FanDuel, DraftKings, other big sportsbooks sue to block new Chicago sports betting tax
A coalition of multibillion-dollar gambling companies are suing to block the city from taxing online sports betting revenue that FanDuel, DraftKings and other major sportsbooks rake in from Chicago bettors.
The Sports Betting Alliance filed for a temporary restraining order in Cook County Circuit Court Tuesday against the 10.25% tax that’s supposed to be levied on the companies’ revenue from online sports bets placed in Chicago, when the 2026 city budget kicks in with the new year Thursday.
Johnson proposed the sports betting tax to raise an estimated $26 million to balance the budget, and an emboldened City Council kept the measure in the spending plan they passed without the mayor’s support. Johnson announced last week he’d let the budget legislation go into effect without his signature.
But the Sports Betting Alliance — which also includes BetMGM, bet365 and Fanatics Sportsbook — says in a lawsuit that the city tax “represents an unconstitutional assertion of authority that rests exclusively with the State.”
And with a span of less than two weeks from budget passage to supposed taxation, city policies “do not establish a review framework, specify application criteria, set processing timelines, or identify enforcement mechanisms associated with the licensing process,” the suit argues.
“Chicago bettors who lack legal means to place online sports wagers will be driven to illegal sports wagering alternatives readily available on the internet and through local bookies, which lack State oversight and consumer protections,” the suit says. “Those alternatives are untaxed, therefore depriving Illinois and, derivatively, Chicago of significant revenues under existing State tax laws.”
A city spokesman said officials had not received the suit and declined to comment on pending litigation.
Illinois’ massive sports betting industry is already heavily taxed, with state lawmakers imposing a graduated tax system in 2024 topping out at 40% for the biggest companies — and then going back to the well for a controversial per-wager tax that helped balance the state budget in May.
The vast majority of sports bets are placed online via the companies’ apps. The state’s 15 licensed sportsbooks made more than $1.1 billion online this year after paying out winners through the end of October, sending over $365 million in state taxes and an additional $11.9 million to Cook County government, which gets a 2% cut of betting revenue within its borders.
That’s an increase from the $951 million in online sports betting revenue generated in the state over the same 10-month period in 2024. But industry leaders are quick to point out that the monthly volume of bets has decreased on the heels of the per-wager tax, which some companies have passed onto bettors.
The companies and some lawmakers say that further taxes on the state’s industry — which saw a monthly record of $1.6 billion wagered in October — could stymie growth.
State Rep. Dan Didech, a Buffalo Grove Democrat who chairs the House Gaming Committee, filed legislation in October that would block municipalities from imposing their own sports betting taxes.
And state Sen. Patrick Joyce, D-Essex, has another bill that would reduce Chicago’s share of state income tax distributions in proportion with whatever the city nets from its local sports betting tax.
Lawmakers return to Springfield in mid-January.