The Sports Betting Alliance (SBA), a coalition of major online sportsbook operators, has filed a lawsuit against the City of Chicago, challenging the city’s newly enacted tax and licensing requirements on online sports betting.
The legal action targets provisions in Chicago’s 2026 budget that impose a city-level tax on online sports wagers and require operators to obtain municipal licenses to continue operating within city limits.
What the lawsuit says
In its complaint, the SBA argues that Chicago lacks the authority to levy its own tax or licensing scheme on online sports betting. The group contends that Illinois law reserves regulatory and taxing power over sports wagering exclusively to the state, unless the General Assembly explicitly grants such authority to municipalities.
The lawsuit also seeks a temporary restraining order to block enforcement of the tax and licensing rules while the case proceeds through the courts. The filing maintains that compliance would create immediate financial and operational harm for operators.
Who’s involved
The Sports Betting Alliance represents several of the largest online sportsbooks operating in Illinois, including DraftKings, FanDuel, BetMGM, Fanatics, and bet365.
Chicago officials approved the sports betting provisions as part of a broader effort to raise revenue for city services. The measures were adopted in late December and were initially scheduled to take effect at the start of the new year.
Why it matters
The lawsuit raises questions about the limits of municipal authority over regulated gambling in Illinois. If the court sides with the SBA, Chicago could be barred from imposing similar taxes or licensing requirements on online betting platforms. A ruling in the city’s favor could encourage other municipalities to pursue their own levies.
The dispute also carries practical implications for bettors and operators. Prior to recent adjustments by the city, some sportsbooks had warned that uncertainty over licensing could force them to suspend online betting services within Chicago.
Recent developments
To prevent an immediate disruption to betting operations, Chicago has issued revised licenses allowing sportsbooks to continue operating while the legal challenge moves forward. The lawsuit itself remains active and is expected to continue into 2026.
The case is likely to play a significant role in shaping how sports betting is regulated and taxed at the local level in Illinois, particularly as cities seek new revenue sources amid ongoing budget pressures.