As well as regulating sports wagering, the new legislation will bring a new casino to Chicago, a city with over 2.7 million people.
However, it also includes a number of controversial elements, such as a bad-actor clause to keep the likes of DraftKings and FanDuel out of the market for at least 18 months.
American Gaming Association CEO Bill Miller has responded by emphasising the "critical" nature of protecting consumers.
He said: "Today, Illinois became the 17th US jurisdiction to legalise sports betting, joining a growing number of states that have taken action since the Supreme Court deemed PASPA unconstitutional last year.
"As the state rolls out its sports betting framework, it’s critical Illinois sports teams and other newcomers to the gaming business follow the lead of the state’s licensed gaming operators in advancing responsible gaming practices to ensure protections for consumers, bets and game integrity."
