Chicago 2026 Budget to Move Forward, Includes Elevated Sports Betting Tax Rate
By Robert Linnehan in Sports Betting News
Published:
- Chicago Mayor Brandon Johnson has said he will neither sign nor deny the city’s 2026 budget
- The budget will go into effect on Jan. 1, 2026, which includes an elevated sports betting tax
- Sports betting operators have warned of a potential Jan. 1 shutdown if certain licensing requirements go into effect
Chicago’s sports betting landscape may become more muddled in the new year, as the city’s proposed 2026 budget will not be vetoed and go into effect on Jan. 1, 2026.
The city’s $16.6 billion budget will include a new a 10.25% tax on online sports betting gross gaming revenues for all licensed operators. This is in addition to the already in place Illinois sports betting tax rates of 20% to 40% based on adjusted gross revenues, plus a fee on every bet placed with an operator.
The budget also includes new licensing requirements, which operators have warned may cause a shutdown moving forward.
New Chicago Sports Betting Challenges in 2026
Mayor Brandon Johnson today reported he will neither veto or sign the city council’s $16.6 billion budget into law, which means the budget will go into effect on Jan. 1, 2026.
By his estimates, the city will bring in an additional $26.2 million per year through the new sports betting tax.
Johnson hopes to close a near $1.15 billion deficit in 2026.
In addition to the new tax rate, the city’s budget also calls for a new licensing requirement that have sports betting operators scratching their heads.
According to an Sports Betting Alliance (SBA) letter sent to Mayor Johnson, Chicago’s proposed budget requires online sports betting operators to have a “City license” by Jan. 1, 2026, to do business, but has not yet provided the details on what is required to procure a license.
Chicago’s new budget calls for each operator to also hold a separate city sports betting license. The problem? Illinois sports betting operators know nothing about them or how to acquire them. There is no licensing process in place, the SBA notes, and even if there was it would be impossible for operators to apply for, and procure, one of the licenses by Jan. 1, 2026.
Without one of these licenses, operators will have to go dark in the city during one of the busiest periods of the sports betting season, which includes the start of the Chicago Bears much-anticipated playoff run.
The Sports Betting Alliance represents the interest of bet365, BetMGM, DraftKings, Fanatics Sportsbook, and FanDuel.
Urging Chicago to Delay New Infrastructure
The Sports Betting Alliance today decried the new budget, which the alliance said includes a “new, unprecedented municipal tax on sports wagering that follows two separate additional state taxes implemented on legal operators in as many years.”
“The new Chicago tax on sports wagering will drive more sports fans to illegal, predatory websites and bookies that are thriving online without any oversight or consumer protections, while avoiding tax obligations entirely,” the Sports Betting Alliance said in a statement. “Further penalizing players in the City of Chicago pushes more sports fans to unregulated, illegal alternatives and has serious implications for the sustainability of the legal market.”
Additionally, the alliance urged the city to delay the new budget’s sports betting licensing infrastructure.
“We urge city leaders to delay the new online sports betting license infrastructure given the extremely truncated timeline caused by the budget process,” the Sports Betting Alliance said. “The new licensing process creates regulatory hurdles that could significantly constrain sportsbook operations in Chicago and may force companies to explore all legal options.”
Leave Taxation to State
Not all Illinois lawmakers are on board with Chicago’s plan. In October, Rep. Daniel Didech (D-59) introduced HB 4171, a bill to prohibit anyone but state legislators the power to regulate, license, or tax sports betting in Illinois.
The proposed legislation came in direct response to Chicago’s new sports betting tax.
Didech’s bill aims to affirm that regulation of the Illinois sports betting industry remains the sole responsibility of the state. Didech is the Chair of the House Gaming Committee.
“When the legislature legalized sports betting in 2019, it was never our intent to allow local governments to create their own rules for this industry,” Didech said. “Chicago’s proposal will hurt consumers, drive vulnerable people to predatory illegal markets, and reduce state tax revenue. The city should work collaboratively with the state to ensure sound, informed policy decisions are made on this issue.”
His bill is co-sponsored by Reps. Curtis J. Tarver II (D-25), Angelica Guerrero-Cuellar (D-22), Edgar González, Jr. (D-23), and Michael J. Kelly (D-15). The state’s legislative session concluded earlier this year and Didech’s bill will not be able to be heard until the 2026 session opens in January.
This is an ongoing story and will be updated as new information comes in.
Regulatory Writer and Editor
Robert Linnehan covers all regulatory developments in online gambling and sports betting. He specializes in U.S. sports betting news along with casino regulation news as one of the most trusted sources in the country.
