Chicago’s proposed 2026 price range has triggered a warning from main on-line sportsbooks that they could must cease accepting wagers inside metropolis limits on January 1, 2026, if the plan takes impact with out a workable licensing course of. The Sports Betting Alliance informed Mayor Brandon Johnson that the price range language creates a brand new city-level requirement for on-line operators whereas leaving no revealed requirements to fulfill, which the group mentioned would make continued operation dangerous and probably illegal.
The battle facilities on two associated items: an added 10.25% metropolis tax on income from wagers positioned inside Chicago, and language that factors to a “City license” construction, although town doesn’t at present concern such licenses for on-line sports activities wagering. Alliance members embrace DraftKings, FanDuel, BetMGM, Fanatics Sportsbook, and bet365.
City Tax Proposal Collides with Missing Licensing Process
The Sports Betting Alliance delivered its issues to the mayor in a letter and referenced a central downside in direct phrases.
“As drafted, the proposed budget and revenue ordinance would impose a City licensing requirement effective January 1, 2026, yet the City does not currently have a licensing rubric that contemplates online sports wagering operators. In the absence of defined terms, application standards, required documentation, and administrative procedures, operators would have no meaningful way to comply with the ordinance upon its effective date,” the SBA letter famous.
The group mentioned the hole between the efficient date and the absence of an utility and issuance course of leaves operators with no clear path to comply. SBA chairman Jeremy Kudon additionally tied the chance to the underlying regulatory construction of the business.
“Online sports wagering operators are highly regulated entities that cannot lawfully operate without all required licenses,” Kudon mentioned within the letter. “Absent published standards and a functioning application and issuance process, operators cannot continue to legally conduct business in the City.”
The alliance urged Chicago to delay enforcement for 180 days so town can develop a licensing framework. It additionally mentioned it prefers town take away the brand new monetary measures from the price range and pursue longer-term options with business enter.
Johnson launched the sports activities betting levy in October as a part of his proposed $16.6 billion price range. The metropolis projected the tax might usher in $26 million, utilizing a forecast of $253.6 million in operator adjusted gross income tied to city-based wagers. According to InGame, that projection represents roughly 40% of the $633.6 million in income generated in Cook County throughout 2024.
The mayor’s broader price range package deal confronted resistance within the City Council’s Finance Committee in mid-November, largely tied to a proposed company head tax. Even so, aldermen saved the sports activities betting tax proposal after they drafted another price range that superior out of the Finance Committee on Wednesday and will attain a full council vote as early as Saturday, December 20.
The different price range additionally proposes legalizing video gaming terminals in Chicago as a approach to assist tackle a $1.2 billion price range hole. Reports describe pushback from Bally’s, which operates a short lived on line casino within the metropolis whereas it completes the everlasting Bally’s Chicago facility.
Johnson has not mentioned whether or not he would veto the choice price range. A veto would require a two-thirds council majority of 34 votes to override. Reporting additionally famous that if town fails to enact a price range by the brand new 12 months, a authorities shutdown might observe.
Compounded Taxes and Potential Market Effects
If Chicago provides a ten.25% metropolis tax to present levies, operators would face a minimal 32.25% tax on Chicago-based sports activities betting income. Illinois applies a progressive statewide tax that begins at 20% and reaches 40% at greater income thresholds. Operators additionally pay a 2% tax on income generated inside Cook County, a levy included within the 2019 legalization legislation.
In addition, the state enacted a per-wager surcharge that took impact July 1 as a part of the Fiscal Year 2026 price range handed in May. The surcharge fees 25 cents per wager till an operator accepts 20 million wagers, then rises to 50 cents after that time. The surcharge generated $20.6 million in state tax income in its first three months, and FanDuel and DraftKings have already paid the upper charge after surpassing 20 million accepted wagers.
The tax layering has already influenced how some operators handle prices. In the Illinois market, some have handed charges on to clients or launched minimal wager limits. Reporting cited a 15% decline in complete bets in September.
The Sports Betting Alliance additionally mentioned town’s plan might create issues outdoors Illinois, since regulators in lots of states count on operators to stay in good standing in all places they do enterprise. The alliance cited the chance that working with out a required metropolis license in Chicago might set off scrutiny in different jurisdictions.
The price range language itself sends blended alerts, based on reporting. In one place, it references “valid City licenses including a primary sports license and, if applicable, necessary secondary sports licenses,” with secondary licenses tied to administration providers suppliers. Elsewhere in the identical part, it states that any on-line operator with a grasp state license can conduct on-line wagering, with out mentioning a metropolis license.
Proposed amendments to Chicago’s municipal code would explicitly add “an online sports wagering operator” to a bit that requires city-level licensing, although no metropolis license at present exists for online sports betting. The alliance mentioned the quick timeframe between passage and January 1 leaves little room for a licensing setup that usually takes months.
The operators’ warning arrives as state lawmakers additionally search to dam Chicago’s plan. Illinois State Rep. Daniel Didech launched laws in October that will forestall native jurisdictions from taxing, regulating, or imposing charges on playing. Illinois Politico additionally reported that State Sen. Patrick Joyce submitted a invoice that would cut back Chicago’s share of the Local Government Distributive Fund by an quantity equal to regardless of the metropolis collects from a sports activities wagering tax.
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