Need licenses, but none issued
The City of Chicago may be in court as the calendar turns to the New Year. On Tuesday, the Sports Betting Alliance (SBA), an advocacy group formed by the country’s major sportsbooks, sued the city over a new licensing and taxation structure that is supposed to take effect on Thursday, January 1.
Included in the city’s 2026 budget, the ordinance requires that sportsbooks acquire a Chicago license, even if they are already licensed in Illinois, and pay a 10.25% tax on sports betting revenue generated within the city.
Not particularly excited to go through more licensing and pay more taxes, sportsbooks are none too pleased about it. And regardless, the SBA says that Chicago has not issued a single license, even though it had promised to by December 29. Thus, the SBA claims that its member sportsbooks will have to either “operate without a City license or cease online sports book operations entirely within the City.”
The SBA also said that the city has not “provided a formal determination as to whether any SBA member will receive a City license for online sports wagering by the December 31, 2025 deadline.”
Unconstitutional?
As for the added tax, the SBA believes it is unconstitutional.
“The State — not the City — has sole authority to license and tax online sports wagering in the State of Illinois,” the lawsuit claims. “The Illinois Constitution reserves authority over licensing for revenue and income-based taxation to the State unless expressly delegated. The Illinois General Assembly has never authorized the City to impose licensing fees or income-based taxes on online sports wagering.”
There are ten licensed online sportsbook operators in the state of Illinois: bet365, BetMGM, BetRivers, Caesars, Circa Sports, DraftKings, ESPN BET, Fanatics, FanDuel, and Hard Rock Bet.
The SBA has filed for a temporary restraining order (TRO) to keep the Chicago licensing requirement from taking effect this week. If the TRO is granted, the sportsbooks could keep operating within city limits without a license until the problems are ironed out.
Two state lawmakers have introduced bills to prevent Chicago from implementing its tax on sportsbook operators. The first, filed by state Rep. Daniel Didech in October, would bar local jurisdictions from taxing gambling. The second, filed in mid-December by state Sen. Patrick Joyce, would reduce the amount of state money earmarked for Chicago’s Local Government Distributive Fund by the sum that the city would make from the local betting tax.
