Chicago Considers Major Sports Betting Tax Increase in $16.6 Billion Budget

Chicago has a municipal budget of $16.6 billion, some of which gets the attention of the sports betting world.

THE proposal it would revolutionize the way sport bets are taxed within the city limits. Chicago is considering significantly increasing the tax on revenue generated from sports bets placed in the city. This potential increase has already sparked interest and concern among betting operators and industry groups who are closely watching the impact it could have on business in the Windy City.

The ordinance states: “A tax is hereby imposed on each primary sports licensee operating in the City. The rate of the tax shall be 10.25% of the adjusted gross sports betting receipts from sports wagers placed in the City. ” The tax would apply both to wagers placed at approved physical locations and to wagers made “over the Internet or via a mobile application” when verified to have been placed in Chicago.

Chicago Mayor remains tight-lipped on sports betting tax

Mayor Brandon Johnsona Democrat, said he would not sign or veto the budget, meaning it would go into effect without his formal approval. City officials say the sports betting tax increase is expected to generate new revenue, with the administration estimating it would generate at least $26 million annually.

If the measure moves forward, the occupancy tax would be in addition to existing state and local taxes. According to city estimates, this would bring the total tax rate on sports betting revenue generated in Chicago to 32.25%.

Industrial groups are already sounding the alarm. Sports betting representatives warn that a higher tax rate could make Chicago a more difficult place to do business, which could lead some operators to downsize or walk away altogether. They also argue that this could instead encourage punters to turn to unregulated or illegal betting options.

In a letter, the Sports Betting Alliance warns that “the proposed budget and revenue ordinance would impose a licensing requirement on the city beginning January 1, 2026, but the city does not currently have a licensing section that contemplates online sports betting operators.” The alliance argues that without “defined terms, enforcement standards, required documentation, and administrative procedures,” operators would have “no meaningful means of complying with the order on its effective date.”

The group is urging the city to delay implementation for at least 180 days, warning that a temporary shutdown of legal online sports betting in Chicago could undermine the city’s revenue goals and “drive consumers to online platforms that circumvent laws that ensure consumer protections, age verification, and responsible gaming protections.”

Chicago’s proposed sports betting tax is fiscal smoke and mirrors that risks undermining a legal market that protects bettors — and could leave the city with nothing to show for it. https://t.co/CGU0aXOpU1

– Sports Betting Alliance (@SBAllianceUS) December 16, 2025

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The sports betting provision is just one of several tax and fee changes incorporated into the budget ordinance, which spans dozens of chapters of municipal code. City council members are expected to weigh the potential revenue increase against concerns about how the change could affect the legal sports betting market in the nation’s third-largest city.

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