Sports Betting Alliance vs Chicago: The industry’s latest battle

Despite entering 2026 with various avenues for expansion, many sports betting operators still find themselves managing concerns from the prior year. Outside of the headline-grabbing news surrounding prediction markets, multiple operators currently associated with the Sports Betting Alliance have been fighting back against new taxes introduced in the city of Chicago.

Prior to the recent developments, Illinois lawmakers began enforcing House Bill 1928 in June 2025, which implemented a $0.25 per wager tax for the first 20 million wagers accepted by a sports betting operator in Illinois, increasing to $0.50 for all bets thereafter. Operators countered the taxes by introducing per wager fees or minimum bet requirements, exemplified by Illinois’ sports betting handle reaching a yearly-high $1.6bn in October 2025, as well as $203.6m in revenue.

Later in the year, Chicago Mayor Brandon Johnson began efforts to impose a 10.25% tax on revenue generated by operators within city limits, ultimately leading to a threat from the Sports Betting Alliance to pull operations out of the city should Johnson’s budget be approved. While the operators associated with the Sports Betting Alliance, including FanDuel, DraftKings and Fanatics, are still conducting business in Chicago, the Alliance would go on to file a lawsuit against the City of Chicago on December 30.

Disconnected intentions 

While many involved with sports betting may question why Mayor Johnson feels the need to enforce even greater tax implications on operators, the politician is backed by multiple states introducing similar legislation during 2025. New Jersey, Maryland and Louisiana each increased their tax rates on sports betting operations in the state, although none witnessed individual cities attempting to do the same.

At the time of writing, Illinois would represent the first US state to include a city or town which also requires operators to submit tax payments, but could open the door for a portion to follow suit. Given the figures produced in states such as Nevada, New York and New Jersey, lawmakers could view the ongoing efforts in Chicago as a means to introduce its own city-based taxes in areas like Las Vegas, New York City and Atlantic City.

In fairness to operators, however, the newly authorized per wager taxes in Illinois have already shifted the strategic efforts of those licensed in the state, as seen by the countermeasures implemented during 2025. Additional increases could begin to force operators to decide whether continuing business in the state, or Chicago specifically, is truly worth the cost set to be paid in the new year.

The Sports Betting Alliance threatened Mayor Johnson with such actions on December 19, having said, "Online sports wagering operators are highly regulated entities that cannot lawfully operate without all required licenses. Absent published standards and a functioning application and issuance process, operators cannot continue to legally conduct business in the City.

"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.”

Considering the amount of effort also being placed in keeping residents off illegal platforms and finding unsafe alternatives to authorized betting, Mayor Johnson will also have to consider whether his new budget is worth the potential ramifications. Perhaps restructured language within the budget could be in order, but it still leaves many to question who is in the wrong when it comes to sports betting’s latest debate.

An ongoing parley

The fight between operators and regulators over tax requirements has certainly been long-winded, even while new expansions in sports betting continue to draw attention away from one of the industry’s most drawn-out discussions. Operators continue to rake in more profit than ever before and, for Sports Betting Alliance representatives such as FanDuel, DraftKings and Fanatics, will introduce new offerings to expand revenue verticals even further.

With multi-million, or even billion, dollar quarters being reported each year, it could be considered equitable for lawmakers such as Johnson to fight for a greater share of the sports betting revenue pie. The industry has also witnessed various examples of operators taking an “ask for forgiveness rather than permission” approach to expansion, which may be the reason certain regulators feel it’s justified to introduce new measures such as those seen in Chicago.

Concerns shared by the Sports Betting Alliance extend further than the industry’s goliaths, however, as multiple operators have also found themselves affected by the recent increases in tax requirements enforced across the US. While FanDuel and DraftKings maintain the leisure of seeing how such efforts play out, smaller operators could be forced to take action in a quicker manner than most expect in 2026.

Disputes over what portion of revenue operators must share with states will without question continue in sports betting, even outside of Illinois and the markets discussed previously.

Which side of the regulatory, or perhaps financial, coin the Illinois dispute eventually lands on is still in question, as well as whether the bettors themselves convey support for either party.