Illinois Republican Rep. Travis Weaver filed House Bill 5811 on September 2, seeking to repeal the state’s tax on “exchange wagers.”
If passed, the bill would remove references to the prediction market tax from the Illinois Sports Wagering Act. Gov. JB Pritzker signed the tax into law in June, with the levy taking effect in July.
The tax imposes a 1.75% levy on the value of any agreement, contract, transaction or swap offered, traded or executed on a prediction market or exchange tied to a sporting contest or event. The rate rises to 3.5% after 5 million exchange wagers.
The Illinois Gaming Board has yet to release its July revenue report, leaving the amount collected under the new tax unclear. The levy is also imposed in addition to other taxes and payments required under the Sports Wagering Act.
The proposed repeal comes as state regulators continue to challenge prediction market operators. The Illinois Gaming Board has issued cease-and-desist letters to Polymarket, Crypto.com, Kalshi, and Robinhood over alleged unlicensed sports wagering activity.
The U.S. Commodity Futures Trading Commission (CFTC) has also challenged Illinois’ efforts to regulate prediction markets, arguing that the markets fall under its exclusive federal jurisdiction.
The CFTC amended its lawsuit against Illinois in June to challenge the new tax, saying the state’s fees interfere with the agency’s authority to regulate and monitor federally regulated designated contract markets (DCMs).
“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,” the amended lawsuit stated.