The sports betting lobby filed a lawsuit Tuesday seeking to block Chicago’s new tax on online wagering set to go into effect Jan 1.
The national Sports Betting Alliance sued the city in Cook County Circuit Court, arguing the sports betting tax included in the final 2026 budget passed by City Council this month is unconstitutional. The levy will require a new license for all operators and tax online bets in the city at 10.25%.
Aldermen passed that tax and others in a revenue package vote this month that cut out Mayor Brandon Johnson’s controversial head tax, in a historic act of defiance. The mayor later refused to sign the full budget after the City Council’s final approval but he also opted not to veto it, meaning it will go into effect. The sports betting tax was his idea and is projected to raise $26.2 million to help close next year’s $1.19 billion budget gap.
A spokesperson for Johnson said the city has not yet received the lawsuit.
The suit names the city and its Department of Finance, Business Affairs and Consumer Protection Commissioner Ivan Capifali and Comptroller Michael Belsky. The sports betting lobby argues that the state retains the right to tax online sports betting because the revenue constitutes a form of “income-based taxation,” which means the Illinois General Assembly would need to grant the city the power to enact that levy.
In the suit’s request for a temporary injunction against the tax taking effect in the new year, the sports betting lobby threatened to turn its machines off otherwise.
“Absent injunctive relief, SBA members would be unable to continue operations in Chicago and remain in compliance with the Chicago Ordinance Amendments as interpreted by the City,” the complaint says. “They would thus be faced with an impossible choice: operate without a City license or cease online sports book operations entirely within the City.”
There has also been pressure from Springfield Democrats who say the city’s tax will eat a hole in state revenue by driving away the businesses or pushing them to operate illegally. Illinois already taxes sports betting statewide in tiers, so the city’s new levy would be on top of any state taxes.
However, when Johnson pitched his original 2026 budget plan, he described the city tax and other measures as targeting big tech and corporations, which he said are profiting from Chicagoans.
The change imposes a 10.25% tax on the adjusted gaming receipts of any sports betting licensee active in the city. The $26.2 million Johnson anticipated the levy would bring in 2026 is more than the $16.5 million the city was projected to raise from casino revenues in 2025.