A fulfilled Freedom of Information Act request submitted by InGame to the City of Chicago Department of Finance shows the city collected more than $3.7 million in sports betting tax receipts in January for the first month the levy was enacted.
The 2026 budget passed by the City Council that took effect without Mayor Brandon Johnson’s signature included a 10.25% tax on adjusted gross revenue generated within Chicago. Johnson, though, initially proposed this levy as part of his budget before he lost control of the process to city aldermen over his proposed corporate head tax. The eventual final budget also included legalizing video gaming terminals in the third-largest city in the United States.
Johnson’s proposal was met with fierce opposition by both industry and state lawmakers. The Sports Betting Alliance (SBA) filed a lawsuit on behalf of operators in December looking to declare the tax unconstitutional, and there are currently two bills in Springfield looking to end it via different methods.
What does the tax bill tell us?
The reverse math based on taking the tax receipts collected and the rate implies sportsbooks generated $36.4 million in adjusted gross revenue in Chicago in January. The Department of Finance did not fulfill a second request within the FOIA to provide figures by operator, but it stands to reason FanDuel and DraftKings accounted for the bulk of that amount based on the $137 million in statewide AGR generated for the month.
The new levy again highlights just how large a tax burden both digital titans are carrying in Illinois. The pair already pay the maximum 40% state tax rate having already crossed the $200 million adjusted gross revenue (AGR) threshold for the fiscal year. They also pay the long-standing 2% tax on all revenue generated within Cook County — where Chicago is located.
Thus, FanDuel and DraftKings are paying 52.25% in taxes on all Chicago-based revenue. Their respective effective tax rates are higher still because both are paying the per wager surcharge that took effect at the start of the fiscal year with the budget passed by Illinois Gov. JB Pritzker last May.
The two operators have remitted a combined $61.8 million in wager surcharges to the state through the first seven months of the fiscal year and paying the higher $0.50 per wager levy after crossing the 20 million wager threshold. There is currently legislation in the Illinois House filed by Gaming Committee Chairman and Rep. Daniel Didech to repeal the surcharge at the end of the fiscal year.
Early positive yield for the city
Though tax revenue generated is subject to both operator performance and the inventory of available wagering based on the sports calendar, the $3.7 million collected in January is unquestionably a strong start. That number was boosted by the Chicago Bears playing two playoff games, which likely gave operators a revenue bounce after the Bears were eliminated in the divisional round by the Los Angeles Rams.
Johnson’s budget estimated the 10.25% tax would generate $26 million in 2026, and that figure implied the city generated 40% of revenue within Cook County. Chicago, though, accounted for 54.5% of the $66.8 million in county-based revenue for January.
The only previous sports betting tax the city collected was a 2% levy on AGR generated by DraftKings’ retail sportsbook adjacent to Wrigley Field. But the city collected less than $40,000 in receipts since the venue opened in March 2024 based on the $1.9 million in AGR.
Should the 10.25% tax be in place for the entire calendar year, there is a slim chance sports betting could generate the most gaming revenue of any legal vertical for the city aside from the Illinois Lottery. The 2026 budget projected $44.6 million in revenue from Bally’s casino, but there are concerns the permanent venue in River West will not be ready for its projected fourth-quarter opening.
Bally’s temporary venue at Medinah Temple in nearby River North has historically underperformed with relation to Johnson’s previous budget forecasts. The mayor budgeted $35 million in tax revenue from Bally’s in both 2024 and 2025; Bally’s generated $16.1 million in receipts in 2024 and $15.9 million last year.
The city projects $6.8 million in revenue from video gaming terminals, a figure solely based on licensing fees. It also includes the assumption Bally’s will forego a $4 million annual payment and re-open the Host Community Agreement it signed with the city as a result of City Council legalizing VGTs.
