Illinois lawmaker proposes repeal of state's prediction market tax

An Illinois lawmaker introduced legislation to repeal the state's transaction tax on prediction market trades. The bill would eliminate the levy that applies to regulated event-contract platforms operating in Illinois. Gov. JB Pritzker approved the tax months earlier as part of the state budget, amending sports betting law to treat certain sports-event contracts like wagers. The repeal push follows prediction market operators' expanded state-level lobbying to reduce trading friction.

The repeal fight puts Illinois in play as both tax collector and potential tax-cut state, a dual role that complicates operators' state-by-state strategy. Kalshi and Polymarket must now track whether the tax dies or spreads, and budget accordingly. The original levy treated CFTC-regulated sports contracts like sportsbook wagers, imposing state licensing costs that federal designation was meant to bypass. A repeal would restore that cost advantage in Illinois; a failure would validate the tax as a model other states with gaming deficit gaps could copy. The legislative timeline is faster than federal litigation, so platforms could know Illinois's stance before the Supreme Court decides whether to hear New Jersey's preemption petition. Traders in Illinois face a pricing edge that hinges on a single state's budget politics, not a clean federal rule.