Illinois Is Pushing Sports Betting To Its Breaking Point

Illinois doesn’t have a sports betting problem. It has a budget problem. And once again, the top betting apps are being used to solve those issues.

After raising taxes twice in two years and rolling out a per-wager fee that already changed betting behavior across the state, Illinois is moving toward yet another tax increase — three in two years if it goes through. This would make Illinois sports betting the most expensive to do business in countrywide (a dubious distinction New York betting currently has).

So what’s the third escalation? To create a tax for sports betting inside the city of Chicago, not other cities inside the state. But here’s the thing: most the population lives in Chicago so it’s the most consequential.

But… the tax ain’t official yet. Matter of fact, there’s a pretty big opposition to adding the tax. That’s the core of this story. Keep reading and we’ll clue you in on the internal strife going on inside Illinois politics at the moment.

Chicago Doubles Down On A City Tax

Last week, 27 of Chicago’s 50 alderpeople filed a revised city budget that includes that city tax on sports betting. Officially, it’s a 10.25 percent tax on sportsbook revenue earned inside city limits. Does not include casino betting, only sports.

If you recall, the tax was first floated by Chicago Mayor Brandon Johnson during the fall. It was part of Johnson’s budget for the new fiscal year and admittedly, it was a defensive move.

You see, the city is underwater. Big time. Chicago’s government is in a $1.2 billion budget deficit. That’s not a typo folks — the hole is really that deep. So Johnson and company is doing whatever it takes to, not necessarily close it (that will take years), but at least corral at it.

The city estimates the proposed sportsbook tax would generate up to $26 million annually. That’s a nice chunk of change, but obviously peanuts compared to the $1.2 billion hole.

If adopted, the tax would take effect January 1. And it wouldn’t replace anything currently on the books. It would stack with current taxes, a quadruple whammy for operators. Sportsbooks operating in Chicago would pay the state’s 20–40 percent tax on gross gaming revenue, Illinois’ per-wager fee, Cook County’s percent tax, and now an additional 10.25 percent city levy. That’s four layers of taxation aimed at the same activity.

State Lawmakers Try To Slam The Door Shut

Let us repeat: the city tax is far from a forevone conclusion. It’s picking up steam, sure, but plenty of opposition remains.

Rep. Dan Didech, chair of the Illinois House Gaming Committee, introduced legislation that would prohibit local governments from imposing their own sports betting taxes. Thirty state representatives signed onto a letter urging Chicago to abandon the idea altogether. Didech didn’t sugarcoat the stakes.

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

This makes a lot of sense. Licensed sportsbooks won’t just take four levels of taxes and move on with their lives. No, they’ll pass it on to customers in new forms of taxes, which could spur them to go offshore and have Illinois miss out on that tax money completely.

Illinois Keeps Turning The Screws

The pace at which Illinois is making these changes is really something to behold. Remember, Illinois first launched sports betting with a 15-percent flat tax rate. That lasted just a few years before in 2024, lawmakers replaced it with a tiered system ranging from 20% to 40 percent, depending on operator revenue.

Then came the per-wager tax in 2025. Sportsbooks now pay 25 cents per bet on their first 20 million wagers, and 50 cents per bet after that. As we said, sportsbooks passed this cost on to the customer, which is why in September — the first full month under the new structure — bettors placed about five million fewer wager than the same month last year before the tax existed.

To us, this is hard evidence that Didech is right, and bettors won’t tolerate this. It’s not just that sportsbooks are levying them with new fees, but they’re also dialing back on promotions since profit margins are worse. It all makes for a worse customer experience in-state for bettors.

Why tolerate that when there’s major offshore sportsbooks like BetUS offering $6,000 in free play to new bettors? We would do the same — and encourage Illinois bettors to explore that option themselves.

Even Supporters Are Warning About The Long Game

At a gaming conference last week, Illinois Rep. Jehan Gordon-Booth offered a rare moment of honesty from inside the state legislature. She acknowledged that states facing budget stress will be tempted to keep raising sports betting taxes. But she warned that doing so reflects a short-term mindset that can backfire over the long haul.

“What you think you’re going to get from raising taxes, you’re not going to get,” Gordon-Booth said. “I don’t want to see us continue to deteriorate the industry.”

That’s quite the statement coming from a state rep, not your average Jane. Chicago politicians need to strongly consider it when dedicating to move forward with this city tax.