It's possible that Illinois lawmakers have finally seen a tax rise they dislike. House Bill 4171 (HB 4171), which would prohibit the state's home rule communities from enacting their own sports betting regulations, including taxation, was advanced by the Illinois House Gaming Committee on Wednesday.
In reaction to Chicago Mayor Brandon Johnson's (D) proposed sports betting tax of 10.25% on operator revenue collected in the Windy City, HB 4171 was first proposed by Rep. Daniel Didech (D), the chairman of the gaming committee. If Johnson's idea is implemented, Chicago-based sports betting businesses would see their rates increase to almost one-third of total revenue.
This is due to the fact that Illinois increased the tax on sports betting in 2025 and 2024. A new fee of 25 cents per wager was imposed by the state last year on an operator's first 20 million booked bets. After that, the rate doubled to 50 cents each bet. Illinois switched to a progressive tax structure the year before, where the biggest businesses by market share pay higher taxes than their smaller competitors.
Didech Recognizes Previous Tax Increases
Didech acknowledged the state's previously reported tax increases in a November letter to Chicago aldermen over the city's sports betting tax ploy.
"The Illinois General Assembly has already increased the state’s sports-betting tax twice in consecutive years—first from a flat 15 percent to a tiered rate as high as 40 percent, and then by adding a per-wager assessment,” he wrote. “Illinois now has one of the highest sports-betting tax burdens in the nation. Certainly, this was a tough vote to ensure that the state had the necessary revenues it needs to serve all those who live within our state. Therefore, we recognize the importance of finding revenue to provide services.”
Additionally, he made the point that permitting home rule cities to establish their own tax regulations for state-regulated businesses could create "dangerous precedent" and weaken the consistency that state-level legislation seeks.
“The ripple effect could extend far beyond gaming,” wrote the lawmaker. “These types of policies could open the door for a patchwork of local taxes in other state-controlled policy areas, making enforcement and compliance nearly impossible.”
The Sports Betting Alliance claims that higher taxes lower wagers
Johnson's tax plan is being contested in court by the industry trade group Sports Betting Alliance (SBA), which also seems to be in favor of the Didech law.
According to the trade organization, the aforementioned per bet fee caused a decrease in the quantity of wagers made in Illinois through regulated channels between September and November 2025. Data, however, shows that the handle hasn't deteriorated materially.
“The data is a warning sign that Illinois’ patchwork of regulations has direct consequences to the state’s revenues as well as the public policy goals of responsible gaming,” the SBA said in a statement. “In the face of high taxes, players are migrating to illegal betting sites and bookies that are cheaper to play, operating without any regulation or consumer protections in place, and bringing in zero tax revenue to the state.”