Video Gaming in Chicago: Where Things Stand

August 20, 2026

Video Gaming in Chicago: Where Things Stand 

The 2026 Chicago City budget licensed video gaming inside the City of Chicago (Chicago or the ‘City’) and relied on the projected income from licensing charges to assist steadiness the different funds finally handed into legislation in December 2025 by the City Council with out the signature of the Mayor. Since passage, the video gaming income has been the topic of recurring debate and controversy between the Mayor, the City Council, Bally’s, and others. However, that debate has occurred with out full public-facing info and evaluation wanted to make knowledgeable coverage selections. This report breaks down what video gaming is, the way it grew to become legalized in Chicago final 12 months, how the political debate performed out, and what’s wanted from a public and monetary coverage perspective at this fragile second because the City approaches an already sophisticated FY2027 funds season. 

What is Video Gaming? 

Video Gaming Terminals (VGTs) are gadgets much like the slot machines generally present in casinos however may be positioned in non-casino institutions. VGTs enable customers to play a number of digital video games that simulate on line casino video games similar to video poker, slots, and different video games of likelihood. Players insert money, and winnings are paid out in money via a ticket-based redemption system. 

Unlike on line casino slot machines, VGTs are designed to be put in independently in a various vary of non-casino institutions, similar to bars and truck stops. Since casinos sometimes have a whole lot of machines, their machines host only one kind of recreation. In distinction, licensed gaming institutions have solely a handful of VGTs – typically only one or two, however six at most – so VGTs are designed to host a number of totally different sorts of video games on the identical bodily platform. In essence, VGTs make slot machine playing extra accessible by permitting companies to supply it, fairly than confining it solely to casinos. 

The State of Illinois (Illinois or the ‘State’) legalized video gaming in 2009 through Public Act 96-0034. As of 2025, Illinois had greater than 49,000 VGTs. By State legislation, VGTs are authorized in municipalities all through Illinois; nonetheless, the legislation permits particular person municipalities to ban VGTs inside their borders. Until not too long ago, Chicago had prohibited the machines, however VGTs have been legalized as a part of the City’s FY2026 funds. 

Video gaming tax and price income have been among the many new revenue sources tapped by a gaggle of alderpeople who crafted a substitute for the Mayor’s funds proposal. Projected income from introducing VGTs in Chicago – estimated within the first 12 months to be derived primarily from utility and licensing charges – was used to steadiness the Council’s funds. However, VGT legalization constituted solely a small portion of the funds resolution, with a projected internet income of solely $6.8 million within the ultimate funds ordinance. 

How does Video Gaming Generate Revenue? 

Video gaming terminals generate income for native governments in two fundamental methods. First, VGTs are taxed on each greenback of their net terminal income – the full earnings of the machine, i.e., cash paid in by patrons much less its payouts. The complete state tax rate for VGTs is 35% of internet earnings. Of that quantity, solely 5% of internet earnings is remitted to the municipality or county the place the terminal operates. The remaining 30% goes to the State. A small portion of the state allocation (0.85%) funds the Illinois Gaming Board (IGB), whereas the remaining 29.15% is deposited within the State’s Capital Projects Fund, the place it helps infrastructure prices. In 2024, internet taxable earnings from VGTs throughout the state was roughly $3 billion. This resulted in $884 million in State income and $152 million in native income. 

In addition to taxes primarily based on a terminal’s internet earnings, counties and municipalities have the flexibility to cost annual fees on VGTs. Non-home rule governments could not cost above $250 per machine, however residence rule governments, which have extra authority and adaptability to boost taxes, haven’t any cap. Both Chicago and Cook County are residence rule models of presidency. Cook County, for instance, fees a $500 utility price and an annual $1,000 per-machine price for institutions in unincorporated areas utilizing VGTs. Chicago now fees the same fees inside its boundaries. 

The Debate Around Video Gambling in Chicago 

Legalizing video gaming in Chicago was already a contested challenge earlier than rising as a query through the FY2026 funds course of. Arguments centered across the fiscal implications of legalization and whether or not or not VGTs would function a dependable income supply. 

From October to December 2025, City Council battled over VGT legalization. The Mayor and his aligned Council alders opposed legalizing VGTs on the idea that it might undermine the City’s technique to generate income from Bally’s on line casino, which is at present working from a short lived location whereas a a lot bigger everlasting on line casino and resort is underneath building. Proponents argued that the income from charges and taxes would outweigh any discount in casino-based income. 

In the ultimate funds bundle, the Council handed an ordinance legalizing VGTs, however with a internet income estimate of $6.8 million primarily based principally on licensing charges within the first 12 months, fairly than precise gaming income, which was projected to rise in future years. But after passage, the Mayor’s Office was gradual to implement the legislation, prompting the Council to inform the Illinois Gaming Board immediately that VGTs have been authorized in Chicago. The ensuing debate has, on either side, centered on the instant implications for the 2026 funds, fairly than the social prices of playing and the income implications for future years. 

Sweepstakes Machines 

One issue complicating the rollout of VGTs in Chicago is the City’s current inhabitants of sweepstakes machines. VGTs are totally different from the more than 7,000 sweepstakes machines working in institutions throughout Chicago, together with bars, eating places, and gasoline stations. Sweepstakes machines provide video games and rewards in a similar way to VGTs however evade statutory and regulatory restrictions by offering non-monetary coupons and prizes fairly than money rewards. As a outcome, sweepstakes machines aren’t licensed or taxed; neither the City nor the State achieve any income from sweepstakes machine utilization. 

Sweepstakes machines function in a authorized grey area. They use a authorized loophole to keep away from being categorized as playing machines, although they mimic the operate of VGTs. This implies that in contrast to VGTs, they aren’t banned by default throughout Illinois. The actual authorized standing of sweepstakes machines is an open query, however they’re working throughout many municipalities in Illinois, together with Chicago, and makes an attempt to shut the authorized loophole on the state stage have so far been unsuccessful. Many municipalities all through Illinois that haven’t chosen to legalize VGTs have additionally banned sweepstakes machines, however Chicago has by no means taken this step, regardless of sustaining a ban on VGTs till simply final 12 months. 

Sweepstakes machines are pure opponents with VGTs, as they provide comparable playing experiences but don’t generate any tax income for the City. As a outcome, proponents of legalizing VGTs pushed this previous summer season to cross a ban on sweepstakes machines all through the City. This movement failed 15-33, leaving the destiny of sweepstakes machines in a seamless limbo inside Chicago. 

The Role of Bally’s Casino 

The Chicago City Council authorized Bally’s to construct Chicago’s first on line casino in 2022, and building began in 2023 when Bally’s acquired its license from the State. While building continues on the primary on line casino undertaking, Bally’s has operated a temporary casino within the Medinah Temple constructing. Since 2023, the City has acquired tax income from the non permanent on line casino’s operations, all of which is dedicated to Chicago’s underfunded pensions. Revenue from the non permanent on line casino has persistently underperformed expectations, however it’s projected to extend considerably when the everlasting on line casino opens in early 2027. 

The settlement governing the opening of the brand new on line casino included a host community agreement (HCA) between Bally’s and the City of Chicago. One clause of that settlement requires the on line casino to pay an annual $4 million price to the City. That price is contingent on Chicago not authorizing new types of playing that would provide competitors to Bally’s, together with VGTs. This is as a result of competitors from legalized VGTs might have a adverse influence on Bally’s slot machine income. Bally’s has made clear that it intends to withhold the 2026 price in September because of the legalization of VGTs. 

In early August 2026, Bally’s introduced it was pausing construction on the non-casino facilities that it contractually dedicated to assemble as a part of its total growth plan and settlement with the City. These facilities embrace a lodge, occasions heart, and eating places in a bigger leisure advanced that includes the on line casino. Bally’s cited the City’s violation of the HCA as justification for the development slowdown, although solely the $4 million annual price is contingent on the VGT restrictions. The City Council has since demanded that Bally’s restart building. Several days after the development pause, Bally’s issued a going concern warning regarding liquidity challenges, indicating substantial doubt that the enterprise will be capable to survive the approaching 12 months and pay its money owed. 

Social Implications 

The choice to legalize VGTs follows a typical sample in Illinois. Policymakers typically legislate and tax actions primarily based on the income gained for presidency, with out accounting for the social prices imposed on their constituents.  

There is extensive literature suggesting hostile societal penalties from many types of legalized playing, a few of which can additionally require elevated authorities expenditures to mitigate. By legalizing VGTs all through the City, Chicago will considerably broaden entry to playing, reducing limitations to entry and making frequent playing extra handy for gamblers throughout Chicago. Additionally, playing taxes, similar to these levied on each VGTs and on line casino playing, are typically regressive and infrequently have a concentrated impact on weak and low-income populations. 

The social influence critique applies equally to VGTs and sweepstakes machines. However, the Council has refused to ban sweepstakes machines even after legalizing VGTs, which is able to compete with them. Although VGTs will doubtless carry adverse social impacts related to the growth of entry to playing throughout Chicago, it’s unclear whether or not these impacts can be new or will merely substitute for the adverse impacts already generated by sweepstakes machines. 

Fiscal Implications 

The 2025 debate in City Council primarily centered across the fiscal impacts of legalizing VGTs. Some opponents of video playing have warned that it might additional tamp down income projections in a regional playing market that has change into considerably saturated since Bally’s was chosen in 2022 to construct and function the City’s first on line casino. At first this will appear counterintuitive: taxing VGTs ought to increase income immediately for the City. But Chicago additionally levies taxes on different forms of playing—most significantly on playing carried out at Bally’s on line casino. VGTs and on line casino slot machines are substitute items, that means that somebody who beforehand gambled at on line casino slot machines may as an alternative select to make use of VGTs at different institutions. This might result in a few of Bally’s income being ‘cannibalized’ by the newly legalized VGTs. 

The Mayor’s Office and Bally’s have additionally argued that legalizing VGTs might trigger the City to lose cash as a result of on line casino and VGT revenues are taxed in another way. While VGT homeowners pay 35% of internet earnings in taxes, the Chicago on line casino pays a graduated tax primarily based on the gross income of its slot machines starting from 22.5% to 74%. (Similar to internet terminal earnings, gross income is the full quantity wagered at slot machines much less the payouts of these machines.) As with VGTs, this income is break up between the City of Chicago and the State. However, even at its lowest finish, the breakdown of the on line casino tax is extra favorable to the City, which will get a minimal of 10.5% of slot machines’ income, in comparison with simply 5% from VGTs. As a outcome, the City might see a internet loss in income, since every greenback shifted away from the on line casino in direction of VGTs generates much less income for the City.  

Studies of on line casino income in different components of Illinois have proven that the introduction of VGTs does lessen on line casino playing, however not at a one-to-one ratio. When VGTs are launched, a locality sees extra playing total. Some of the cash spent at VGTs is cannibalized from casinos, whereas some is altogether new. The fee of recent playing and the dimensions of cannibalization are what decide whether or not or not the legalization of VGTs is worthwhile, and by how a lot. 

The query of what the steadiness between new playing and on line casino cannibalization can be for Chicago has been evaluated however not made typically out there. In 2025, the City contracted Christiansen Capital Advisors to review the implications of legalizing VGTs. The ensuing report analyzed the income VGTs would usher in taxes over a ten-year interval, in addition to potential offsets from income losses at Bally’s. It discovered that City income from taxes on VGTs would doubtless simply barely exceed the income misplaced from Bally’s and the cancellation of the $4 million annual cost. The report projected that the rise in internet playing income would by no means exceed $10 million and, in some years, would drop total, although solely barely. Additionally, the report could have barely underestimated internet VGT income, because it didn’t embrace income that the City would obtain from licensing charges. Although the fiscal influence of legalizing VGTs in Chicago will most probably be optimistic for the City, a income loss remains to be potential if the terminals underperform expectations. Either means, the influence will doubtless be fairly small.  

The Christiansen report was finalized in July of 2025. However, not made public, nor was it supplied to the City Council. Thus, when the Council needed to contemplate legalizing VGTs to shut the funds deficit, alders needed to estimate VGT income with out entry to the excellent analysis that had already been carried out on the subject, whereas the Mayor’s Office was in a position to selectively choose proof from the report that favored their place. 

Much of the political controversy across the legalization of VGTs stems from the conflicting income estimates supplied by either side. This state of affairs is immediately attributable to the truth that the information and evaluation to grasp the income proposal have been withheld from the City Council and have been by no means subjected to public scrutiny. As the Council shouldn’t be geared up to behave as a co-equal department of presidency to the Mayor, it was neither in a position to compel the discharge of knowledge managed by the Mayor’s Office pertaining to VGT income, nor in a position to order its personal unbiased evaluation from Council funds workplace or from knowledgeable, independently chaired finance committee. The Council does have the ability to change this dynamic; it might introduce guidelines requiring the manager department to offer info upon Council request. However, regardless of a number of disputes over info sharing within the 2026 funds course of, the Council has but to make this reform. 

Where Things Go From Here 

With video playing legalized in Chicago and the Illinois Gaming Board formally notified of the change, eligible institutions can now apply for licenses. Once acquired, they will pay native charges, set up VGTs, and begin to accrue income, a few of which can be remitted to the City as tax {dollars}. But eight months into Chicago’s fiscal 12 months, a whole lot of functions stay unprocessed by the IGB. This could also be as a result of the Mayor’s Office has indicated it is not going to challenge metropolis licenses, basically refusing to execute the funds ordinance handed by the City Council. 

It is more and more unlikely that Chicago will see any of the projected $6.8 million in internet income from VGTs in 2026. As mentioned, a number of troubling elements contribute to this:  

• The Mayor’s persevering with refusal to execute the VGT provisions of the funds as handed by the Council; 
• The City Council’s inaction concerning sweepstakes machines; 
• The IGB’s delays in each transferring a whole lot of functions for legalized VGTs and providing any steering on the legality of sweepstakes machines; and 
• Bally’s acknowledged intention to withhold the 2026 neighborhood profit price. 

With eight months of the 2026 fiscal 12 months behind us, the Council’s concern ought to be much less the marginal penalties of VGTs on the present 12 months funds, and extra the results for the quickly approaching FY2027 funds cycle. Given the expectations of a giant funds deficit for FY2027, the query of whether or not VGTs are a significant internet income profit for the City wants accountable, fact-based public-facing decision. The Christiansen report ought to be made public and its evaluation vetted and debated within the Council. Additional public evaluation ought to embrace not simply the VGT-casino dynamics, but in addition the VGT-sweepstakes machine dynamics and each income and social externalities.  

The Mayor and the City Council ought to intention to return out of the FY2027 funds season with a transparent understanding of which forms of playing are authorized and unlawful in Chicago, in addition to publicly out there and agreed-upon income estimates for City playing taxes. That means understanding the destiny of Bally’s, the way forward for VGTs, and the legality of sweepstakes machines. Clear and clear evaluation of those points can be essential if Chicago is to cross a balanced and reliable funds for 2027.