City of Chicago Sues Airbnb and SlumberStay

The city of Chicago is suing both an Airbnb host and the rental platform company itself, alleging the company failed to help reign in problem operators.

In a lawsuit filed Monday, the city claims prolific Airbnb host Milan Rubenstein violated its short-term housing ordinance more than 200 times between 2024 and 2025 and that Airbnb purposefully avoided prohibiting unlawful rentals from the platform, allegedly “prioritizing profit over compliance with city law,” a city press release stated.

The city is asking Airbnb and the host to surrender profits on the illegally rented units. The suit claims that in March and April, Rubenstein rented out over 500 unregistered units worth more than $1 million in booking value each month.

Rubenstein, whose company SlumberStay operates in Chicago, Nashville and Phoenix, at one point owned more than 740 Chicago-area apartment units, including several properties in the South Loop, according to the lawsuit. His properties include a 344-unit, multi-building apartment complex in Mount Prospect that previously had multiple owners; he bought the parcels piecemeal between 2010 and 2014 for $24.4 million total, and sold it later in 2014 for $33 million, according to the filing and previous reports.

In 2021, he applied for and received a hotel license for a high-rise 2036 South Michigan Avenue that he owns and operates as a furnished, short-term rental property. He then listed that license number as the short-term rental registration number for units across the city instead of registering those properties individually as the short-term rental ordinance requires, the filing claims.

As of April, 167 units were tied to the hotel license number despite being scattered across the city, the lawsuit alleges.

Chicago passed a short-term rental ordinance in 2016 in an effort to create uniform standards for hosts and limit the rentals’ impact on the overall housing market, as well as address safety concerns for guests.

Features of the ordinance include:

A ban on properties with excessive local code violations
Safety requirements such as smoke and carbon monoxide detectors
Adherence to occupancy limits
Contact information of the host for the city on the registration
Registration fees and annual renewals
Registration can be revoked for “egregious conditions” such as drug trafficking, gang activity or violent acts
Nondiscrimination requirements against guests and public disclosure of wheelchair accessibility or inaccessibility

Additionally, the ordinance requires booking platforms such as Airbnb to provide monthly reports of rental data, and the services are prohibited from listing units that are not properly registered with the city.

The filing claims Airbnb failed to remove noncompliant listings and continued to collect fees on the rentals. It also alleges that the company provided incomplete data to the city regarding rental activity in the city, as required in the ordinance, and refused to use a data platform built by the city to cross-reference listings on the rental platform and listings registered with the city.

The company also refused to provide information about hosts and hosts’ specific addresses to help the city track down noncompliant properties. According to the lawsuit, the city met with Airbnb representatives several times in 2024 and 2025 to improve enforcement efforts of the ordinance and the company repeatedly refused to use the city’s data portal to verify registered addresses.

Rubenstein and representatives of Airbnb did not immediately respond to requests for comment.

The city is asking a judge to require Rubenstein to properly register all of his units and prohibit Airbnb from listing unregistered units. It also calls for fines of $3,000 and $10,000 per day for violations of the ordinance against both Rubenstein and Airbnb.

If successful, the lawsuit claims holding Airbnb accountable will help the city work with the platform in the future to crack down on other problem hosts, as it has done with other booking platforms. In any given month, the city of Chicago has roughly 5,000 to 6,000 units available to rent on Airbnb, according to the filing.

Founded in 2008, Airbnb has grown into a multi-billion dollar enterprise that reportedly processed $9.3 billion in bookings in 2025.