Thirty Illinois House Democrats have urged the City Council to spike Mayor Brandon Johnson’s proposal to tax online sports betting for fear that it would invite other municipalities to do the same, drive online sports betting underground and send state revenue on a tailspin.
The City Council’s Finance Committee has already blown a $100 million hole in Mayor Brandon Johnson’s proposed 2026 budget by shooting down the corporate head tax he wants.
If alderpersons kill Johnson’s plan to apply Chicago’s 10.25% amusement tax to online sports bets — as the House Democrats demanded Thursday in a letter to 50 alderpersons — the gap that needs to be filled would get $26 million bigger.
State Rep. Dan Didech (D-Buffalo Grove), chair of the House Gaming Committee, said the revenue the city stands to gain pales by comparison to what the state stands to lose if more than 200 other cities and towns across the state layer their own taxes on internet sports bets onto recent state tax increases.
“If you increase the tax so it becomes cost prohibitive for gamblers, they will seek out overseas sites that… are more dangerous, more predatory, untaxed and unregulated. That’s a direct loss in tax revenue for the state. That impacts our ability to invest in infrastructure,” said Didech, who has a bill pending that would prohibit local taxes on sports betting.
“A lot of these places require you to transfer your money to bitcoin and crypto-currency. Sometimes winners get paid out. Sometimes they don’t. Money is not kept in segregated players’ accounts. It’s a much more predatory environment for players.”
State Rep. Curtis Tarver (D-Chicago), chair of the House Revenue Committee, noted that the state has “already taxed sports betting to the hilt” and struck twice in the last two years — first from a flat 15% to a tiered rate as high as 40%, then by taxing every bet.
If the city decides to “pile on” its own 10.25%, it could “cost them more than it would generate by making things strained when they ask for revenue and additional home-rule authority,” Tarver said. “You’ll start to see a lot of pre-emptive language or attempts to claw back” the city’s home-rule powers.
The letter to City Council members underscores how Johnson has had little or no success in Springfield because of a strained relationship with Gov. JB Pritzker, a late and poorly communicated legislative agenda, and unpopular lobbying team.
It talks about the sports betting tax as a “missed opportunity for collaboration” between Chicago and Springfield, and emblematic of an “ongoing communication gap that must be addressed” for the city and state to forge a more productive relationship.
“Had the city engaged the General Assembly in advance… there may have been a path to shape a more sound and coordinated approach,” the letter states. “Unfortunately, that opportunity was lost. As has too often been the case, the city advanced this proposal without meaningful consultation or early dialogue, leaving legislators — even members who represent the city of Chicago — with no choice but to oppose the measure.”
On Thursday, Tarver said Johnson has had a hard time in Springfield because of his failure to outline a “coherent strategy” and “communicate on the front-end.” The mayor has also chosen “absolutely the wrong person” by designating former Ald. John Arena (45th) as his chief lobbyist in Springfield.
“He seems to alienate everybody he comes into contact with,” Tarver said of Arena. “I’ve never seen somebody who, the more you’re around him, the less you want to be around him.”
Arena could not be reached to respond to Tarver’s remark. The mayor’s press office has no immediate comment on the sports betting letter.
Ald. Matt O’Shea (19th) said he was not aware of the letter. But he called it “another example of this administration’s failure to have a relationship and an open line of communication with Springfield.”
“We don’t have an agenda… There’s 10 examples of how dysfunctional this relationship is. There is no relationship,” O’Shea said.
Ald. Gilbert Villegas (36th) said the city missed an opportunity to claim its share of the state tax on sports betting at the same time that Cook County secured a 2% share.
“As we’re trying to create a better relationship in Springfield, it would behoove the city to collaborate with the General Assembly in order to make sure that the city doesn’t get screwed later on,” Villegas said.