A coalition representing a few of the largest on-line sportsbooks in america has taken authorized motion in opposition to the town of Chicago, difficult a brand new tax and licensing framework included within the metropolis’s 2026 finances. The lawsuit, filed Tuesday in Cook dinner County Circuit Courtroom by the Sports activities Betting Alliance, seeks to cease Chicago from implementing a ten.25% tax on sports activities betting income generated inside metropolis limits, together with new native licensing necessities for operators.
The ordinance was scheduled to take impact Thursday, coinciding with the beginning of the 2026 fiscal yr. Below the plan accredited by the Metropolis Council earlier this month, sportsbooks would want to acquire city-issued licenses and pay the brand new tax on adjusted gross receipts tied to bets positioned in Chicago.
Sportsbooks Problem Metropolis’s Authority
In its courtroom submitting, the Sports activities Betting Alliance argues that Chicago lacks the authorized authority to impose both the tax or the licensing system. The group represents a number of main operators, together with DraftKings, FanDuel, BetMGM, bet365, and Fanatics Betting and Gaming.
The criticism states, “The State — not the Metropolis — has sole authority to license and tax on-line sports activities wagering within the State of Illinois.” It continues, “The Illinois Structure reserves authority over licensing for income and income-based taxation to the State except expressly delegated. The Illinois Normal Meeting has by no means approved the Metropolis to impose licensing charges or income-based taxes on on-line sports activities wagering.”
In accordance with the lawsuit, Illinois’ Sports activities Wagering Act doesn’t allow municipalities to layer extra taxes or licensing necessities on prime of the state’s present regulatory construction. Sportsbook operators already pay between 20% and 40% in state taxes, relying on income ranges, in addition to per-wager charges of 25 cents on every of the primary 20 million bets and 50 cents for every wager past that threshold.
Licensing Timeline and Authorized Maneuvers
The Sports activities Betting Alliance initially sought a short lived restraining order to dam enforcement of the ordinance earlier than it took impact. The group argued that the brief window between the Metropolis Council’s Dec. 20 finances approval and the Jan. 1 implementation date left operators with no clear path to compliance.
The criticism mentioned that as of Tuesday, the town had not issued any licenses, forcing sportsbooks to determine whether or not to “function with no Metropolis license or stop on-line sports activities ebook operations solely inside the Metropolis” as soon as the calendar turned to 2026. The alliance warned that such a state of affairs might push bettors towards unlawful and unregulated playing choices.
The lawsuit states, “As a result of these options are untaxed, forcing SBA members to ‘go darkish,’ would deprive Illinois, and, derivatively, Chicago, of great revenues below present state tax legal guidelines from on-line sports activities wagering that has been authorized in Illinois and in Chicago since 2019.”
On Wednesday, after Chicago issued licenses to the alliance’s member operators, the SBA withdrew its request for a short lived restraining order. A spokesperson cited by ESPN confirmed that whereas the emergency movement was dropped, the underlying lawsuit will proceed.
Funds Stakes and Political Response
Chicago officers have mentioned the brand new tax is predicted to generate about $26 million in income subsequent yr. Mayor Brandon Johnson proposed the measure as a part of an effort to stability the town’s finances. The Metropolis Council finally handed the spending plan with out the mayor’s assist, and Johnson introduced final week that he would enable the finances to take impact with out his signature.
Metropolis officers didn’t instantly reply to requests for touch upon the lawsuit, and a metropolis spokesperson mentioned the administration had not but acquired the submitting and wouldn’t touch upon pending litigation.
On the state degree, some lawmakers have already moved to counter Chicago’s strategy. State Rep. Daniel Didech, a Buffalo Grove Democrat who chairs the Home Gaming Committee, launched laws in October that might explicitly prohibit native governments from regulating, licensing, or taxing sports activities betting.
“When the legislature legalized sports activities betting in 2019, it was by no means our intent to permit native governments to create their very own guidelines for this trade,” Didech mentioned in a press launch. “Chicago’s proposal will damage customers, drive susceptible folks to predatory unlawful markets, and cut back state tax income. The town ought to work collaboratively with the state to make sure sound, knowledgeable coverage choices are made on this problem.”
That invoice has not but superior to a vote. Individually, State Sen. Patrick Joyce of Essex has proposed laws that would scale back Chicago’s share of state earnings tax distributions primarily based on how a lot income the town collects from its personal sports activities betting tax.
Illinois lawmakers are anticipated to return to Springfield in mid-January, because the authorized struggle over Chicago’s sports activities betting ordinance continues.
