Chicago mayor proposes local sports betting tax

Illinois sportsbook operators could see another tax hike, at least in the city of Chicago.

Chicago Mayor Brandon Johnson included a 10.25% tax on sports betting revenue in his latest proposed budget, which his office released last week. The proposed $16.6 billion budget would take effect 1 January 2026, and the sports betting tax aims to help close a $1.15 billion deficit.

Johnson wrote in a budget introduction that the overall spending plan closes the gap “without increasing the city’s property tax levy or relying on regressive revenue measures.”

“Instead, it advances a balanced approach rooted in fairness: generating progressive revenue from those with the greatest capacity to contribute and delivering savings through government modernization and efficiency initiatives,” he wrote.

The proposed sports betting tax could generate an estimated $26 million. The proposal is not a complete surprise, as earlier this year, the Chicago Financial Future Task Force suggested a per-wager surcharge for bets made in the city.

Illinois sports betting tax increases

Illinois has been a frontline for tax increases related to sports betting the past two years.

In 2024, Governor JB Pritzker changed the industry’s tax structure in his 2025 budget. Instead of the base 15% tax on sports betting revenue, it introduced a tiered system ranging from 20% to 40%. The tax rate is tied to the revenue generated by each sportsbook. The increase resulted in more than $260 million in new taxes from the industry.

This year’s adopted budget, meanwhile, included a new per-wager surcharge for sportsbooks. Operators pay 25 cents per wager on the first 20 million wagers, and 50 cents each after that. In 2024, there were 370 million bets placed in Illinois, with both DraftKings and FanDuel taking more than 150 million bets each.

The per-wager tax has led to a variety of operator approaches on how to mitigate its effect on their bottom line.

Five sportsbooks, including DraftKings and FanDuel, instituted per-bet service fees. DraftKings’ fee does not apply to parlays above $10, straight bets above $50 and bonus bets. Bet365, Caesars and Fanatics also enacted per-bet service fees in Illinois.

BetRivers and ESPN Bet now have $1 minimum wagers. Bettors must wager at least $2 at Hard Rock Bet and $2.50 at BetMGM. Circa now carries a $10 minimum bet.

Big year for sports wagering tax hikes

While Illinois politicians have been the most active in hiking taxes on the sports betting industry, they are not the only ones.

This year, Maryland Governor Wes Moore proposed doubling the sports betting tax from 15% to 30% in his budget. Lawmakers eventually made the new rate 20% in the final budget.

Ohio Governor Mike DeWine successfully pushed to double his state’s tax rate in 2023, from 10% to 20%. He again proposed doubling the tax this year before lawmakers rejected the move.

New Jersey Governor Phil Murphy this year proposed pushing the state’s rate from 13% to 25%. Lawmakers brought it down to 19.75% before sending it back to Murphy.

Louisiana Governor Jeff Landry signed a bill this year that increases the tax from 15% to 21.5%.