January 28, 2022
On December 15, 2021, the Chicago City Council approved an ordinance (SO2021-3243) to regulate sports wagering in the City. The new legislation lifts a previous City ban on sports betting and allows for a 2% tax on gross sports betting revenues. It also allows for the opening of sports betting locations (also known as “sportsbooks”) in and around five of the City’s sports stadiums, among other locations.
A landmark 2018 ruling by the United States Supreme Court struck down a federal law prohibiting commercial sports betting in most states and opened the door to individual states legalizing sports gambling. The State of Illinois subsequently authorized sports wagering through the 2019 Sports Wagering Act. In addition to putting the regulation and rulemaking for sports gambling under the control of the Illinois Gaming Board and setting out what kinds of sports can be bet upon and where, the Act provides for taxes on gaming receipts and licensing and other fees. The State tax rate is 15% of adjusted gross sports wagering receipts. The State also imposed a 2% additional tax on adjusted gross receipts from sports betting in Cook County to “enhance the county’s criminal justice system.”
Several forms of gambling allowed elsewhere in Illinois continue to be prohibited in the City of Chicago, such as video gambling. Therefore, the City’s sports wagering ordinance provides for an exception allowing for sports gambling conducted by licensed operators in specific locations, such as casinos and within and around sports facilities. The City is still in the process of reviewing bids from potential casino operators as allowed under the State of Illinois’ 2019 gaming expansion legislation. There is not currently a casino in operation within City limits. The sports gaming ordinance also provides for taxation and licensing fees. There is a 2% tax on adjusted gross sports wagering receipts from wagers placed within the City at licensed locations. Therefore, adding up the State, County and now City tax, the aggregate sports wagering tax rate is 19% within Chicago city limits. The City of Chicago has projected that the tax will generate $400,000-$500,000 annually from an estimated $25 million in annual revenues for sports betting in the City.
Prior to Council approval, the legislation, which had been introduced the previous summer, was under review by a Joint Committee of Zoning, Landmarks and Building Standards and License and Consumer Protection. After months of discussion, the ordinance was eventually revised in several areas, adding the tax and diversity goals in a substitute ordinance, which passed Committee with a 19-7 vote.
The substitute ordinance ultimately passed in the City Council with a 39-9 vote.
The Civic Federation will continue to monitor the legislation surrounding sports wagering in the City of Chicago and will communicate updates as they become available.
Related Links:
Fiscal Impact Overview – Sports Betting Ordinance
Illinois Sports Wagering Act (230 ILCS 45)