Illinois Should Lower Sports Betting Taxes, Says Policy Group

September 25, 2025

Illinois has some of the highest online sports betting taxes in the US – a status the state should reconsider if it wants to continue raking in revenue from losing gamblers.

This is the opinion of the Illinois Policy Institute (IPI), which is sometimes referred to as right-leaning since it supports ideas that are difficult to find in deep blue Illinois, such as lower taxes and less government expenditure.  Through its Illinois Policy journal, the organization warned the state’s high sports wagering taxes risk crimping what’s become an impressive revenue stream.

"People should be free to place a bet, but state government shouldn’t be hoping they lose so it can spend more,” according to the group. “If Springfield wants a competitive, healthy betting market that funds public services without punishing residents, lawmakers should roll back the per-bet fee and keep Illinois’ market attractive to players.”

The per-bet fee comment relates to a July law that imposes a 25-cent tax on an operator's first 20 million recorded bets and a 50-cent tax after that.

Yes, Illinois Has High Sports Betting Taxes

The per-bet tax structure emerged about a year after Illinois approved a progressive sport wagering tax plan that moved much of the expense to the bigger operators — mainly DraftKings and FanDuel.

In other words, the state is not hesitant to increase wagering-related levies or almost any other taxation.  Its sports betting tax rate equates to 50%, tying it with Delaware for fifth-highest in the US.  When focused on significantly populous states, Illinois follows only New York, which taxes sports betting at a rate of 51%.  The next highest well-populated state is Pennsylvania at 36%.

Even Massachusetts and New Jersey – states notorious for having an assortment of high taxes — apply levies of just 20% and 21%, respectively, to online sports betting.  The IPI feels that while sports betting has been a cash cow for Illinois, that revenue could be at risk if the state doesn’t embrace a more favorable tax structure.

“Illinoisans lost $1.12 billion betting on sports in 2024, including $700 million on long-shot, high-payout bets known as parlays that require multiple outcomes. With the new fees in effect, those losses will climb even higher,” adds the think tank. “The risk is bettors will return to unregulated, illegal markets where the state collects nothing and consumers have fewer protections.”

Chicago Could Be Next

Cash-needy Chicago could take a page from the state’s playbook and deploy its own per-bet tax.  In a new report, the Chicago’s Financial Future Task Force said that if the city employs a per-wager fee of 50 cents on internet sports wagers placed within city limits, it’d add another $17 million in annual revenue.

That’s pennies on the dollar relative to the estimated fiscal 2026 deficit of $1.1 billion, but that budget gap implies the city is compelled to explore new revenue sources.