SBA sues to block imposition of new Chicago betting tax
Summary
The Sports Betting Alliance (SBA) has filed suit in Cook County seeking a temporary restraining order to stop Chicago from enforcing a new municipal online sports betting licensing regime and a 10.25% tax on adjusted gross wagering receipts from bets placed within the city. The ordinance was approved by Chicago City Council on 20 December as part of a last-minute budget package and is due to take effect on 1 January 2026.
The SBA represents major operators including bet365, BetMGM, DraftKings, FanDuel and Fanatics Betting and Gaming. In its complaint the Alliance says the city’s measures are unconstitutional, exceed powers reserved for the state under the Illinois Constitution, and improperly reach online operators without a physical presence in Chicago. A broader hearing is set for March, while the SBA seeks immediate court intervention to preserve current operating conditions.
Key Points
- The SBA filed the suit on 30 December asking for a temporary restraining order to block Chicago’s new online sports betting tax and city-level licence.
- Chicago’s amendment introduces a 10.25% tax on adjusted gross online sports wagering receipts and a municipal licensing requirement effective 1 January 2026.
- SBA members operate under Illinois Gaming Board licences and already face steep state taxation, including a graduated rate up to 40% and an added per-wager levy introduced in 2024–25.
- The Alliance argues the ordinance is pre-empted by state law, unconstitutional under the Illinois Constitution, and improperly applies to operators without a physical Chicago presence.
- State legislators have already proposed bills to curb municipal sports betting taxes and to adjust state revenue allocations in response to local levies; a court hearing is scheduled for March.
Content Summary
The SBA’s legal action challenges a last-minute Chicago budget amendment that layered a city-level licence and a 10.25% tax on top of an already heavy state tax burden for sportsbooks. The complaint asserts that revenue-generating licences and income-based taxes are a state function unless the General Assembly explicitly delegates authority — which the SBA says has not happened for Chicago.
Operators argue the additional local tax materially alters the economics of the market, pushing some to change pricing or minimum bets and driving concerns about bettors shifting to unregulated alternatives. The Alliance wants the court to halt enforcement while the constitutional and statutory issues are litigated.
Context and Relevance
This is a significant industry legal fight: if Chicago’s tax stands it could open the door for other municipalities to impose their own levies, further increasing operator costs and complicating market economics already strained by state-level taxes. For operators, regulators and investors, the outcome will influence pricing, product strategy and where firms choose to allocate marketing and promotional spend.
For policy-makers and lawyers, the case tests the boundary between state pre-emption and municipal taxation authority in Illinois — and it may prompt swift state legislative responses to constrain local action on betting taxes.
Why should I read this?
Short and blunt: if you work in sports betting, gaming law, finance or city policy — this could change who pays what and where. The SBA’s suit could stop a costly new local tax before it bites, or it could set a precedent that lets cities add another layer of taxation. Either way, it matters.