Chicago 2% Sports Betting Tax Plan Derailed

If Mayor Lori Lightfoot has anything to say about it, it may soon cost a bit more for sportsbooks to operate in Chicago. A new tax is now on the table as a city council committee prepares to vote on a retail sportsbook ordinance amendment.

However, the ordinance was upended when License Committee Chairman Emma Mitts called an end to the contentious meeting over a topic that has pitted team owners against casino developers.

The ordinance would impose an additional 2% tax on Illinois sports betting gross revenues, bringing the total tax for the industry in Chicago to 19%. The resulting tax rate would be higher than the 17% for sportsbooks in Cook County and 15% in the remaining areas of Illinois.

In 2019, lawmakers in the state-approved retail sportsbooks at professional sports facilities in Chicago. This included Wrigley Field, United Center, Guaranteed Rate Field, and Soldier Field. While the sports teams are open to offering sports betting, other gaming stakeholders are not happy with the idea. Casino Magnate Neil Bluhm continues to be strongly opposed to the idea, fearing that land-based casinos will lose revenues because of the stadium operations.

Bringing Sports Betting Revenue to Chicago

According to Chicago Mayor Lori Lightfoot, the tax change ensures the city receives its fair share of revenues. The mayor pointed out the percentage matches the county tax and that Chicago needs to benefit from the new services offered via local sports teams. Lightfoot also dismisses Bluhm’s claim that casinos will lose money due to sports betting via stadiums.

The change to the sports betting tax in Chicago seems to be an effort to make Bluhm and city council members happy. Bluhm’s Rush Street Gaming already operates Rivers Casino in Des Plaines and is hoping to be selected for a casino license in Chicago. He has been vocal in the past about how sports stadiums should not provide betting services and is against this new tax.

Bluhm feels that local casinos will pay the price if stadiums begin offering sports betting. According to studies that Bluhm has seen, he says that casinos could lose $11-$12 million annually due to loss of visitors. He calls the 2% tax ‘small potatoes’, stating the amount will be around $1 million annually.

The casino magnate pointed out that people will now visit Wrigley Field or other stadiums to bet, while a new Chicago casino will take several years to construct. Players will already be accustomed to wagering at stadiums and will be less likely to visit local casinos. Bluhm pointed out further that as sports bettors stop coming to casinos, there is a loss in casino revenues alongside sports betting earnings:

“For every dollar of sports betting you’re losing, you lose about $3 or $4 of casino revenue…While they’re there, they walk around and play slot machines. They play roulette. They play blackjack. That’s big money for both the city and state.”

The tax rate seems to be one reason why operators were not open to applying for the casino license in Chicago. When asked if Rush Street Gaming would back out of the licensing process if the revised ordinance passes, Bluhm stated that the decision has yet to be made.

For alderpersons of the city, many were concerned about Chicago’s benefit from sports betting. The additional tax is seemingly a way to get more council members on board with the idea so operations can eventually begin at stadiums.

Existing Amusement Taxes Highlight An Opposing View

While Bluhm does not want to see the tax added due to the already high to operate a new Chicago casino, there is another opposing view to consider. Attorney Mara Georges currently represents United Center and Wrigley Field Holdings. She pointed out that the amusement taxes are already so high in the state that sports fans may opt to wager in the suburbs instead of doing so at the city stadiums.

Georges called the amusement taxes among the highest in the United States and, are something that anyone visiting a stadium will have to pay. With an additional tax on operations, Georges says it creates an uneven playing field when comparing city and suburban services.

The attorney pointed out further that the higher tax will result in reduced revenue. Georges says that examples can be seen across the country when sportsbooks have higher taxes, they generate lower revenue.