State Lawmakers Pressure Chicago City Council to Reject Sports Betting Tax Hike

The group sent a letter to all 50 aldermen urging them to reject Mayor Brandon Johnson’s plan to apply a 10.25% city amusement tax to online betting platforms. This intervention highlights a growing rift between state legislators and city administration regarding fiscal strategy and the management of the gaming sector.

Risks of Market Fragmentation

The coalition of lawmakers argues that the proposed tax would trigger negative consequences extending well beyond city limits.

Their primary concern is that a Chicago-specific tax would set a precedent, encouraging over 200 other municipalities across Illinois to implement similar levies.

State Representative Dan Didech, who chairs the House Gaming Committee, warned that such a fractured tax structure would make legal betting cost-prohibitive for the average consumer.

According to Didech, pushing the cost of participation too high inevitably drives players toward the black market. If the legal environment becomes too expensive, bettors will migrate to offshore, unregulated sites that pay no taxes to the state.

Didech noted that the revenue Chicago hopes to gain is negligible compared to the massive losses the state would incur if the legal market contracts. The legislators argue that this creates a more predatory environment for players while draining the state’s tax base.

Fiscal Saturation and Budgetary Gaps

State Representative Curtis Tarver, chair of the House Revenue Committee, emphasized that the industry is already carrying a heavy financial load.

He pointed out that the state recently replaced its flat 15% tax rate with a tiered system that charges operators up to 40%. Tarver argued that the state has “already taxed sports betting to the hilt.”

Adding a municipal layer on top of these recent state-level hikes would place excessive strain on operators like DraftKings and FanDuel.

However, rejecting the tax presents immediate challenges for Mayor Johnson’s financial planning. The proposed tax on digital wagering was projected to generate $26 million for the 2026 budget.

If the City Council heeds the state lawmakers’ advice and blocks the measure, the city’s budget deficit will widen by that amount. This comes shortly after the City Council’s Finance Committee rejected a separate corporate head tax proposal, which already created a $100 million gap in the mayor’s revenue projections.

Breakdown in Communication

The dispute exposes a deeper disconnect between Chicago City Hall and the General Assembly in Springfield. The letter from the House Democrats criticizes the Johnson administration for acting “without meaningful consultation or early dialogue.”

Lawmakers claim this lack of communication left them no choice but to publicly oppose the measure. Representative Tarver characterized the proposal as a lost opportunity for collaboration and criticized the administration for lacking a coherent strategy.

The friction has escalated to the point where state officials are questioning the city’s autonomy. Tarver warned that if Chicago attempts to hoard tax revenue through independent measures, the state might consider “clawing back” the city’s home-rule powers.

Alderman Matt O’Shea echoed these sentiments, describing the situation as another example of the administration’s inability to maintain functional relationships with state leadership. The standoff leaves the City Council to decide between plugging a $26 million hole or preserving the stability of the statewide gaming market.