ESPN, Sports Betting Alliance sues Chicago over proposed licensing, tax:
The Sports Betting Alliance, an advocacy group for several of the nation’s major sportsbooks, sued the city of Chicago on Tuesday, seeking to prevent it from enforcing a new ordinance that would levy a tax on its member sportsbooks within city limits.
The ordinance, which is part of Chicago’s 2026 budget, would require legal sportsbooks to enter into a new licensing system and to pay a tax on 10.25% of sports betting revenue generated within the city. It would go into effect Thursday.
In its complaint, the SBA said that the city would issue licenses to legal sportsbooks by Dec. 29, but as of Tuesday had not done so, forcing sportsbooks to choose whether to “operate without a City license or cease online sports book operations entirely within the City” once the calendar turned to 2026 on Thursday. The complaint also argues that the tax associated with the new ordinance is unconstitutional.
“The State — not the City — has sole authority to license and tax online sports wagering in the State of Illinois,” the complaint reads. “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.”
The SBA also filed a motion for a temporary restraining order, imploring the court to prevent the city licensing requirement from taking effect at the beginning of the year. That motion was withdrawn Wednesday after the city of Chicago issued sports betting licenses to all of its member operators.
Among the sportsbooks the SBA represents is DraftKings, with which ESPN has a business partnership.
Should the ordinance be allowed to proceed, it would add yet another tax to sports bets in Illinois. In September, the state implemented a per-bet tax that compelled sportsbooks to pass the cost on to consumers in the form of a per-bet transaction fee. At the time, some sportsbook operators raised concerns over the future viability of operating within the state.
