Illinois Lawmaker Files Bill To Scrap Prediction Market Tax

Illinois Republican Rep. Travis Weaver has introduced House Bill 5811, seeking to repeal the state’s tax on “exchange wagers”.

Weaver filed the bill on 2 September, with the proposed legislation seeking to remove references to the prediction market tax from the Illinois Sports Wagering Act.

Governor JB Pritzker signed the tax into law in June, with the levy taking effect in July.

Prediction Market Tax Under Review

The tax imposes a 1.75% levy on the value of agreements, contracts, transactions or swaps offered, traded or executed on a prediction market or exchange linked to a sporting contest or event.

The rate increases to 3.5% after five million exchange wagers.

The Illinois Gaming Board has yet to publish its July revenue report, meaning the amount generated by the new tax remains unclear.

The levy is also applied in addition to other taxes and payments required under the Illinois Sports Wagering Act.

Regulators Challenge Prediction Markets

The proposed repeal comes as Illinois regulators continue to challenge prediction market operators over their activities in the state.

The Illinois Gaming Board has issued cease-and-desist letters to Polymarket, Crypto.com, Kalshi and Robinhood, alleging unlicensed sports wagering activity.

The US Commodity Futures Trading Commission (CFTC) has also challenged Illinois’ efforts to regulate prediction markets, arguing that such markets fall under its exclusive federal jurisdiction.

In June, the CFTC amended its lawsuit against Illinois to challenge the newly introduced tax.

The federal regulator argued that the state’s fees interfere with its authority to regulate and monitor 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.”