The Sports Betting Alliance (SBA) has filed suit against the City of Chicago, arguing that a new licensing mandate and a 10.25% tax on wagers placed within city limits exceed the city’s constitutional authority. Both measures are part of Chicago’s new budget, which takes effect Thursday, Jan. 1.
According to the SBA, Illinois law gives the state — not municipalities — exclusive control over licensing and taxing online sports wagering. The group contends that Chicago’s attempt to impose its own permitting system could drive sportsbook operators out of the city.
“The State — not the City — has sole authority to license and tax online sports wagering in the State of Illinois,” the complaint states, adding that the Illinois Constitution reserves revenue‑based licensing and taxation powers for the state unless explicitly delegated. “The Illinois General Assembly has never authorized the City to impose licensing fees or income-based taxes on online sports wagering.”
SBA members include Bet365, BetMGM, DraftKings, Fanatics, and FanDuel.
Operators Warn of Looming Deadline
Chicago’s $16.6 billion budget — which Mayor Brandon Johnson neither signed nor vetoed — introduces both the city‑specific licensing requirement and the 10.25% tax on bets placed within Chicago. The tax was proposed by the mayor.
The SBA argues that operators were told the city would issue the necessary licenses before the budget took effect. That has not happened, and the group says the delay could force operators to shut down their Chicago platforms.
In the lawsuit, the Alliance notes:
“Despite prior assurances that licenses could and would be issued on December 29, 2025, the City of Chicago has not issued the required municipal license to any SBA member or its master license holder. Nor has the City provided a formal determination as to whether any SBA member will receive a City license by the December 31, 2025 deadline.”
Earlier in December, the SBA asked Mayor Johnson to postpone the licensing and tax requirements to allow operators time to comply. The request went unanswered, prompting the lawsuit.
The Alliance says its members now face a choice: violate the ordinance after midnight on New Year’s Eve or halt online sportsbook operations within Chicago entirely.
Illinois Becoming a Tougher Market for Sportsbooks
The dispute comes as Illinois continues to raise the financial burden on sports betting operators. Earlier this year, Gov. J.B. Pritzker signed a law imposing a 25‑cent tax on the first 20 million wagers an operator books annually, doubling to 50 cents per bet thereafter. That followed a 2024 tax increase, making Illinois one of the most expensive sports betting jurisdictions in the country.
In response, DraftKings, Fanatics, and FanDuel added per‑bet fees, while competitors raised minimum wager amounts.
Chicago’s proposed licensing fees add another layer of cost. According to the SBA:
- Primary sports license: $50,000 in the first year, $25,000 annually thereafter
- Secondary sports license: $10,000 in the first year, $5,000 annually thereafter
The Alliance argues these fees are designed primarily to generate revenue and exceed those imposed on other types of businesses.
