Illinois’ Senate Bill 3019, signed into law last month by Governor JB Pritzker, will see a new tax on prediction market transactions and a tax rise on sports betting operators.
Illinois to Increase Taxes on Sports Operators and Tax Prediction Market Trades
The first five million trades would be subject to a 1.75% tax, with the rate increasing to 3.5% on any trades beyond that threshold. Some view the tax as another method for the state to control the rapidly expanding prediction markets. Earlier this year, Illinois tightened ethics standards across various fields, including new rules aiming to curb potential abuse in prediction markets.
The new proposed tax increases on sportsbooks have drawn criticism from industry stakeholders. The Sports Betting Alliance (SBA), whose members include big names like DraftKings and FanDuel, argues that higher taxes would discourage bettors from using regulated sportsbooks.
Expectedly, prediction market operators have also challenged the proposed tax. Kalshi and the Commodity Futures Trading Commission (CFTC), which currently regulates prediction markets, have filed a lawsuit against the state. The case is currently pending before the US District Court for the Northern District of Illinois. Until the case is resolved, something that could potentially take years, the state cannot implement the event wager tax.
How Much Money Does Illinois Make from Taxing Sportsbooks?
Considering the vast sums of money traded on prediction markets and traditional sports betting operators, it’s easy to see why Illinois might want to further tap into the field. Since its legalization in the state in 2020, sports betting has become a significant source of revenue for Illinois. Bettors have wagered more than $59 billion, generating over $1 billion in tax revenue.
In May 2025, the Illinois General Assembly amended the Sports Wagering Act to introduce a per-wager tax on online sports bets. The measure became law on June 17, 2025, and took effect a few weeks later. According to the Illinois Gaming Board, tax revenue has risen sharply since the initial increase, climbing from $393 million in fiscal year 2025, with the funds generated being used to support a range of state programs.
However, the higher tax has coincided with a decline in betting activity. Data comparing May 2025 with May 2026 shows a 21% year-over-year drop in the number of bets placed after the new tax took effect. Illinois’ sports betting handle also fell 10.2% year-over-year in May, dropping to $1.1 billion.
In other news from Illinois, a man recently won $1.3 million from the state lottery.