Chicago Eyes Gambling ‘Cash Cow,’ But State Tax Deal Blocks Millions in Revenue

A “Loser” Deal for Chicago

The biggest roadblock is the state’s tax split on video gaming. According to city officials, the current structure is “heavily tilted in the state’s favor,” with Illinois receiving five to six times more revenue than Chicago and other municipalities.

Out of $1.1 billion in total video gaming revenue, the state collects $955 million, leaving just $164 million for local governments.

This structure makes lifting Chicago’s ban on video gaming terminals a non-starter for many. “It doesn’t take a rocket scientist to figure out that the current tax structure is a ‘loser for Chicago,'” said Budget Committee Chairman Ald. Jason Ervin.

Under the current deal, Chicago would earn just over $3 million in 2026. Chicago’s Chief Financial Officer, Jill Jaworski, agreed the tax split is “not favorable to us,” but said it shouldn’t stop the conversation. “That can be a very strong argument for going to the state to try to get changes,” she said.

A Push for Renegotiation

With a potential “cash cow” on the line, city leaders are ready to negotiate. “That’s why the good Lord invented negotiations,” said Ald. Andre Vasquez. The sentiment is that while the current numbers don’t work, a better deal is possible if the city applies pressure.

“You’ve got to figure out a way to make this work because you’ve got businesses in the city that are looking for the revenue,” Ervin said. “You’ve got a City Council that’s looking for additional revenue. We really want to find solutions here.” A city consultant noted that doubling Chicago’s share of the video gaming tax could boost its take to $38 million by 2027.

Beyond video gaming, City Council members are also setting their sights on online sports betting. The mayor’s administration has already analyzed the possibility of imposing a local tax on major platforms like DraftKings.

The argument is simple: the activity is already happening within city limits, and Chicago should get a piece of the action. Ald. Jeanette Taylor put it plainly: “People download them and gamble all the time. We should be able to get money off of them.”

Cracking Down on Illegal Machines

A third, more problematic revenue source is also on the table: the thousands of illegal “sweepstakes” machines operating in gas stations and liquor stores. These machines currently generate no income for the city and are often linked to crime.

“We’re getting nothing for sweepstakes. They’re at gas stations. They’re at liquor stores. They have become a haven for crime,” said Black Caucus Chair Ald. Stephanie Coleman.

These machines are particularly common in Chicago’s Black communities. CFO Jill Jaworski acknowledged that these machines “live in a gray area, and that’s why enforcement is challenging,” agreeing that new legislation is needed to license, regulate, and tax them.