Chicago legalized video gaming terminals eight months ago to generate $6.8 million in net revenue for its 2026 budget, but the rollout has ground to a halt with hundreds of applications unprocessed and the city unlikely to see any of the projected funds, according to a report published August 20, 2026 by the Civic Federation. The report finds that a standoff between the mayor, city council, the casino operator Bally's, and state regulators has left the new revenue source in limbo while Chicago approaches an already complicated 2027 budget season with expectations of a large deficit.
Video gaming terminals are slot-machine-like devices that can be installed in bars, restaurants, and other non-casino establishments, allowing patrons to play electronic poker, slots, and other games of chance for cash. Illinois legalized VGTs statewide in 2009, and as of 2025 more than 49,000 terminals operated across the state, generating approximately $3 billion in net taxable income during 2024. That produced $884 million in state revenue and $152 million in local revenue from a 35% tax on net terminal income, with municipalities receiving just 5% while the state takes 30%. Chicago and Cook County, as home rule governments, can also charge unlimited annual fees per machine—both now charge a $500 application fee and $1,000 annual fee per terminal, while non-home rule governments face a $250-per-machine cap.
The report explains that legalizing VGTs emerged during Chicago's contentious 2025 budget fight, when a group of alderpeople crafted an alternative to the mayor's proposal and used projected licensing fees from video gaming as part of their solution. The mayor and allied council members opposed legalization on grounds it would undermine revenue from Bally's casino, which has operated from a temporary location since 2023 while constructing a permanent facility scheduled to open in early 2027. Bally's host community agreement with Chicago includes an annual $4 million fee contingent on the city not authorizing new gambling that could compete with the casino, and Bally's has announced it will withhold the 2026 payment due to VGT legalization. In early August 2026, Bally's paused construction on the hotel, events center, and restaurants it committed to build, citing the city's violation of the agreement, and days later issued a going concern warning indicating substantial doubt the business can survive the coming year.
The report reveals that in 2025, Chicago contracted Christiansen Capital Advisors to study VGT revenue implications over ten years, including potential losses from reduced casino gambling. That analysis found city revenue from VGT taxes would likely barely exceed the revenue lost from Bally's cannibalization plus the canceled $4 million annual payment, with net gambling revenue gains never exceeding $10 million and potentially dropping below zero in some years. The report was finalized in July 2025 but never released publicly or shared with city council, forcing alderpeople to estimate VGT revenue without the comprehensive research already completed while the mayor's office selectively cited evidence favoring its position. The report states that the lack of transparency directly caused the political controversy, as council members lacked the data needed to make informed decisions and have not implemented reforms to compel information sharing from the executive branch. Complicating matters further, more than 7,000 unregulated sweepstakes machines—which mimic VGTs but pay out coupons instead of cash and generate no tax revenue—operate across Chicago in a legal grey area, and council voted 15-33 this summer against banning them despite legalizing their taxed competitors.
The Civic Federation calls for the Christiansen report to be made public and its analysis vetted and debated in council, with additional public analysis covering not just VGT-casino dynamics but also VGT-sweepstakes machine dynamics and both revenue and social costs. The report notes that gambling taxes tend to be regressive with concentrated impacts on vulnerable and low-income populations, and that legalizing VGTs significantly broadens access to gambling across Chicago, though it's unclear whether negative social impacts will be new or simply substitute for those already generated by sweepstakes machines. With the 2027 budget cycle rapidly approaching, the report concludes that the mayor and council should emerge with a clear public understanding of which gambling types are legal and illegal in Chicago, along with transparent and agreed-upon revenue estimates—a resolution that will prove crucial if the city is to pass a balanced and trustworthy budget for 2027.