Chicago Budget Adds City-Specific Tax, License for Sportsbooks

The battle between lawmakers and sportsbooks continues in Illinois.

This time, the city of Chicago has fired shots, adding controversial language regarding sports betting to its 2026 budget. The changes include adding a 10.25% tax on operators and creating a Chicago-specific license. The industry has already been vocal in its opposition, claiming that the city has no legal authority to add its own tax and licensing requirements.

The move defied warnings from state lawmakers and operators, setting up a massive showdown in the Windy City.

Chicago Takes Flamethrower to Gambling

Chicago has gone rogue during a tense time for the state’s sports betting industry. Illinois lawmakers have already angered sportsbooks by adding tax hikes in two consecutive budgets, making it one of the most expensive markets for operators. This has led sportsbooks to add minimum bet requirements or per-wager fees, as the two sides refuse to budge.

The fighting between the state and industry has cooled, but Chicago’s new budget will surely spark that fire back to life. State lawmakers saw this coming when they warned the city to avoid the controversial changes, but their words were brushed aside.

The new budget also took a shot at the casino industry by legalizing Video Gaming Terminals (VGTs). They had been banned from the city limits over concerns that it would hurt casino revenue as bettors choose to play their favorite slot games close to home. 

Bally’s, which is building a massive casino in downtown Chicago, has threatened to cancel a $4 million annual payment to the city over the change.

SBA Files Lawsuit

The Sports Betting Alliance (SBA) didn’t take long to take action against Chicago. They filed a motion with a Cook County court, requesting a temporary restraining order against the city. This would delay the implementation of the new tax and licensing requirements as the two sides battle in court.

The industry lobby group is arguing that the city lacks the legal standing to enforce these changes. As with the rest of the US sports betting markets, only the state regulator has the authority to levy taxes and issue licenses. 

Could Battle With Chicago Ease Tensions in Illinois?

As the saying goes, “the enemy of my enemy is my friend.”

State lawmakers and operators have seen their relationship completely dissolve over the last year, with no signs of improvement. While the state’s sports betting handle has remained strong amid the battle, the number of bets placed continues to decline. This has led to fears that the market would shrink, hurting both the state and sportsbooks. 

Illinois has not been supportive of Chicago's changes, begging them to reject the budget proposal. While they may not be able to file a lawsuit, state lawmakers could help support the SBA’s fight. That alliance could reopen talks and begin a badly-needed healing process between the two sides.