Chicago Stadium Sportsbooks Hit A Stumbling Block As Council Questions ‘Paltry’ Tax Take

Posted on December 8, 2021
Written By on December 8, 2021

Plans for Chicago stadium sportsbooks stalled on Tuesday, as city politicians questioned whether the “paltry” tax revenues were worthwhile.

Chicago mayor Lori Lightfoot predicted last week that the stadium sports betting plan would be approved by the City Council committee in December.

However, aldermen at the council meeting on Tuesday were not so accommodating.

Peanuts for Chicago

They pushed back on the estimated $500,000 annual tax rate that Chicago would raise, labeling it “peanuts.”

“I just think $400,000-to-$500,000-a-year to the city of Chicago is really paltry — even when you add in the licensing fee that these guys are gonna have to pay,” said Budget Committee Chairwoman Pat Dowell, per the Chicago Sun-Times.

“It seems like peanuts for an industry that is growing,”

The tax estimate came from city financial staff, based on 2% tax on $25 million in annual GGR.

Along with the 2% tax to Chicago, operators would also pay 15% tax to the state and 2% to Cook County.

Obstacles for Chicago sportsbooks

Under Illinois sports betting law, sports teams can run retail betting and mobile betting within five blocks of their stadia for a $10 million license fee. However, this cannot happen in Chicago until the City Council passes an ordinance to approve it. 

Aldermen Walter Burnett and Brian Hopkins proposed a measure to do just that earlier this year.

However, the potential proceeds from Chicago sports betting pale in comparison to the 40% tax from a forthcoming Chicago casino project.

Casino cannibalization?

Rush Street Gaming owner Neil Bluhm has been pounding the pavements, warning that stadium sportsbooks would cannibalize casino revenue.

A lobbyist for Bluhm told the council on Tuesday that every $1 from sportsbook taxes would cost $4 from the casino.

“The city will lose $10 to $12 million per year,” said lobbyist John Dunn, per the Chicago Tribune

“Focus on what’s best for Chicago taxpayers. This ordinance is a Big W for sports team owners, but an even bigger loss for Chicago casino tax revenue.

Eating their own lunch?

Lightfoot has said the city did a study that disproved the cannibalization argument.

“There’s been some dire warnings issued by some who … already use sportsbooks at their own casinos and who are trying to kill sportsbooks here in Chicago,” Lightfoot said last week.

 “They have not put forth any convincing evidence that somehow it’s going to cannibalize a casino here in Chicago. … We’ve seen zero indication that that’s the case.”

However, no councilors at the meeting on Tuesday had actually seen the research.

As a result, the meeting was adjourned until members had time to read the study.

Take a step back

Alderman Greg Mitchell agreed the city was rushing and needed to take more time to evaluate the sports betting situation.

“We’re moving entirely too fast and the upside is very minimal. $400,000 to $500,000? Hell, we burned that up this morning on lights alone in Chicago. I mean — that’s nothing for us,” Mitchell said.

He added: “We really need to take a step back. … There are too many unknowns. … The risk-reward is just not there. It’s too little.”

Options for Chicago sportsbooks

DraftKings is one operator looking to take advantage of stadium sportsbooks. The operator has a deal in place with the Chicago Cubs to open a retail book at Wrigley Field.

Other potential venues for stadium sportsbooks include:

  • Guaranteed Rate Field (White Sox)
  • Soldier Field (Bears)
  • The United Center (Bulls, Blackhawks)
  • Wintrust Arena (Sky)
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Brad Allen

Brad has been covering the online gambling industry in Europe and the US for more than four years, most recently as the news editor at EGR Global.

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