Legal Lines in the Sand
In its filing, the Sports Betting Alliance contends that Illinois’ Sports Wagering Act leaves taxation and licensing squarely in state hands. The lawsuit argues that local governments were never granted permission to impose additional taxes or licensing schemes on online sports betting.
“The State — not the City — has sole authority to license and tax online sports wagering in Illinois,” the lawsuit states, adding that the Illinois Constitution reserves income-based taxation and revenue licensing to the state unless lawmakers clearly say otherwise.
According to the complaint, the General Assembly has never authorized Chicago to collect licensing fees or impose income-based taxes on online sportsbooks.
A Looming Deadline
Because the city budget was approved Dec. 20, the lawsuit says Chicago officials have not had time to issue licenses before the tax is set to take effect Jan. 1. That delay, the operators argue, leaves them with a stark choice: keep operating without a city license or shut down betting in Chicago altogether.
Either option, the lawsuit warns, could push customers toward illegal and unregulated gambling markets.
“Because those alternatives are untaxed, forcing SBA members to go dark would deprive Illinois, and derivatively Chicago, of significant revenues,” the lawsuit claims, pointing out that legal online sports betting has operated in both the state and the city since 2019.
