Chicago Proposes 10.25% Tax On Online Sports Betting

State lawmakers in Illinois are urging their municipal counterparts in Chicago to reject a proposal from the mayor to implement a city tax on online sports bets placed in the Windy City.

As part of his 2026 budget, Chicago mayor Brandon Johnson proposed a 10.25% city tax on online wagers. The mayor projected that such a tax could add $26 million annually to the city’s coffers.

A bloc of 29 Illinois House Democrats is calling upon Chicago City Council alderpersons to reject Johnson’s proposal to add a city levy to online sports wagers. They fear the tax hike will cause Illinois sports bettors to take their action to unregulated offshore sportsbooks.

“If you increase the tax so it becomes cost-prohibitive for gamblers,” Rep. Dan Didech told the Chicago Sun-Times. “They will seek out overseas sites that … are more dangerous, more predatory, untaxed and unregulated.

“That’s a direct loss in tax revenue for the state. That impacts our ability to invest in infrastructure.”

Each state regulates all legal sports betting in the USA.

Illinois lawmakers take proactive approach to Chicago tax plan

Didech is chair of the House Gaming Committee, and in that role, he is already hedging his bets against this proposed Chicago sports betting tax. He has introduced a bill, HB 4171, dubbed the Sports Wagering – No Local Taxes Bill. Specifically, if passed into law, it would deny municipalities in the state the power to regulate, license, or tax sports wagering.

Didech’s bill has already gained 15 co-sponsors since its introduction. Among those co-sponsors are several Chicago-area representatives.

“When the legislature legalized sports betting in 2019, it was never our intent to allow local governments to create their own rules for this industry,” Didech said in a press release. “Chicago’s proposal will hurt consumers, drive vulnerable people to predatory illegal markets, and reduce state tax revenue. The city should work collaboratively with the state to ensure sound, informed policy decisions that are made on this issue.”

The bill has already passed first reading and has been referred to the state Rules Committee. On January 14, the Illinois legislature will reconvene to consider this bill further.

Illinois already has implemented state tax increases on sports betting

If the Chicago tax levy is approved, it will be the second tax hike applied to sports betting in Illinois in a matter of months.

On July 1, 2025, the state implemented a per bet tax on regulated sportsbooks operating in the state. The Illinois government charges sportsbooks 25 cents per wager for the first 20 million bets per operator. Beyond that threshold, the tax rate increases to 50 cents per wager.

When Illinois originally launched legal and regulated sports betting in 2020, a 15% flat tax was instituted on all bets. In 2024, that tax rate was hiked to be between 20-40%, depending upon the volume of bets handled by a sportsbook.

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