Illinois already has some of the highest online sports betting (OSB) taxes in the nation, but if the financially stressed city follows a task force's proposal, Chicago bettors may face additional hardship.
A levy on all online sports wagers made within city borders is one of the many suggestions made by Chicago's Financial Future Task Force in a recently published study. The city is already dealing with a $1.1 billion fiscal 2026 deficit. According to the task team, the city would collect $8.5 million annually if it levied a fee of 25 cents on every wager made there. When the tax is doubled to 50 cents, the expected revenue also doubles.
"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.”
Since 98% of sports wagers in the city are conducted on computers or mobile devices, the group points out that although Chicago already pays taxes on wagers placed at physical sportsbooks, this revenue source is insignificant.
Taxes on sports betting are popular in Illinois
Illinois levies a 25-cent fee on an operator's first 20 million booked bets and a 50-cent fee after that, according to a recently approved law that took effect in July. According to the Sports Betting Alliance (SBA), the effective tax rate on a $1 wager would be 100% if Chicago implemented its own 50-cent per bet tax.
More than half of sports wagers in Illinois are for $5 or less, according to the trade association, which is made up of gaming corporations, suggesting that state law disadvantages smaller wagerers. About half a dozen operators changed their minimum bet levels in reaction to the previously announced state tax increase, with Circa Sports raising theirs to $10.
The SBA believes that if Chicago follows suit, it will encourage bettors to use unregulated sportsbooks, which would result in no money for the state or city, as it stated in relation to the statewide tax increase.
“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.
Higher Taxes for Illinois Bettors—For the Time Being
The football season may be in full swing, but sports betting specialists say there is no proof that Illinois' higher taxes are discouraging bettors. Furthermore, there is little evidence that DraftKings, Fanatics, or FanDuel—the operators who charge per-bet fees in the state—are experiencing a high rate of customer churn.
The operators that enforce minimum bets do so in a modest manner; frequently, they establish minimums that are less than what the majority of bettors would initially wager.
It's unclear if Chicago will accept the task force's recommendation, but if it does, it seems like many Windy City gamblers will accept it.