Chicago officials weigh lifting video gaming ban, push for bigger share of state revenue

Chicago alderpersons on Monday said the city should consider lifting its longstanding ban on video gaming and imposing a local tax on online sports betting, but only after demanding a greater cut of tax revenue from the state.

City officials and council members said the current tax structure heavily favors the state, leaving Chicago with a minimal return from legal video gaming, reports Chicago Sun Times. According to Ald. William Hall, who chairs the City Council’s Revenue Subcommittee, of an estimated $1.1 billion in statewide video gaming revenue, Illinois receives $955 million, with Chicago and other municipalities splitting just $164 million.

“They would generate a lot of money opening up this market,” said Chicago Chief Financial Officer Jill Jaworski. “The state gets a much larger percentage than we do from a tax framework that is not favorable to us.”

A consultant report commissioned by the city concluded that video gaming would have limited fiscal benefit for Chicago under the current rules. The analysis by Christiansen Capital Advisors projected that if the city doubled its local tax rate, Chicago’s annual share would rise to $38 million in 2027 and $54 million in 2028.

“With the taxing framework that we have to deal with at the state, we’re not seeing that we’re going to make much more money,” Jaworski told the subcommittee. “That doesn’t mean we shouldn’t have them. ... That can be a very strong argument for going to the state to try to get changes…that would make it more favorable to us.”

Budget Committee Chair Jason Ervin expressed frustration over revenue estimates that assume the status quo. “It doesn’t take a rocket scientist to figure out” the current structure is a “loser for Chicago,” he said. “This is not possible. So the question comes down to, how do we find a reasonable ask between the state to make this all work?”

Other alderpersons pushed for regulation and taxation of illegal sweepstakes machines, which are prevalent in gas stations and liquor stores across the city. “They have become a haven for crime,” said Ald. Stephanie Coleman. Ald. Jeanette Taylor added, “I can take you to three different liquor stores ... and show you those machines that have been there for five-plus years that we have not made a dime on.”

Jaworski acknowledged the issue, noting that sweepstakes machines “live in a gray area, and that’s why enforcement is challenging.” She added: “We do need legislation around that.”

Taylor also advocated for taxing online sports betting platforms such as DraftKings. Jaworski confirmed the Johnson administration has already “done the analysis” on imposing such a local tax. “People download them and gamble all the time. We should be able to get money off of them,” Taylor said.

While council members differed on how to move forward, most agreed that reforms in state law were a prerequisite for expanding gaming in Chicago. “That’s why the good Lord invented negotiations,” quipped Ald. Andre Vasquez.