Publication Date: September 25, 2025, 06:10h.
Updated on: September 25, 2025, 06:10h.
- Illinois ranks fifth in the nation for sports betting taxes
- Illinois Policy advocates for reduced tax rates instead of increases
- Chicago may consider implementing its own sports betting tax hike
Illinois holds one of the highest tax rates for online sports betting in the United States—a stance that may need reassessment if the state intends to maintain its revenue stream from losing bettors.
The Illinois Policy Institute (IPI), which some view as a right-leaning organization due to its advocacy for lower taxes and reduced public spending—principles not often seen in predominantly Democratic Illinois—asserts that the state’s elevated sports betting taxes may jeopardize a growing revenue source.
“Individuals should have the freedom to place bets, but the state shouldn’t rely on their losses to increase spending,” the group stated. “To sustain a vibrant and competitive betting market that benefits public services without burdening taxpayers, lawmakers must reconsider the per-bet fee and ensure Illinois remains an appealing market for players.”
The mention of per-bet fees refers to a policy enacted in July, imposing a tax of 25 cents on an operator’s first 20 million wagers, followed by 50 cents thereafter.
Confirming Illinois’ High Sports Betting Taxes
The per-bet taxation structure was introduced about a year following Illinois’s adoption of a progressive sports betting tax model that predominantly impacts the largest operators, particularly DraftKings and FanDuel.
Essentially, the state does not hesitate to increase wagering-related taxes or almost any other form of taxation. The current sports betting tax rate stands at 50%, making it tied with Delaware for the fifth-highest in the nation. Among states with large populations, Illinois only follows New York, which levies a 51% tax on sports betting, with Pennsylvania trailing at 36%.
Even states like Massachusetts and New Jersey—recognized for their high taxation—impose rates of just 20% and 21% on online sports betting, respectively. The IPI argues that while sports betting has ushered in significant revenue for Illinois, this influx could be jeopardized without a more favorable tax framework.
“Illinois residents incurred losses totaling $1.12 billion on sports bets in 2024, including $700 million on parlay bets known for their long-shot, high-payout nature, which require multiple successful outcomes. With the new fees coming into play, those losses are expected to increase,” the think tank highlights. “The danger lies in bettors reverting to unregulated, illegal markets, depriving the state of tax revenue and leaving consumers with fewer protections.”
Potential Developments in Chicago
Desperate for cash, Chicago may follow the state’s example and implement its own per-bet tax. A recent report from Chicago’s Financial Future Task Force suggested that if the city adopts a 50-cent fee on internet sports bets placed within its borders, it could generate an additional $17 million annually.
This amount is minimal compared to the projected fiscal deficit of $1.1 billion for fiscal 2026, but the financial gap suggests the need for the city to pursue new revenue sources.