Chicago Task Force Eyes Internet Gaming Tax as Untapped Revenue Stream
Chicago is staring at a fiscal crunch, and one of the city’s own task forces thinks the answer might be hiding in plain sight: online betting. A new report from the Chicago Financial Future Task Force calls out the imbalance between how sports wagering is taxed today and where most of it actually happens. The solution, they argue, is to introduce a per-wager tax on internet betting — a move that could generate millions in new revenue for the city each year.
The 2% Problem
Right now, Chicago collects taxes only on bets placed in physical sportsbooks. The catch is that slice of the market makes up just two percent of the action.
The other 98 percent of wagers happen online, and they slip through untouched. For a city hunting for stable revenue streams, that’s a gaping hole.
The task force frames it bluntly in its report: “Currently, the City taxes sports wagering at physical sports wagering facilities where only 2% of all sport betting occurs. The remaining 98% of sport betting occurs online and remains untaxed.”
What the Tax Could Deliver
The proposal on the table is simple: charge a flat fee for every bet placed online within city limits. Two models are floated — a low-end option at 25 cents per wager and a high-end option at 50 cents. The lower rate could bring in $8.5 million annually, while the higher could nearly double that figure to $17 million.
These estimates assume Chicago accounts for at least 20 percent of all bets placed in Illinois and bakes in a 10 percent leakage rate for bettors who avoid the tax by wagering outside the city.
Even with those caveats, the numbers suggest meaningful gains at a time when City Hall is under pressure to find sustainable funding sources.
Part of a Bigger Package
The gaming tax isn’t being pitched in isolation. It’s one of three new tax ideas listed in the report’s “New Taxes” section, alongside reinstating the long-defunct head tax and launching a Payments in Lieu of Taxes (PILOT) program. Combined, the options could deliver anywhere from $18.7 million to $94.6 million in new annual revenue.
But the internet gaming tax stands out because it’s targeting a sector already booming, and one that most Chicago residents are engaging with digitally rather than on the sportsbook floor. Unlike raising existing rates, this is about capturing activity that’s currently untaxed.
Of course, taxing every online wager comes with practical challenges. Bettors might route around the fee, operators will raise objections, and the legality of imposing a city-level online betting tax could trigger debate in Springfield. But the logic is clear: leaving 98 percent of the market untouched doesn’t square with the city’s budget reality.
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