The nation’s largest online sportsbooks have marched into court, challenging Chicago’s plan to tax wagers placed within city limits, a move the companies liken to changing the rules midgame just as the clock strikes midnight on the new year.
At the center of the dispute is a sportsbooks betting tax lawsuit filed by the Sports Betting Alliance, a trade group representing Bet365, BetMGM, DraftKings, FanDuel and Fanatics Betting and Gaming. The coalition argues that Chicago lacks the legal authority under Illinois law to impose its own sports betting tax.
A New Tax, a New Fight
Chicago’s 2026 budget, approved by the City Council earlier this month, introduces a 10.25% tax on adjusted gross receipts from all sports bets placed within city boundaries. The plan also requires sportsbooks to obtain city licenses, with annual fees ranging from $5,000 to $50,000.
Sportsbook operators say the city’s action piles new burdens atop an already heavy load. Under existing law, they pay between 20% and 40% in state taxes, plus per-wager fees of 25 cents on each of the first 20 million bets and 50 cents for every bet after that threshold.
