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Illinois Bill Seeks to Repeal Prediction Market Tax Amid Legal Challenges

By jili tutorial · September 5, 2026

Illinois Bill Seeks to Repeal Prediction Market Tax Amid Legal Challenges

Overview of the Proposed Repeal

An Illinois lawmaker has introduced legislation to repeal the state’s newly enacted tax on sports prediction markets, less than three months after the measure became law—and while it faces legal challenges from Kalshi and the Commodity Futures Trading Commission (CFTC).

Representative Travis Weaver filed HB 5811 on Wednesday. The bill would remove the provisions of the Illinois Sports Wagering Act that establish the state’s exchange wager transaction tax. The proposal comes as Illinois remains embroiled in litigation over prediction markets with Kalshi, the CFTC, and Coinbase.

What the Bill Would Eliminate

HB 5811 would strike the Sports Wagering Act’s definition of an “exchange wager”—which covers any agreement, contract, transaction, or swap offered, traded, or executed on a prediction market or exchange and tied to a sporting contest or event. By removing this definition, the bill would repeal the associated transaction tax.

The current tax structure is set at:

Illinois originally approved the exchange wager tax as part of its FY2027 budget package earlier this year. Senate Bill 3019 amended the Sports Wagering Act to specifically define exchange wagers and include them within the state’s sports wagering framework. The law also requires prediction markets to obtain state licenses.

Importantly, the repeal would not affect Illinois’ existing sportsbook tax structure. That includes:

The CFTC sued Illinois in April, before the state enacted its exchange-wager tax. The agency challenged the state’s attempts to apply its gambling laws to prediction market platforms. After Governor JB Pritzker signed the budget into law, the CFTC amended its complaint to specifically challenge the new exchange-wager tax.

Kalshi separately sued Illinois in June, following the enactment of the new tax and licensing framework. Like its other complaints against state officials, Kalshi argued that state regulation of its federally registered exchange is preempted by federal commodities law. The exchange also challenged requirements that would subject it to Illinois sports wagering licensing and geolocation rules.

Illinois is also defending a lawsuit brought by Coinbase. That case predates the exchange wager tax, having been filed in December 2025.

Broader Implications

While HB 5811 would remove the transaction tax if it becomes law, it would not resolve the wider dispute over state and federal authority over prediction markets. That constitutional question could ultimately reach the U.S. Supreme Court.

Featured Image: formulanone via Wikimedia Commons (license)