Chicago's New Sports Betting Tax & Licensing Law Unveiled

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Transcript

00:00Let's start off here. What's going on in Chicago? I mean, there's been some stories over the last

00:05few weeks that are seemingly pointing toward a maybe potential shutdown of sports betting. Of

00:10course, money always involved here, licensing involved as well. But money is the real story

00:15here. What's the discourse here with the operators and the state of Illinois? What's going on?

00:24Yeah, you had several major sports books represented by this group called the Sports

00:28Betting Alliance in Chicago, which is FanDuel, DraftKings, BetMGM, Bet365, and Fanatics as

00:36well, had threatened to leave the city of Chicago if its new budget went into effect on January

00:441st, which was yesterday. And they have not left the state because the budget, what it

00:50did was created a new licensing requirement for these sports books. It would require that

00:55they wouldn't only be licensed by the state, which they already have been for several years.

00:59It would require that they now are licensed by Chicago. And there was nothing else in the budget

01:04which gave any language around when those licenses would be issued, what would even go into issuing

01:10those licenses. So the sports books responded with a lawsuit saying that we'll have to leave

01:15the state if we are unlicensed in Chicago when this new requirement takes effect, because that

01:20could impact our licenses in other jurisdictions. We've seen in the past, if you are deemed a bad

01:26actor in one state or not complying with rules in a certain other jurisdiction, sometimes other

01:30states will take that into account and can penalize sports books for that or even not allow them to be

01:36in their states. But those licenses were issued yesterday without much fanfare. It seemed like they

01:41were pretty much just given as soon as the budget passed. And also in the new budget, the real thing

01:47is that it creates a new 10.25% tax rate on these sports books. That's what really what they wanted

01:53to stop with the lawsuit, which is still ongoing, because they don't want to be taxed on top of

01:59already the 20 to 40% rate that they have to pay in the state, as well as the 50 cent per bet fee

02:05that was added last year. So now they have to pay upwards of 40% tax rate, plus the per bet fee,

02:11and now plus the 10.25% rate in Chicago. It's the first city to pass its own sports betting tax

02:18on top of it. So sports books are going to in the meantime, be paying that tax and staying in the

02:23state. We'll have to see if anything else happens as a result. This past year, when that new Illinois

02:30tax was put in place, they passed that extra tax down to the customer. Sports books like FanDuel and

02:36DraftKings now have a 50 cent fee added on to bets placed in the states to effectively kind of move

02:42that money down to the customer. So we'll see if they try anything similar with Chicago. Now what

02:47they're kind of weighing is a bill in the legislature, which would prevent the city from

02:51doing this extra tax on top of the state tax. Illinois lawmakers have been very vocal against

02:57Chicago kind of acting on its own, adding its new tax. There's also a bill that would reduce the

03:02amount of revenue that Chicago can get from the state sports betting tax rate as a result. So

03:07a big shakeup in Chicago for the meantime, these sports books are going to keep operating. And if

03:12they're successful, if Chicago successful keeping this tax, you know, you have to think about then

03:17what happens with other states and other cities that always want to capture more tax revenue if

03:21they can. We'll see what happens with Chicago be watching it all 2026. It'll be one of the few

03:26non prediction market related topics that really will have some attention this year.