Chicago sportsbooks are warning Mayor Brandon Johnson that they may be forced to halt operations on January 1 if his proposed 10.25% tax on local wagering is enacted without a clear licensing framework. The warning comes from the Sports Betting Alliance (SBA), which represents operators including DraftKings, FanDuel, BetMGM, Fanatics Sportsbook, and bet365.
The mayor introduced the tax as part of his $16.6 billion 2026 budget in October. While the City Council Finance Committee rejected Johnson’s overall budget due to a corporate head tax, it retained the sports betting levy in its version. Ordinances related to the budget passed in City Council with a 29-19 vote on Friday. Johnson has not said whether he will veto the budget, which could create a government shutdown if the package is not enacted by the new year.
Operators Warn Of Legal And Operational Risks
In a letter to Johnson, the SBA said, “The City Council just handed a gift to illegal operators. Passing a tax without a licensing framework is like issuing traffic violations before painting the lanes and posting the speed limits. Absent clarity and any delay in implementation, legal sportsbooks may not be able to legally operate in Chicago on January 1 — forcing Chicagoans back into the shadows of the illegal, underground market during an exciting few weeks ahead for Chicago football fans and the entire city. That’s bad for consumers, bad for integrity, and bad for the City’s bottom line.”
SBA members argue that the proposed budget creates a requirement for a “City license” for online sportsbooks, but the city currently lacks rules for applying, approving, or enforcing such licenses. The alliance is urging a 180-day delay to establish a licensing rubric, though its preferred outcome would be a budget without the added tax burden.
Financial Impact On Sportsbooks
If implemented, the proposed tax would add 10.25% to Chicago-based revenue on top of the state’s progressive rates ranging from 20% to 40% and a 2% Cook County tax. Based on 2024 revenue, DraftKings could face an effective rate of 54.9%, while FanDuel could pay 54.5% in total. The city’s $26 million revenue projection assumes operator adjusted gross revenue of $253.6 million, which is 40% of Cook County’s $633.6 million sports betting revenue in 2024.
Mobile sportsbooks also pay a per-wager surcharge of $0.25 or $0.50 under the state Fiscal Year 2026 budget, generating $20.6 million in the first three months.
Comparisons And Past Examples
Illinois’ situation mirrors Connecticut’s 2021 sports betting rollout, when operators like DraftKings and FanDuel were temporarily required to partner with tribal casinos to maintain legal operations. Other unlicensed operators had to shut down until provisional licensing was granted.
The SBA’s warning highlights the potential for disruption in Chicago, where legal sportsbooks already have market access. Without clear licensing guidance, operators fear noncompliance and possible forced shutdowns at the start of 2026. The City Council may vote on an alternative budget as early as Saturday, which also includes legalization of video gaming terminals, a measure facing resistance from Bally’s, the operator of a temporary city casino.
Source:
“Major sportsbooks threaten to exit Chicago on Jan. 1”, sbcamericas.com, December 18, 2025
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