Sports betting in Chicago to continue in 2026, after sportsbooks drop bid to immediately block tax and licensing law
Sports betting will continue uninterrupted in Chicago in 2026, after a coalition of sportsbooks dropped their effort to immediately block new taxes and licensing requirements in the city.
The Sports Betting Alliance – which represents betting operators Bet365, BetMGM, DraftKings, FanDuel, and Fanatics Betting and Gaming – had filed a lawsuit on Tuesday in Cook County, seeking an emergency injunction blocking enforcement of the city's new sports betting regulations.
Their lawsuit claims the state's Sports Wagering Act does not give local governments the authority to impose their own taxes on top of the state's sports betting taxes, or to require local licenses to generate revenue from sports betting.
They also said no sportsbooks had yet been licensed as of Tuesday, leaving them in legal limbo as 2026 approached, but since filing the lawsuit, all five sportsbooks have been granted city licenses. On Monday, they dropped their request for an emergency temporary restraining order against the city.
They had argued, without licenses issued by the city, they would have been forced to choose between continue operating without a license beginning Jan. 1, or shut down operations in Chicago, which they said would have left sports gamblers to rely on illegal and unregulated betting operations.
"We are pleased to see the City of Chicago moved quickly yesterday to maintain the operations of legal platforms that provide customer protections not available in the illegal market. Given these developments, there was no longer any need for an expedited TRO," the SBA said in a statement on X. "Chicago sports fans will continue to have the benefits of legal, regulated sports wagering without interruption heading into the new years."
While those companies are now dropping their bid to immediately block implementation of the city's sports betting tax and licensing requirements, their lawsuit challenging the law's constitutionality will continue. A hearing on that lawsuit has been scheduled for March.
The 2026 budget plan approved by the City Council earlier this month would impose a 10.25% on the adjusted gross receipts from all sports bets placed within the city.
Sportsbook operators already pay between 20% and 40% in state taxes, in addition to per-wager fees of 25 cents on each of the first 20 million bets placed, and 50 cents for each bet thereafter.
The City Council approved a requirement for annual licensing fees between $5,000 and $50,000 for sports betting operators.
The lawsuit claims only the state, not any local governments, has the authority to impose such regulations in Illinois.
"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 lawsuit claims.
Proposed legislation introduced in Springfield in October would expressly prohibit local governments from regulating, licensing, or taxing sports betting.
"When the legislature legalized sports betting in 2019, it was never our intent to allow local governments to create their own rules for this industry," State Rep. Daniel Didech (D-Bufffalo Grove) said in a press release in October. "Chicago's proposal will hurt consumers, drive vulnerable people to predatory illegal markets, and reduce state tax revenue. The city should work collaboratively with the state to ensure sound, informed policy decisions are made on this issue."
The legislation has yet to come up for a vote.