Published on: December 31, 2025, 11:48h.
Updated on: December 31, 2025, 11:48h.
- The trade organization warns that a new licensing requirement in the city’s budget could drive operators away from the Windy City.
- The budget is set to begin on Thursday, January 1.
- SBA’s lawsuit highlights the 10.25% tax on sports bets made within Chicago’s city limits.
The Sports Betting Alliance has filed a lawsuit against Chicago, asserting that the city is exceeding its constitutional authority by introducing a new licensing requirement for sportsbooks, alongside critiquing the proposed tax on local wagers.
These two issues are part of the newly introduced budget, which becomes effective tomorrow. The trade alliance contends that licensing regulations are to be established at the state level, not by the city, arguing that Chicago’s attempts to enforce its own licensing system could drive sportsbooks out of the city.
The Alliance’s complaint states, “Only the State — not the City — possesses the authority to license and tax online sports wagering within Illinois.” It further asserts, “The Illinois Constitution limits the power to regulate licensing for revenue and income-based taxes to the State unless explicitly delegated. The Illinois General Assembly has not authorized the City to impose licensing fees or income-based taxes on online sports wagering.”
Members of the Sports Betting Alliance (SBA) include industry leaders such as Bet365, BetMGM, DraftKings, Fanatics, and FanDuel.
Operators Under Pressure as Chicago Introduces Sports Betting Regulations
Chicago’s budget of $16.6 billion, which was neither approved nor rejected by Mayor Brandon Johnson (D), includes the city-specific licensing requirement and the proposed 10.25% tax on sports bets within city borders. This initiative was put forth by the Mayor.
The SBA argues in its lawsuit that its members were assured that Chicago would issue the necessary licenses for operators before the budget became effective, yet this has not happened, putting those gaming companies at risk of exiting the third-largest city in the US.
“Despite previous assurances that licenses would be issued by December 29, 2025, as of the filing of this complaint, the City of Chicago has yet to issue the required municipal license to any SBA member or its master license holder,” states the SBA’s court filing. “Additionally, the City has not provided a clear indication about whether any SBA member will obtain a City license for online sports wagering by the December 31, 2025, deadline.”
Earlier this month, the SBA sent a letter to Mayor Johnson requesting a postponement of the licensing and tax requirement to allow member firms adequate time for compliance, but those requests went unanswered, leading to the lawsuit.
“These attempts have been fruitless, putting SBA members in a precarious position of potentially violating the Ordinance, as interpreted by the City, after midnight on New Year’s Eve, or ceasing online sportsbook operations in the City altogether,” the Alliance emphasizes.
Challenges for Sports Betting Companies in Illinois
This year, Illinois Governor J.B. Pritzker (D) enacted a law instituting a tax of 25 cents per bet for the first 20 million wagers taken by an operator, which then increases to 50 cents for each subsequent bet. This followed a sports betting tax increase in 2024, making Illinois one of the states with the highest sports betting taxes in the nation.
Consequently, companies like DraftKings, Fanatics, and FanDuel have started imposing per-bet fees, with competitors raising minimum betting amounts. The Chicago-specific license fees are also viewed as burdensome.
“The city’s licensing fees are evidently designed to generate revenue, charging $50,000 for a primary sports license in the first year, followed by $25,000 annually, and $10,000 for a secondary sports license initially, dropping to $5,000 each year thereafter,” concludes the SBA. “These charges are higher than those applied to other types of businesses.”