Illinois lawmakers have included taxes on sports prediction markets as part of the state’s latest budget. The move is expected to be met with opposition from operators and the Commodity Futures Trading Commission (CFTC).
The budget imposes a 14.25% tax rate on a prediction market operator’s transaction fees or adjusted revenues. Whether companies are willing to comply with the new regulation remains to be seen.
The CFTC filed a lawsuit in Minnesota after the state passed a new law restricting prediction markets. The agency claims exclusive jurisdiction over prediction markets and has aggressively rejected any state attempts to regulate the industry.
The tax in Illinois is another effort by a state to claim authority over the operations of CFTC-licensed platforms.
Illinois “Addicted To Spending Money”
Illinois has raised taxes on the gambling industry multiple times in the last few years. Last year, it followed an increase in the revenue tax rate by adding a per-bet fee for sportsbooks. Chicago then added a tax on sports betting operators to its budget.
Companies have opposed those taxes, and the Sports Betting Alliance (SBA) filed a lawsuit against the city of Chicago in December.
The CFTC or prediction market operators such as Kalshi may decide to take similar action in response to the taxes on prediction markets.
Rep. Blaine Wilhour, a Republican in a largely blue state, said the taxes result from the state’s inability to control its spending.
“This state is addicted to spending money it doesn’t have,” Wilhour said, as reported by ABC7. “It’s addicted to creating programs that it can’t afford. It’s addicted to making promises it can’t keep, and it’s addicted to coming back to the taxpayers constantly, constantly to clean up the mess.”
Democrat Rep. Diane Blair-Sherlock responded to Wilhour’s criticisms by claiming the problem lies in federal spending.
“I will not be lectured about excessive state spending at a time when I am watching billion- dollar ballrooms being built, private jets being flown around by staff to go to their girlfriend’s concerts, while SNAP benefits are cut, while Medicaid is cut, while Medicare is cut, while people are desperately trying to get health care,” she said. “We as a state are trying to fill in gaps created by the federal government.”
Trump and Pritzker Lock Horns On Prediction Markets
Governor JB Pritzker signed off on the gambling tax increases last year and will now face approving the new tax on prediction markets. He previously approved an executive order aimed at preventing state employees from using nonpublic information in prediction markets.
Pritzker was named as “SCUM” by President Donald Trump last week in a rant against prediction market opponents. The Governor has been a vocal critic of the President and claims he is only protecting the industry to serve his family’s business interests.
Illinois took action to prevent and ban insider trading with online prediction markets in our state.
— Governor JB Pritzker (@GovPritzker) May 26, 2026
The most corrupt President in our nation’s history wants to make sure states like ours can’t regulate prediction markets so his family and administration can keep profiting. pic.twitter.com/JZyS3aqNfA
Trump Media has partnered with Crypto.com, while Donald Trump Jr. is a strategic advisor to both Kalshi and Polymarket. His venture firm, 1789 Capital, has also invested in Polymarket.
DFS, Social Media Also Targeted With New Taxes
In addition to the proposed tax on prediction markets, fantasy sports operators have also been hit with a 15% tax. The levy is expected to generate $5 million in fiscal 2027, according to lawmakers.
Social media companies will also be hit. Similar to the per-bet tax on gambling, Pritzker proposed a new fee ranging from $0.10 to $0.50 per Illinois user per month, depending on the number of users each platform has.
In response to the gambling tax, operators largely passed the fee directly on to users, with other companies raising the minimum bet. Social media operators may also choose to start charging Illinois residents to use their platforms. The tax is expected to generate $200 million in additional revenue for the state.
The revenue and tax changes, contained in Senate Bill 3019, passed the House in a 73-41 vote before being approved by the Senate. It will now be up to Pritzker to sign off on the legislation.
