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Sportsbooks file lawsuit against Chicago betting tax increase
After the Chicago City Council passed a budget plan to raise the sports betting tax by 10.25% in 2026, the Sports Betting Alliance (SBA) filed a lawsuit to stop the enforcement of the tax increase.
The SBA is a coalition of bet365, BetMGM, DraftKings, FanDuel, and Fanatics Betting and Gaming. Their lawsuit claims that the Sports Wagering Act of Illinois does not allow local governments to impose additional taxes or require separate local licenses.
The lawsuit states:
“The State, not the city, has sole authority to license and tax online sports wagering in the State of Illinois. 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.”
As a result, the city granted licenses to all five operators, leading the alliance to withdraw the request for an emergency temporary restraining order.
The SBA responded:
“We are pleased to see the City of Chicago has moved quickly to maintain the operations of legal platforms that provide customer protections not available in the illegal market. This development means that Chicago sports fans will continue to enjoy legal, regulated sports wagering without interruption into the new year.”
On the other hand, the lawsuit against the increased betting tax will still continue, as a hearing is scheduled for March 2026.
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