Illinois legislator seeks repeal of new prediction-market sports tax

Illinois Rep. Travis Weaver has filed legislation to repeal the state’s new tax on sports-related prediction-market transactions. The measure, HB 5811, would remove the provisions governing “exchange wagers” from the Illinois Sports Wagering Act.

The bill was filed Sept. 2, according to Yahoo Finance’s report. If enacted, it would take effect immediately, SportsBettingDime reported.

Illinois enacted the levy in June as part of the budget signed by Gov. JB Pritzker, and it took effect July 1. It applies to the value of an agreement, contract, transaction or swap offered, traded or executed on a prediction market or exchange tied to a sporting contest or event.

Operators pay 1.75% on each such transaction for their first 5 million exchange wagers in a fiscal year. The rate rises to 3.5% on transactions after that threshold. The receipts are deposited monthly into the state’s Sports Wagering Fund and are owed in addition to other payments required under the Sports Wagering Act.

The Illinois Gaming Board had not yet released its July revenue reports, leaving the revenue raised by the tax unclear.

Weaver has questioned both the fiscal rationale and the legal footing for the levy. He said the budget did not assume revenue from many of its new taxes, while appropriating money for the attorney general to defend them. He argued that issues involving federal interstate commerce should be handled at the federal level.

He also criticised Illinois’s broader approach to gambling taxation. “Every time the budget’s a little bit short, we go to the pocket of sports bettors,” Weaver said, calling it “ridiculous” to create new taxes aimed at the sports-betting market.

The proposal arrives amid a jurisdictional fight between Illinois and federal regulators over prediction markets. Illinois sports-betting regulators sent cease-and-desist letters to Polymarket, Crypto.com, Kalshi and Robinhood, alleging unlicensed sports-wagering activity.

The Commodity Futures Trading Commission has sued Illinois over the state’s efforts to police prediction markets and amended its case in June to challenge the new tax. The agency argues that prediction markets are within its exclusive regulatory jurisdiction. In language quoted in the Yahoo Finance report, the CFTC said Illinois’s special fees on federally regulated designated contract markets interfered with its authority to regulate the market uniformly.

WilmerHale has noted that sports-based prediction markets are governed by federal commodity-derivatives laws and that platforms operate as CFTC-regulated designated contract markets. The firm said global prediction-market trading rose from less than $16 billion in 2024 to nearly $64 billion in 2025, with sports contracts accounting for more than 80% of activity.

Illinois’s exchange-wager levy also followed its earlier use of transaction-based sports-betting charges. A June 2025 policy imposed a 25-cent fee on an operator’s first 20 million bets and 50 cents on each bet thereafter. Card Player reported that operators passed much of that cost to customers and that betting volume subsequently fell.

The budget containing the prediction-market tax passed the Illinois Assembly by 73 votes to 41 and the Senate by 36 to 19. Card Player assessed Weaver’s repeal effort as unlikely to pass, given Democratic control of both chambers and the largely party-line budget votes.