Chavdar Vasilev is a journalist covering the casino and sports betting market sectors for CasinoBeats. He joined CasinoBeats in May 2025 and reports on industry-shaping stories across the US and beyond, including legislative debates, market...
Read Full BioThe Sports Betting Alliance (SBA) has warned that Chicago’s newly approved budget, which includes a 10.25% tax on revenue from wagers placed within city limits, could force online sportsbooks to shut down in the city as early as January 1.
Despite the warning, the Chicago City Council passed its alternate 2026 spending budget, which also includes the legalization of video gaming terminals (VGTs). It now moves to Mayor Brandon Johnson.
The Council and the mayor disagree on several provisions of the budget. Some include VGTs and Johnson’s proposed corporate head tax. Still, both versions include the 10.25% tax, proposed as a way to close a budget gap of over $1.1 billion.
Alliance Issues Shutdown Warning Ahead of Budget Vote
In a December 18 letter to Johnson, SBA, which represents some of the industry’s biggest operators, including FanDuel, DraftKings, BetMGM, Fanatics, and bet365, cautioned that the proposed city-level licensing framework tied to the tax cannot be complied with under the current structure.
“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.“
The SBA emphasized that, without defined terms, application standards, or administrative procedures, operators would be unable to lawfully operate once the ordinance takes effect.
“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.“
Risk of Sportsbooks Going Dark in Chicago
The letter explicitly raises the prospect that sportsbooks would have to halt operations in Chicago.
“Absent published standards and a functioning application and issuance process, operators cannot continue to legally conduct business in the City.“
The SBA warned that such a shutdown would undermine the city’s stated policy goals and revenue expectations.
“A shut-down of online sports wagering in Chicago, however temporary, would undermine the ordinance’s revenue and policy objectives by driving consumers to online platforms that dodge laws that ensure consumer protection, age verification, and responsible gaming protections.”
The Alliance also cautioned that the impact would extend beyond Chicago, potentially affecting statewide tax receipts.
“A shut down of legal online platforms will also risk jeopardizing millions, if not tens of millions, of dollars in state revenue.“
City Council Advances Budget Despite Industry Objections
Under the adopted budget framework, Chicago would impose a municipal tax in addition to Illinois’ existing state-level sports betting levy. City officials estimate that the new tax could generate around $26 million annually.
Illinois sportsbooks are already operating under some of the highest tax rates in the nation. FanDuel and DraftKings pay over 40% tax on their gross receipts, following a series of recent tax hikes.
In 2024, the state raised the levy from a flat 15% to a graduated system, ranging from 20% to 40%. Additionally, earlier this year, lawmakers added a per-wager excise tax. That led sportsbooks to introduce bet surcharges or minimum bet requirements.
Critics of Chicago’s approach argue that the city’s tax increases the risk that customers shift to offshore platforms.
Notably, in September, Illinois saw a 15% decline in wagers. The month is typically one of the busiest of the year due to the NFL kickoff and college football.
State-level opposition to the Chicago city tax has also emerged. In October, Illinois lawmakers introduced legislation that would block municipalities from imposing their own sports betting taxes.
The bill’s sponsor, Rep. Daniel Didech, said that the 2019 legalization of sports betting “was never intended to give local governments authority to create their own rules.”
Request for Delay & Alternative Path Forward
While opposing the ordinance in its current form, the SBA formally requested that the city delay implementation by at least 180 days. That would allow time for the development of a workable licensing framework.
“It is urgent that your Office takes action to develop a cogent licensing framework and to delay the effective date by at least 180 days.”
The SBA also reiterated that Chicago should pursue longer-term solutions in coordination with state lawmakers, rather than acting unilaterally.
“The City should work collaboratively with the gaming industry to pursue more durable and permanent revenue solutions, including potential amendments to state law that would support long-term revenue generation for the City while maintaining regulatory integrity and consumer protections.”
What Comes Next
With the City Council’s approval, the budget now moves to Johnson, who has called it “morally bankrupt.”
The mayor’s office has previously suggested he could issue line-item vetoes on items he dislikes. If he does issue a veto, the City Council could override it with a two-thirds majority.
If the budget is not approved by the end of the year, the city government will shut down. That would delay implementation of the new ordinance and allow sportsbooks to continue operating under the existing regulatory framework.
However, if Johnson and the Council do come to an agreement, major sportsbook operators have warned that they may have to suspend operations in Chicago.
