Illinois Bill Seeks to Eliminate Prediction Market Tax Amid Legal Challenges | Gambling Insider

An Illinois lawmaker is seeking to repeal the state’s recently enacted tax on sports betting markets, less than three months after the measure became law and was challenged by Kalshi and the Commodity Futures Trading Commission (CFTC).

Representative Travis Weaver filed HB 5811 on Wednesday. The legislation would repeal provisions of the Illinois Sports Betting Act regarding the state’s tax on exchange betting.

The proposal comes as Illinois remains involved in litigation over prediction markets with Kalshi, the CFTC and Coinbase.

The bill will abolish the tax on exchange bets

HB 5811 would repeal the Sports Wagering Act’s definition of “exchange wagering,” which covers an agreement, contract, transaction, or swap offered, sold, or executed on a prediction market or exchange and tied to a sporting competition or event.

It will eliminate the transaction tax, set at 1.75% for the first 5 million exchange bets executed by the platform during a financial year, and 3.5% for each exchange bet thereafter for the remainder of the financial year.

Earlier this year, Illinois approved an exchange rate tax as part of its fiscal year 2027 budget package. SB 3019 amended the Sports Wagering Act to specifically define exchange betting and include it in the state sports betting structure. The law also requires prediction markets to obtain government licenses.

The repeal will not affect the existing sports betting tax structure in Illinois. This includes a progressive tax ranging from 20% to 40% of adjusted gross receipts from sports betting, as well as a separate tax on each bet. Online bookmakers also pay $0.25 for each of the first 20 million bets per year. Above this threshold, the tax increases to $0.50.

Tax disputes from the CFTC, Kalshi

The CFTC sued Illinois in April, before the state implemented the tax on exchange bets. The agency has challenged the state’s attempts to apply gambling laws to prediction market platforms. After Governor J.B. Pritzker signed the budget, the CFTC amended its complaint to challenge the new tax on exchange bets.

Kalshi separately sued Illinois in June after adopting a new tax and licensing system. As with all complaints against state officials, Kalshi argues that state regulation of her federally chartered exchange takes precedence over federal commodity law.

The exchange also challenged claims that it is subject to Illinois sports betting and geolocation licensing rules.

Illinois is also defending a lawsuit filed by Coinbase. This case predates the introduction of the exchange rate tax and was filed in December 2025.

While HB 5811 would repeal the transaction tax if it becomes law, it would not resolve a broader dispute over state and federal power over prediction markets that could reach the Supreme Court.

Featured image: formulanon via Wikimedia Commons (license)

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Chavdar Vasiliev

Global wire editor

Chavdar Vasiliev is the editor of Global Wire in Gambling Insideroverseeing day one coverage of the latest developments in the global gambling industry. His work focuses on regulation, enforcement, revenue, market activity and emerging sectors, including prediction markets and casino betting.

Vasiliev previously reported for publications, including CasinoBeats And Bonus.comcovering the stories shaping the industry in the U.S. and beyond, from legislative debates and market expansion to financial performance and operator strategy.

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