Chicago’s Financial Future Task Force, established by Mayor Brandon Johnson, has proposed a new tax targeting each online sports bet placed within the city’s limits. This initiative, aimed at addressing a looming $1.1 billion budget deficit projected for 2026, could significantly impact both the city’s finances and its betting industry. The task force estimates that charging $0.25 per wager could generate approximately $8.5 million annually, while a $0.50 charge might bring in around $17 million. They emphasize that although Chicago currently taxes physical sportsbooks, these revenues are negligible due to the overwhelming dominance of online betting, which accounts for 98% of all wagers.
This proposal follows similar moves at the state level. In July, Illinois introduced its own per-bet tax, requiring operators to pay $0.25 on the first 20 million bets and $0.50 on any wagers beyond that. However, the Sports Betting Alliance (SBA), representing major operators like FanDuel, DraftKings, BetMGM, Fanatics, and bet365, argues that implementing an additional city-level tax would effectively double the tax rate for bets placed in Chicago. This could result in a scenario where a $1 wager incurs $1 in taxes, a drastic increase that could have significant repercussions for both bettors and betting companies.
Industry executives have expressed concerns that such a measure could deter smaller bettors. In response to the state tax increase, some operators in Illinois have already raised their minimum bet limits. The SBA warns that further tax hikes could drive players towards offshore or unregulated sportsbooks, which lack consumer protections and do not contribute tax revenue to the local economy.
Despite the backlash from both players and industry stakeholders, the potential revenue from the proposed tax is tempting for city officials. In July, Illinois collected an additional $5.2 million through its newly instituted per-bet tax, demonstrating the financial benefits of such measures. As Chicago grapples with its substantial budget shortfall, the task force has suggested several revenue-generating strategies, including reinstating a head tax on employers and expanding local services, alongside the betting tax proposal.
However, the proposal has sparked significant dissatisfaction among bettors. The SBA reports that over 100,000 complaints have been lodged by Illinois residents with their political representatives, criticizing the state’s per-bet tax since its introduction. Social media platforms also reflect widespread discontent among casual bettors, who argue that the fees are disproportionate to their wager amounts.
The city faces a complex decision. While the potential financial gains are clear, the negative repercussions for the betting industry and bettors cannot be ignored. Smaller betting companies, in particular, might struggle to absorb the increased financial burden, potentially leading to reduced market diversity. On the other hand, the city’s pressing financial needs make the allure of additional revenue difficult to dismiss.
A second viewpoint arises from considering the broader economic implications. Some analysts suggest that instead of implementing additional taxes, the city could focus on expanding the betting market and increasing competition among operators. This approach could potentially boost tax revenues without imposing additional costs on consumers. However, others argue that this might not generate sufficient funds quickly enough to address the impending deficit.
As the debate continues, the fate of the proposed tax remains uncertain. The City Council has yet to make a decision, and Chicago’s gambling community is keenly awaiting the outcome. In the meantime, Chicagoans are already feeling the pinch of increased costs due to the state-imposed tax, and many are bracing themselves for the possibility of further financial strain if the city-level tax is approved.
Ultimately, the proposed online sports betting tax presents a challenging dilemma. It highlights the tension between the need for fiscal sustainability and the potential impact on a thriving industry. As policymakers deliberate, they must carefully weigh the long-term economic and social consequences of their decision, striving to balance the city’s financial health with the vitality of its betting market.
Garry Sputnim is a seasoned journalist and storyteller with over a decade of experience in the trenches of global news. With a keen eye for uncovering stories that resonate, Alex has reported from over 30 countries, bringing light to untold narratives and the human faces behind the headlines. Specializing in investigative journalism, Garry has a knack for technology and social justice issues, weaving compelling narratives that bridge tech and humanity. Outside the newsroom, Garry is an avid rock climber and podcast host, exploring stories of resilience and innovation.
