Suit follows warning
Just a few weeks after the Sports Betting Alliance (SBA) warned the City of Chicago that its member sportsbooks may need to shutter on January 1 over a provision to tax sports betting operators, the trade group has gone one step further and filed a lawsuit against the municipality.
overstepped its authority”
On Tuesday, the SBA filed multiple complaints against City Hall, essentially claiming that by imposing a local gambling tax of 10.25% in a budget it approved last month, the Chicago City Council “overstepped its authority.”
While Mayor Brandon Johnson’s administration maintains the tax hike is necessary for the 2026 budget, the SBA’s suit means City Hall now faces a temporary restraining order. Chicago is the first US city to implement its own tax on sports betting firms and might also become the first to have it ruled unlawful.
Pleas unheeded
The SBA had earlier written to the mayor on December 18, calling for the January 1 implementation of the new tax to be pushed back at least 180 days to allow sports betting firms to become compliant. The trade body also threatened to shutter sportsbooks in the New Year.
Since the city has yet to issue licenses to the ten sportsbooks operating in Illinois, the SBA states its member platforms either risk operating without a license or must close to avoid any legal repercussions.
In the request for a temporary restraining order (TRO), the SBA reportedly wrote that the Johnson administration “promised to issue licenses by Monday, but none had been as of Tuesday morning.”
The SBA complaint added that the city had not “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.”
The SBA’s TRO requests an injunction that would suspend the municipality’s licensing requirement while allowing sportsbooks to continue operating until the issue is resolved.
Unconstitutional move?
In addition, the alliance’s lawyers wrote that due to Illinois’ regulatory set-up, City Hall does “not have the power to issue licenses.”
The SBA suit claims that under the state constitution, “a home rule unit such as the City of Chicago, may not require a ‘license for revenue’ or ‘impose taxes upon or measured by’ income, earnings, or occupations unless the General Assembly has expressly granted that power to the home rule unit.”
“The General Assembly has not done so here,” the SBA stated.
