Illinois Republican state Rep. Travis Weaver has introduced HB 5811, a bill that would repeal the state’s tax on prediction-market sports-event contracts and remove the term exchange wager from the Sports Wagering Act. The proposal follows Illinois’s adoption of the tax as part of its fiscal-year 2027 budget. The tax and related provisions have been challenged in court by the Commodity Futures Trading Commission (CFTC) and Kalshi.
Illinois amended its sports-betting law to treat certain sports-event contracts offered on prediction markets as exchange wagers. Under the law, an exchange wager is an agreement, contract, transaction or swap offered, traded or executed on a prediction market or exchange that is tied to a sporting contest or sporting event.
Licensing and federal preemption fight
Governor JB Pritzker signed Senate Bill 3019, the fiscal-year 2027 budget carrying the exchange-wager provisions, earlier this year. In addition to defining and taxing exchange wagers, the amended law requires prediction-market platforms to obtain an Illinois license. The initial license fee is $15 million and is valid for four years, followed by $1 million renewal fees.
The CFTC sued in April before the exchange-wager tax was approved, challenging efforts by Illinois lawmakers to regulate sports-event contracts. After Pritzker signed the budget, the agency amended its complaint and argued that the licensing and tax provisions are preempted by the Commodity Exchange Act. Kalshi sued Illinois in June, arguing that state regulation of its federally registered exchange is preempted by federal commodities law and challenging the state’s licensing requirement.
Illinois officials have defended the regulations and taxes as consumer protections against illegal gambling. The dispute centers on the state’s authority to regulate and tax sports-event contracts offered on prediction-market platforms.
Timing and rationale
HB 5811 would remove the definition of exchange wager from the Sports Wagering Act and repeal the related transaction tax. The tax is set at 1.75% on the first five million exchange wagers conducted by a platform during a fiscal year and 3.5% on each exchange wager beyond that threshold.
Weaver told CDC Gaming that he filed the bill to build momentum before the tax begins producing state revenue. He also criticized the decision to budget additional funds for the attorney general to defend the new taxes while not budgeting revenue from them.
The proposal would not change Illinois’s existing sports-betting tax structure, which uses graduated rates 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 and $0.50 for wagers above that threshold.
The Illinois legislature is scheduled to return for a six-day veto session in November and December. Weaver said the bill would more likely be considered when lawmakers return on January 13 for the 2027 legislative session, although that schedule does not guarantee a hearing.
Source: CDC Gaming
Petra Vanhoof has spent the better part of a decade following the shifting tides of gambling regulation across Europe and beyond. She came up through the compliance side of the industry before pivoting to writing, which gives her a grounded, no-nonsense perspective on the rules, loopholes, and political maneuvering that shape how operators actually do business. She is particularly drawn to the gap between what regulators say and what the market ends up doing in response.