Chicago Considers New Sports Betting Tax That Could Push Operators Out

City leaders in Chicago are weighing a plan to add a per-wager tax on sports bets placed within city limits, just months after Illinois raised its own rates. Industry insiders warn that another levy could be the tipping point for some sportsbooks operating in the state.

The Chicago City Council will revisit the matter after Labor Day, with early discussions suggesting the city could match — or even surpass — the state’s newly introduced fee. The move comes on top of Cook County’s 2% tax on sports betting revenue, creating the possibility of a triple hit for operators.

Good to know

• Illinois’ tax increase already applies a sliding scale from 20% to 40% on digital sports betting revenue.
• A state fee of up to 50 cents per wager took effect on July 1, adding millions in annual costs for major operators.
• Chicago’s proposed surcharge could mean an additional $10 million per year in expenses for the biggest sportsbooks.

Illinois’ per-wager fee now requires operators to pay 25 cents on each of their first 20 million bets annually, and 50 cents for every wager beyond that. For top players like DraftKings and FanDuel, industry estimates peg the cost of the state’s fee alone at more than $60 million per year.

Adding a Chicago-specific charge would only deepen the strain. For smaller legal wagers, taxes could consume most of the bet before payouts are even calculated. One lobbyist previously told Kansas lawmakers that under lighter tax regimes, sportsbooks make around six cents per $100 wagered. In Chicago, a $1 bet could see as much as 75 cents taken by taxes and fees before the operator sees any return.

Operators Adjust to Stay Afloat

Some sportsbooks have already responded to the state fee by setting minimum bets to protect margins. ESPN Bet just implemented a $1 minimum, Hard Rock Digital raised theirs to $2, and BetMGM went even higher at $2.50. A new city tax could push those minimums up further, making small wagers less appealing or even impossible for casual bettors.

Adam Hoffer, director of excise tax policy at the Tax Foundation, believes the risk is growing:

“At what point do these sports operators say, ‘You’ve made it so we can’t operate here anymore.’ I worry that that is coming sooner than later. I think that this pushes the line of whether or not the companies could be profitable or not.”

Impact on Players and Market Behavior

Hoffer describes the city proposal as a “revenue grab” that would most affect casual, frequent bettors who place small wagers. That’s because a fixed per-wager fee hits lower bets proportionally harder. Some players may decide to move their activity to unregulated offshore sites, which carry no such taxes but lack consumer protections.

Despite these concerns, the technical ability to enforce a city-only tax already exists. Geolocation provider GeoComply confirms that current systems can pinpoint whether a wager is placed inside city limits. “You’re already checking the location of the bettor because these systems are already in place,” said Lindsay Slader, the company’s senior vice president for compliance.

Lobbying Efforts in Full Swing

The Sports Betting Alliance, which represents BetMGM, FanDuel, DraftKings, bet365, and Fanatics Sportsbook, is actively lobbying both in Springfield and in Chicago to prevent another layer of taxation. Industry advocates argue that while regulated sports betting has brought in strong tax revenue since legalization, pushing operators past the point of profitability risks sending that business — and tax revenue — back underground.

Hoffer warns that there’s a fine line between effective taxation and overreach: “It’s a big risk. It could all go away.”

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