As part of its state budget, Illinois amended its sports betting law to tax and treat certain sports-event contracts offered on prediction markets as “exchange wagers,” which was quickly challenged in court by Kalshi and the Commodity Futures Trading Commission (CFTC).
House Bill 5811, introduced by Republican state Rep. Travis Weaver, would eliminate the tiered tax on sports-event contracts and remove the definition of exchange wager from the Sports Wagering Act.
Weaver told CDC Gaming on Wednesday that he filed the bill now to get the word out and create some momentum behind his legislation. The Illinois legislature will return in November and December for a six-day veto session.
Weaver explained that his bill would probably be considered when lawmakers return on January 13 for the 2027 legislative session, but “in a perfect world,” they would consider it during the upcoming veto session.
HB 5811 would remove the definition of an “exchange wager” from the Sports Wager Act, which is defined as “an agreement contract, transaction, or swap that is offered, traded, or executed on a prediction market or exchange tied to a sporting contest or sporting event.”
Weaver’s bill would also repeal the transaction tax, set at 1.75% on the first five million exchange wagers conducted by a platform during the fiscal year and 3.5% for each exchange wager after five million.
Illinois Governor JB Pritzker, a Democrat, signed Senate Bill 3019, the state’s fiscal-year 2027 budget, earlier this year. Besides specifically defining and taxing exchange wagers, the budget also implemented a first-in-the-nation monthly fee on social-media platforms collecting data from over 100,000 Illinois users.
The budget includes a 10% tax on gross receipts from targeted digital-advertising services for business with over $1 million in Illinois receipts, as well as a 0.2% privilege tax on digital-asset business activity handled by brokers for Illinois customers and new or adjusted taxes on fantasy sports.
“I just had a huge problem with that,” Weaver said, “since we actually didn’t budget any revenue from the new taxes. What we did was budget additional cash for the attorney general to defend them.”
The amended sports betting law also requires prediction markets to obtain state licenses for an initial fee of $15 million, which is valid for four years, with $1 million subsequent renewals.
Weaver told CDC Gaming that if the tax is determined to be legal and begins generating revenue for the state, then “it gets hard to kill it.” He added that’s why he introduced the measure to eliminate them now before the veto session.
“They are in effect and not generating any revenue,” said Weaver, who expressed frustration with lawmakers continuing to go back to increase taxes on gambling.
“If it’s legal, we have to let it be legal,” Weaver added.
Weaver’s bill would not impact Illinois’s existing sports betting tax structure, which includes a graduated tax rate from 20% to 40% on adjusted sports wagering receipts. Mobile sportsbook operators also pay $0.25 for each of their first 20 million annual wagers, with the tax rising to $0.50 above that threshold.
The CFTC sued in April before the exchange wager tax was approved, challenging any attempt by Illinois lawmakers to regulate sports event contracts. After Pritzker signed the budget bill, the CFTC amended its complaint, arguing that the licensing and tax provisions are preempted by the Commodity Exchange Act.
Illinois officials have defended the regulations and taxes as necessary consumer protections against illegal gambling. Kalshi sued the state in June, saying that state regulation of its federally registered exchange is preempted by federal commodities law.
Kalshi also challenged Illinois’s requirement to be licensed in the state.
