An Illinois legislator has introduced a bill aimed at revoking the state’s recently established tax on sports prediction market transactions, which ranges from 1.75% to 3.5%. This proposal comes less than three months after the tax was enacted and subsequently contested by Kalshi and the Commodity Futures Trading Commission (CFTC).
Representative Travis Weaver submitted HB 5811 on Wednesday, which seeks to amend the Illinois Sports Wagering Act to eliminate the tax on exchange wager transactions.
The legislation arrives at a time when Illinois is embroiled in legal disputes concerning prediction markets, involving Kalshi, the CFTC, and Coinbase.
HB 5811 aims to remove the definition of an “exchange wager” from the Sports Wagering Act. This definition currently encompasses agreements, contracts, transactions, or swaps that are offered, traded, or executed on prediction markets or exchanges linked to sporting events.
The proposed repeal would abolish the transaction tax, which is set at 1.75% for the first $5 million in exchange wagers made by a platform during the fiscal year, increasing to 3.5% for any wagers beyond that amount for the remainder of the fiscal year.
The exchange wager tax was included in Illinois’ FY2027 budget package earlier this year. SB 3019 specifically defined exchange wagers and integrated them into the state’s sports wagering framework, also mandating that prediction markets secure state licenses.
Importantly, the repeal would not alter Illinois’ current sportsbook tax structure, which includes a progressive tax rate between 20% and 40% on adjusted gross sports wagering receipts, along with a separate per-wager tax. Online sportsbooks are also required to pay $0.25 for each of their first 20 million wagers annually, with the tax increasing to $0.50 for any wagers above that threshold.
The CFTC had previously filed a lawsuit against Illinois in April, prior to the implementation of the exchange wager tax, contesting the state’s authority to impose its gambling regulations on prediction market platforms. Following the signing of the budget by Governor JB Pritzker, the CFTC updated its complaint to include the new tax.
In June, Kalshi initiated its own lawsuit against Illinois after the tax and licensing framework were enacted, arguing that federal commodities law supersedes state regulation of its federally registered exchange.
Illinois is also defending itself against a lawsuit from Coinbase, which predates the exchange wager tax and was filed in December 2025.
While the passage of HB 5811 would eliminate the transaction tax, it would not resolve the broader conflict regarding state versus federal jurisdiction over prediction markets, a matter that could ultimately be decided by the Supreme Court.