ESA sues to overturn Chicago online game service tax

Trade group goes to court over city's expansion of amusement tax to include game streaming and subscription services

By Brendan Sinclair.Published Monday 5th June 2017, 7:32pm GMT

The Entertainment Software Association today sued the City of Chicago for an amusement tax it levied in 2015 that would require operators of online gaming services to charge its customers more for the games they play.

The trade group's objection hinges on the notion that charging the tax for digitally delivered games but not for those purchased on physical media, "resulting in an unlawful discriminatory tax on electronic commerce."

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"This discriminatory tax makes Chicagoans' lives more expensive, just because they live in the 21st century and choose to play video games online," ESA president and CEO Michael D. Gallagher said. "As one of the most innovative and rapidly growing industries in Illinois, we are proud to take this fight to court and stand up for consumers. Chicago's tax bureaucrats are out of line in extending their reach beyond legal limits imposed by federal law. We intend to remedy that situation."

The ESA's suit adds that the costs of complying with the tax law are substantial. It also says the streaming and subscription-based services in question "are substantially similar or equivalent to other untaxed offline amusements."

This is not the first time the online portion of the Chicago Amusement Tax has been challenged in court. A number of Internet Service Provider customers filed suit in December of 2015 on a number of the same grounds. That suit is still winding its way through the Circuit Court of Cook County.

Read article on GamesIndustry.biz