Chicago’s proposed 2026 funds has triggered a warning from main on-line sportsbooks that they might should cease accepting wagers inside metropolis limits on January 1, 2026, if the plan takes impact with out a workable licensing course of. The Sports activities Betting Alliance instructed Mayor Brandon Johnson that the funds language creates a brand new city-level requirement for on-line operators whereas leaving no revealed requirements to satisfy, which the group mentioned would make continued operation dangerous and doubtlessly 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 “Metropolis license” construction, despite the fact that town doesn’t presently problem such licenses for on-line sports activities wagering. Alliance members embrace DraftKings, FanDuel, BetMGM, Fanatics Sportsbook, and bet365.
Metropolis Tax Proposal Collides with Lacking Licensing Course of
The Sports activities Betting Alliance delivered its considerations to the mayor in a letter and referenced a central drawback in direct phrases.
“As drafted, the proposed funds and income ordinance would impose a Metropolis licensing requirement efficient January 1, 2026, but the Metropolis doesn’t presently have a licensing rubric that contemplates on-line sports activities wagering operators. Within the absence of outlined phrases, utility requirements, required documentation, and administrative procedures, operators would haven’t any significant method to adjust to the ordinance upon its efficient 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 danger to the underlying regulatory construction of the business.
“On-line sports activities wagering operators are extremely regulated entities that can’t lawfully function with out all required licenses,” Kudon mentioned within the letter. “Absent revealed requirements and a functioning utility and issuance course of, operators can not proceed to legally conduct enterprise within the Metropolis.”
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 funds 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 funds. Town projected the tax may herald $26 million, utilizing a forecast of $253.6 million in operator adjusted gross income tied to city-based wagers. In response to InGame, that projection represents roughly 40% of the $633.6 million in income generated in Cook dinner County throughout 2024.
The mayor’s broader funds bundle confronted resistance within the Metropolis Council’s Finance Committee in mid-November, largely tied to a proposed company head tax. Even so, aldermen stored the sports activities betting tax proposal after they drafted an alternate funds that superior out of the Finance Committee on Wednesday and will attain a full council vote as early as Saturday, December 20.
The choice funds additionally proposes legalizing video gaming terminals in Chicago as a means to assist handle a $1.2 billion funds hole. Experiences describe pushback from Bally’s, which operates a brief 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 funds. A veto would require a two-thirds council majority of 34 votes to override. Reporting additionally famous that if town fails to enact a funds by the brand new yr, a authorities shutdown may comply with.
Compounded Taxes and Potential Market Results
If Chicago provides a 10.25% 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 increased income thresholds. Operators additionally pay a 2% tax on income generated inside Cook dinner County, a levy included within the 2019 legalization legislation.
As well as, the state enacted a per-wager surcharge that took impact July 1 as a part of the Fiscal 12 months 2026 funds handed in Could. The surcharge prices 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. Within 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 activities Betting Alliance additionally mentioned town’s plan may create issues exterior Illinois, since regulators in lots of states count on operators to stay in good standing in every single place they do enterprise. The alliance cited the danger that working with out a required metropolis license in Chicago may set off scrutiny in different jurisdictions.
The funds language itself sends blended indicators, in accordance with reporting. In a single place, it references “legitimate Metropolis licenses together with a major sports activities license and, if relevant, crucial secondary sports activities licenses,” with secondary licenses tied to administration companies 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 “a web based sports activities wagering operator” to a piece that requires city-level licensing, despite the fact that no metropolis license presently exists for on-line sports activities betting. The alliance mentioned the quick timeframe between passage and January 1 leaves little room for a licensing setup that sometimes 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 might 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 scale back Chicago’s share of the Native Authorities Distributive Fund by an quantity equal to regardless of the metropolis collects from a sports activities wagering tax.
