Sports Betting Alliance Challenges Chicago Betting Fees, Taxes

Sports Betting Alliance Sues Chicago Over Permitting Fees, Taxes

The Sports Betting Alliance has filed a lawsuit against Chicago, arguing the city is overstepping its constitutional authority with a new licensing requirement and tax on sports wagers placed within city limits.

The dispute centers on provisions in Chicago’s latest budget, including a city-specific license for online sportsbooks and a 10.25% levy on bets placed in the city, which operators say could drive them out of the market.

Sports Betting Alliance Sues Chicago Over Permitting Fees, Taxes

Posted on: December 31, 2025, 11:48h.

Last updated on: December 31, 2025, 11:48h.

The trade group says a licensing requirement in the city’s new budget could chase operators out of the Windy City.

The budget goes into effect on Thursday, Jan. 1.

SBA’s suit also emphasizes the budget’s 10.25% on sports bets placed within Chicago city limits.

The Sports Betting Alliance is suing Chicago, claiming the city is overstepping its constitutional authority with a new licensing requirement for sportsbook operators while also firing at the city’s proposed tax on wagers placed there.

A trade group is suing Chicago over the city’s sports betting tax and licensing scheme.

Both items are part of the new budget, which goes into effect tomorrow. The trade group argues licensing initiatives are set at the state, not city, level, adding that Chicago’s effort to impose its own permitting scheme on sportsbooks operating there could chase those companies from the city.

The State — not the City — has sole authority to license and tax online sports wagering in the State of Illinois,” according to the Alliance’s complaint. “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.”

Members of the Sports Betting Alliance (SBA) are Bet365, BetMGM, DraftKings, Fanatics, and FanDuel.

Operators Short on Time to Fight Chicago Sports Betting Ploys

Chicago’s $16.6 billion budget, which Mayor Brandon Johnson (D) neither approved nor rejected, contains the city-specific licensing provision as well as a 10.25% levy on sports wagers placed within city limits. The latter measure was proposed by the mayor.

In its suit, the SBA argues its members were assured Chicago would issue the relevant licenses to operators prior to the budget going into effect, but that hasn’t occurred and that lapse risks forcing those gaming companies out of the third-largest US city.

“Despite prior assurances that licenses could and would be issued on December 29, 2025, as of the time of filing this Complaint, the City of Chicago has not issued the required municipal license to any SBA member or to its master license holder,” the SBA said in the court document. “Nor has the City 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.”

Earlier this month, the SBA penned a letter to Mayor Johnson requesting a delay of the licensing and tax requirement so member firms could comply with the orders, but those overtures weren’t acknowledged prompting the lawsuit.

“Those efforts have been unsuccessful, putting the SBA members in jeopardy of either violating the Ordinance, as interpreted by the City, after midnight on New Year’s Eve, or ceasing online sportsbook operations within the City entirely,” notes the Alliance.

Illinois Increasingly Difficult for Sports Betting Firms

Earlier this year, Illinois Gov. J.B. Pritzker (D) signed law creating a tax of 25 cents per bet on the first 20 million wagers booked by an operator with that levy doubling to 50 cents for each bet thereafter. That followed a sports betting tax increase in 2024 with the two measures combining to make Illinois one of the highest sports betting tax jurisdictions in the country.

Those moves also resulted in DraftKings, Fanatics, and FanDuel applying per bet fees with rivals increasing minimum bet sizes. As for the Chicago-specific license fees, those too are considered onerous.

“Further confirming the license requirement is directed at generating revenue, the City charges $50,000 for a primary sports license in the initial year and $25,000 for each year thereafter, and $10,000 for a secondary sports license in the initial year and $5,000 for each year thereafter,” concludes the SBA. “These fees exceed those imposed on all other types of businesses.”