in the city are done so via computers or mobile devices.

Illinois Loves Sports Betting Taxes

Under a newly signed law that went into effect in July, Illinois applies a levy of 25 cents on an operator’s first 20 million booked bets and 50 cents thereafter. The Sports Betting Alliance (SBA) argues that if Chicago applies its own 50-cent per bet tax, the effective tax rate on a $1 bet would be 100%.

As it said with regards to the statewide tax increase, the SBA believes that if Chicago follows the same path, bettors will be enticed to wager with unregulated sportsbooks, meaning no revenue for the city or state.

“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. Unregulated, offshore operators offer cheaper sports betting alternatives for consumers, without any protections — including age verification — and without any oversight, not to mention no tax revenue whatsoever,” said SBA in a statement.

Illinois Bettors Dealing with Higher Taxes…For Now

Perhaps it’s because football season in full swing, but analysts covering sports wagering equities say no evidence has emerged that Illinois’ higher taxes are chasing bettors away. Additionally, data doesn’t point to DraftKings, Fanatics, and FanDuel – the operators imposing per bet fees in the state – suffering significant customer attrition.

The operators requiring minimum bets are doing so in modest form, in many cases setting minimums that are below what most bettors would wager in the first place.

It remains to be seen if Chicago embraces the task force’s recommendation, but if it does, it appears many Windy City bettors will grin and bear it.