New Illinois Budget Hikes Taxes on Online Betting and Vaping

Illinois lawmakers ed a $55.2 billion budget just before their spring session deadline, introducing new revenue measures including higher taxes on tobacco, vaping products, and notably, online sports betting. The tax hikes are designed to help close an expected budget gap and bolster the state’s financial position without raising income or sales taxes.

The budget, which Gov. JB Pritzker called his “seventh consecutive balanced budget,” closes the books with over $1 billion in additional taxes and adjustments. Among these is a newly approved tiered tax on online sportsbooks – 25 cents per wager for the first 20,000 bets and 50 cents for each wager thereafter—expected to generate around $36 million in revenue.

Online Gambling Tax Targets Sportsbooks

The move to tax online betting platforms aligns with broader Democratic efforts to identify new revenue streams without increasing the burden on individual income tax payers. This decision arrives as sports betting continues to grow in popularity across Illinois and the nation.

The tax was part of a broader revenue package that also increased the wholesale tax on tobacco products to 45% and brought e-cigarettes and nicotine pouches under that same umbrella for the first time. The new vaping-related taxes will Medicaid funding and tobacco-related health initiatives.

Mixed Reactions from Lawmakers Over Budget Process and Priorities

While Democrats praised the spending plan for its balance and investments in social services, Republicans took issue with both the content and the rushed timing of its age.

“Democrats introduced a bill, $880 million in tax increases… and six short hours from introduction of what it was to ing in both the House and the Senate,” said Senate Republican Leader John Curran, describing the approach as lacking transparency.

State Senator Don DeWitte was particularly critical of the new taxes, saying, “I will not this betrayal of hard-working Illinoisans… It’s time for this body to stand with taxpayers, not stand up against them.”

Still, Democrats argued that the tax on online gambling and other new levies are targeted tools to sustain key services while avoiding harsher revenue measures. House Majority Leader Robyn Gabel pointed to nearly $400 million in spending cuts, with about half stemming from operational savings, as part of the effort to trim costs while maintaining fiscal stability.

Major Transit and Stadium Plans Left Unaddressed

Despite approving the extensive budget and revenue measures, lawmakers adjourned without ing solutions for Chicago’s looming $771 million mass transit deficit or offering for the Chicago Bears’ proposed stadium move to Arlington Heights.

The online gambling tax and other new levies represent a strategic approach to stabilizing Illinois’ finances amid economic uncertainty. The revenue plan also includes a tax amnesty program projected to bring in $228 million, and new rules to tax profits from corporations that shift money offshore.

In light of reduced federal funding and declining state revenues, Sen. Elgie Sims noted, “Our priorities are being fiscally responsible, preparing for the future and facing the challenges that are coming our way head on.”

Source:

“Illinois lawmakers budget with tax hikes on tobacco, gambling — but adjourn without transit, Bears stadium” chicagotribune.com, May 30, 2025