On September 2, Illinois Republican Representative Travis Weaver introduced House Bill 5811, aiming to eliminate the state’s tax on exchange wagers.
If the bill is approved, it would remove the prediction market tax from the Illinois Sports Wagering Act. This tax was enacted by Governor JB Pritzker in June and went into effect in July.
The tax imposes a 1.75% charge on the value of any agreement, contract, transaction, or swap associated with a prediction market or exchange related to sports events. Notably, this rate increases to 3.5% once the number of exchange wagers exceeds 5 million.
The Illinois Gaming Board has not yet published its revenue report for July, leaving the total revenue generated from the new tax uncertain. This tax is in addition to other levies and payments mandated by the Sports Wagering Act.
This move to repeal the tax coincides with ongoing challenges from state regulators against prediction market operators. The Illinois Gaming Board has sent cease-and-desist notices to companies like Polymarket, Crypto.com, Kalshi, and Robinhood, citing unlicensed sports wagering activities.
Moreover, the U.S. Commodity Futures Trading Commission (CFTC) has also contested Illinois’ attempts to regulate prediction markets, asserting that these markets fall under its exclusive federal jurisdiction.
In June, the CFTC modified its lawsuit against Illinois to include objections to the new tax, claiming that the state’s fees disrupt the agency’s ability to oversee federally regulated designated contract markets (DCMs). The amended lawsuit stated, “Defendants' attempt to regulate CFTC-regulated DCMs and target these DCMs by singling them out for special fees interferes with Plaintiffs' exclusive authority to uniformly regulate and monitor this congressionally defined market.”