Chicago Sues Airbnb And One Of City’s ‘Most Active’ Hosts Over ‘Illegal Short-Term Rentals’

CHICAGO — The City of Chicago filed a lawsuit this week against Airbnb and the South Loop-based Slumber Stay, alleging the two vacation home rental businesses “repeatedly” violated Chicago’s housing ordinance and consumer protection laws.

The lawsuit, filed Monday in the Circuit Court of Cook County, contends Airbnb processed bookings for unregistered and unlicensed units hosted by Slumber Stay, “prioritizing profit over compliance with City law.”

According to the city’s lawsuit, Slumber Stay, 2036 S. Michigan Ave., “repeatedly failed” to register short-term rental units with the city, used a non-transferable hotel license number across multiple unrelated properties and continued to list and rent units unlawfully even after admitting to similar misconduct and paying fines for other units.

The complaint stated that Slumber Stay — which the city said in a press release is one of Airbnb’s “most active hosts” in Chicago — received nearly 200 city citations in 2024 and 2025 for violating the Shared Housing Ordinance and other consumer protection laws.

“Requiring short-term rental companies to follow the same rules as everyone else is critical to our work of building a safer, more affordable Chicago,” Mayor Brandon Johnson said in a Tuesday press release announcing the lawsuit. “The City will deter bad actors from attempting to slip under the regulatory radar and ensure that the industry is operating fairly and safely both for our residents and visitors to our great city.”

The lawsuit names Airbnb, Inc., its affiliate Airbnb Living, LLC, Slumber Stay LLC and its manager, Milan Rubenstein. The parties are scheduled for an initial hearing at the Richard J. Daley Center on Aug. 21, according to court records.

Messages were left seeking comment from Airbnb and Slumber Stay.

The city is asking a judge for an order barring the defendants from renting unlawful short-term rentals, while also banning Airbnb from brokering unlawful rentals. It is also seeking fines to punish the defendants “for their repeated violations of municipal law and to deter others in the industry from engaging in similar misconduct.”

Slumber Stay is one of 11 companies through which Rubenstein offers short-term rental units on Airbnb and other platforms, according to the lawsuit. Rubenstein’s Chicago-area apartment portfolio once included 740 units, with multiple properties in the South Loop, according to the complaint — which noted Rubenstein acquired a 344-unit complex for $24.2 million in 2014.

According to the lawsuit, the city previously cited Rubenstein for hosting short-term rentals using fraudulent registration numbers. He allegedly used the same hotel license number assigned to his Michigan Avenue property for multiple locations in Pilsen, the West Loop and Bronzeville.

Despite admitting liability and paying city fines, Rubenstein and Slumber Stay have continued renting short-term housing units in Chicago unlawfully, according to the lawsuit. Airbnb, meanwhile, “knows or should know that hosts like Rubenstein operate on its platform in violation of the Ordinance by renting unregistered or unlicensed units,” the complaint said, also accusing it of rejecting a “years-long effort” to cooperate.

“Defendants’ misconduct places renters of unlawful short-term units at risk, exposes Chicago residents to illegitimate rentals in their neighborhoods and apartment buildings, and harms competitors that play by the rules by creating an uneven playing field,” the complaint reads.

Chicago enacted its Shared Housing Ordinance in 2016 to regulate short-term rentals through platforms like Airbnb and Vrbo, which were rapidly growing. The Chicago City Council amended the ordinance in 2020, including by imposing location restrictions on short-term rentals, limiting the number of short-term rental units in a building and requiring such units to be registered with the city.

Chicagoans or consumers who wish to inform the city about their experience with short-term rentals can email consumerprotection@cityofchicago.org.