Illinois collected $2.7 billion in gambling-related tax revenue in fiscal year 2026, a 19.2 percent increase from the prior year and a 90 percent increase from fiscal year 2019, the final year before the state approved a major gambling expansion, according to a report from the Commission on Government Forecasting and Accountability. Video gambling machines alone generated more than $1 billion in state and local tax revenues, surpassing the Illinois Lottery for the second consecutive year.
Sports wagering generated $593 million in state taxes on more than $15 billion wagered, with 319 million individual bets placed in the fiscal year. Nearly 99 percent were made online.
Where the revenue comes from
The distribution of gambling losses is not uniform. A 2024 Connecticut study, the most comprehensive recent analysis of the breakdown, found that 71 percent of all legal gambling revenue in the state came from the fewer than 7 percent of residents identified as problem or at-risk gamblers. More than half of sports bets were made by fewer than 2 percent of residents, those classified as compulsive gamblers.
Illinois is approaching 50,000 video gambling terminals, which the state commission described as the equivalent of over 40 full-size casinos. Net income per video gambling machine has risen from $117 per day in 2016 to $182 in 2026. Illinoisans lost more than $3.3 billion playing video gambling slots last fiscal year, three times what they lost a decade ago.
The revenue is real and the state has built infrastructure spending plans around it. The student loan default crisis is a useful parallel: a policy that extracts near-term revenue or savings from a specific population while deferring the social cost of the financial distress it creates. The commission projects gambling revenue will continue to grow as new permanent casinos open and sports wagering expands with new fantasy sports offerings. The structural dependency on gambling revenue is increasing as the industry scales.
The fiscal model and its limitations
The challenge for states that have built significant budget lines on gambling revenue is that the revenue is inherently regressive — it is sourced disproportionately from lower-income and problem-gambling populations — and it is not a stable base for capital programs that have decades-long planning horizons. Pennsylvania, with a similar population size and two years more of legal sports betting, generated $663 million in sports wagering losses in fiscal 2026, trailing Illinois's $1.4 billion.
Despite bettors placing fewer total bets in fiscal 2026 than in the prior year, state tax revenues were still higher, in part because of a new per-wager tax on online bets. The S&P 500's record profit margins were built partly on the same structural insight: pricing power that holds even when volume softens, because the customer base has limited alternatives., in part because of a new per-wager tax on online bets. The state has structured the tax so that volume is less important than the presence of the bettor, which is an efficient revenue extraction mechanism and an unusual relationship for a government to have with the people it taxes.
