Illinois Lawmakers Move to Block Chicago’s Sports Betting Tax Grab

In response, lawmakers in both chambers of the Illinois legislature have introduced competing bills aimed at preempting or penalizing such local taxes, thereby complicating Chicago’s budget strategy. This legislative push follows mounting industry opposition and litigation over the constitutionality of Chicago’s tax plan.

Two New Senate Bills

On January 13, Senator Patrick Joyce introduced two new bills. Senate Bill 2800 (SB 2800) would amend the Sports Wagering Act to give central authority over sports betting to state authorities. This would strip cities and counties of their power to impose fees or taxes on the activity.

The bill relies on provisions in the Illinois Constitution to deny and limit home-rule authority over sports betting. The law would take effect immediately upon approval.

The other proposal from Joyce, titled Senate Bill 2760 (SB 2760), would amend the state Revenue Sharing Act to penalize any local authority that imposes surcharges or fees on sports betting. Any municipality that attempts to do so will have the total amount collected through the charge deducted from its Local Government Distributive Fund.

Therefore, the difference between the two bills is that one creates financial consequences for any municipality attempting to impose a betting charge. At the same time, the other would categorically eliminate that authority.

Both bills were referred to the Senate Assignment Committee, which will determine which standing committee will review the bills next.

House Bill Adds Bipartisan Weight to Pushback

Parallel to the Senate proposals, the House has filed its own measure — House Bill 4171. The proposal would bar municipalities from taxing, regulating, or licensing sports wagering, further solidifying statewide authority and preempting local levies.

HB 4171 would amend the Sports Wagering Act to deny home-rule units the power to regulate, license, or tax sports wagering, effective immediately upon passage.

Notably, HB 4171 has bipartisan support and has gathered 28 co-sponsors.

Tax Burden and Declining Handle Add Urgency

As a response to the state per-wager tax, all sports betting operators imposed either minimum bet requirements or surcharges. New data from the Illinois Gaming Board indicate that the changes are having a negative impact on the market.

In September and October, the number of bets decreased by 15% and 16% year-over-year, respectively. For those two months, the state saw 11 million fewer bets.

In a statement, the Sports Betting Alliance (SBA), which represents the interests of US online gambling operators, said that the decline is “alarming evidence that tax hikes are creating a lose-lose situation for fans.”

The SBA has already taken legal action in response to Chicago’s tax plan. It has argued that the city lacks constitutional authority to impose its own levy. SBA’s lawsuit initially challenged both the new tax and proposed licensing requirements, with operators threatening to withdraw from the Chicago market entirely if the tax were to take effect.

The city removed the licensing requirement, which resulted in the SBA withdrawing its legal action regarding licensing. Its complaint relating to the constitutionality of the proposed tax remains active.

Operators and bettors say they are being squeezed from every direction. Aside from the per-wager levy and potential Chicago tax, lawmakers raised the tax on sports betting revenue in 2024. It transitioned from a flat 15% to a tiered system, ranging from 20% to 40% depending on revenue brackets.

As a result of the higher taxes and declining wageringvolume, BetRivers recently raised its minimum bet requirement from $1 to $5.

VGT Debate Reflects Broader Fiscal Strain

Gambling legislation has dominated the headlines in Chicago over the past few weeks. Another topic in this area is the legalization of video gaming terminals (VGTs) as part of the 2026 budget.

While the City Council approved the measure in late December, officials are now renegotiating it. Mayor Brandon Johnson and some aldermen believe the budget was rushed to prevent a government shutdown. The administration believes that the plan is “suboptimal” in its current form.

Some sticking points include the lack of vendor diversity, an unfavorable revenue split with the state, and insufficient control at the ward level to dictate where machines can operate. There has also been little input from Bally’s Casino and various labor groups.

The current proposal is that the city would get 5% of VGT tax revenue, compared to 30% for the state. The city already gets 20% from slot machines at the temporary casino in Medinah Temple.

Chicago also faces the loss of roughly $74 million annually from taxes and annual payments from Bally’s, which claims its business would be severely affected. The operator, which is building the city’s first casino, also claims that up to 1,050 jobs are at risk.

Supporters argue that VGTs would provide an essential lifeline for small restaurants and bars, which are battling rising costs. Estimates suggest that the city is missing on tens of millions of dollars in potential revenue annually. Those who oppose the idea believe addiction levels will rise and locals will be hurt economically.

City lawmakers have a lot on their plates now to deal with, between the attempts to stop the citywide betting tax and efforts to include VGTs. With competing bills, ongoing litigation, and mounting pressure on city finances, the path forward is far from settled.