Industry Pushback: Sports Betting Alliance Files Complaint — Then Secures Licenses Just in Time for Chicago’s New Tax Law

A group of U.S. sportsbook operators confirmed last week that they filed a lawsuit in Cook County and have requested a temporary restraining order against Chicago’s new licensing requirements.

The SBA–which includes DraftKings, FanDuel, Fanatics, BetMGM, and bet365–argued that the city’s budget plan, which aims to raise taxes by 10.25% on online wagers, is “invalid and unconstitutional” under state laws.

It seems that the group’s pressure netted some results.

SBA withdrew its request for TRO after Chicago issued city-level sports betting licenses to major operators just before January 1st. With these licenses, some of the country’s top operators are safe, but still face one more problem: a tax on online sports betting wagers placed within the city.

City’s Budget Now a Law, But SBA’s Members Now Armed with Licenses

The Sports Betting Alliance (SBA) shared Tuesday that it filed a request for a temporary restraining order against Chicago’s new licensing requirements. In its complaint, SBA argued that “the State – not the City – has sole authority to license and tax online sports wagering in the State of Illinois." 

The group added that the “Illinois Constitution reserves authority over licensing for revenue and income-based taxation to the State unless expressly delegated." It further added that the state’s Illinois General Assembly has never authorized Chicago to impose licensing fees and impose taxes on online sports bets.

Licensing Issues, Solved

Online sportsbooks were also concerned that they were operating without approved licenses at the time of the submission of the complaint.

According to the group, they’re operating without licenses, “despite prior assurances that licenses could and would be issued on December 29, 2025. It also added that the City has not provided them with an explanation or at least a formal determination as to whether one of their members will get a license by December 31st.

Days after filing its request, SBA decided to withdraw its motion after Chicago approved city-level betting licenses. With these licenses, SBA members are no longer at risk of being “out of compliance” when the new tax program rolls out.

SBA, Broader Sports Betting Industry Faces Tougher Road Ahead

Although the group managed to score a win with its new licenses, it remains facing some serious challenges. The lawsuit challenging the constitutionality and authority of the city to impose taxes (on sports betting wager) and licensing regime will proceed.

In its letter of withdrawal of the TRO, SBA explained that their “r complaint related to the constitutionality of Chicago’s proposed tax will continue to proceed on the merits in court.

Individual members of the SBA have not issued their statements as of the time of this writing.

REFERENCES:

• ESPN Sports

• The Chicago Journal