Chicago officials are taking a closer look at online sports betting platforms and their intersection with sweepstakes-style operators, as city leaders explore new ways to regulate and potentially tax digital wagering within city limits.
While online sports betting is already legal across Illinois, including in Chicago, the city itself currently receives no direct tax revenue from the activity. Popular platforms like DraftKings, FanDuel, and BetRivers can be freely accessed by residents, but all revenue taxes are routed through the state. That could soon change.
During recent City Council discussions, policymakers raised the possibility of imposing a local city tax or licensing fee on internet sportsbooks operating within Chicago’s jurisdiction. While no specific rates or enforcement mechanisms have been confirmed yet, the proposal is now under formal review, and a subcommittee hearing is expected in the coming weeks.
Officials are also expressing concern about the blurred lines between regulated sportsbooks and unregulated sweepstakes-style betting platforms, many of which mimic sports betting with virtual currency and prize redemptions. These platforms often operate in a legal gray area—marketing themselves as free-to-play sweepstakes but offering odds-based gameplay that closely mirrors real-money wagering.
The city’s legal team is reportedly analyzing whether these operators can be targeted through local ordinances or licensing rules, especially if they advertise to Chicago-based users or use local infrastructure such as payment processors or affiliate partners.
If successful, the combined approach would allow Chicago to do two things:
- Crack down on unlicensed sweepstakes sportsbooks operating without regulation.
- Capture new revenue from legal operators who currently generate millions in local handle but remit no taxes to the city.
This initiative follows a growing national trend. Several states, including New York, California, and Louisiana, have recently moved to ban or restrict sweepstakes sportsbook platforms that blur the boundaries of legality.
For Chicago, the next steps will be critical. A local tax on internet sports betting could set a precedent for other major U.S. cities — and could pressure both state regulators and national operators to better define where sweepstakes end and gambling begins.
As digital betting continues to evolve, Chicago’s regulatory stance could signal a new phase in how cities assert control over the booming online wagering economy.