HB 5811: Illinois Bill Seeks to Repeal Prediction Market Tax

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Mon Sep 07, 2026, 7:00 am ET

Read Time: 4 minutes

HB 5811: Illinois Bill Seeks to Repeal Prediction Market Tax

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Republican Rep. Travis Weaver filed HB 5811 on September 2, seeking to remove the exchange-wager provisions from the Illinois Sports Wagering Act. The proposal arrives less than three months after Illinois introduced the tax as part of its FY2027 budget package.

The move comes as Illinois faces separate legal challenges from Kalshi, the Commodity Futures Trading Commission (CFTC), and Coinbase. Those cases question whether state authorities can regulate prediction markets that operate under federal commodities laws.

HB 5811 Targets the Exchange-Wager Tax

HB 5811 would eliminate Illinois' statutory definition of an "exchange wager." The definition covers contracts, transactions, agreements, or swaps offered through prediction markets and tied to sporting events.

Removing that definition would also eliminate the transaction tax attached to these wagers. Illinois currently charges platforms 1.75% on their first five million exchange wagers during a fiscal year.

The rate then rises to 3.5% for every exchange wager beyond that threshold. Illinois created the tax through SB 3019, which amended the state's Sports Wagering Act earlier this year.

The legislation also introduced state licensing requirements for prediction market operators. That requirement has become another major point of contention between Illinois and prediction market companies.

For the wider Illinois gambling market, the proposed repeal would represent a significant change. Still, HB 5811 targets prediction markets rather than the state's established sports betting framework.

Legal Challenges Surround the Tax

The proposed repeal arrives as Illinois continues defending several lawsuits over prediction market regulation.

The CFTC sued Illinois in April before lawmakers enacted the exchange-wager tax. The federal agency challenged Illinois' broader attempt to apply state gambling laws to prediction markets.

After Gov. JB Pritzker signed the FY2027 budget package, the CFTC amended its complaint. The revised case specifically challenges the new exchange-wager tax.

Kalshi then filed its own lawsuit against Illinois in June. The prediction market operator argues that federal commodities law preempts the state's regulatory requirements.

Kalshi also challenges Illinois licensing and geolocation requirements. Meanwhile, Coinbase is defending its own interests in a separate lawsuit concerning prediction market regulation.

Consequently, repealing the tax could remove one major point of contention. It would not resolve the larger dispute over regulatory authority.

Existing Sportsbook Taxes Would Remain

HB 5811 would not affect Illinois' existing sportsbook tax structure.

The state currently applies a graduated tax of 20% to 40% on adjusted gross sports wagering receipts. Operators also face a separate per-wager tax.

That fee stands at $0.25 for each of an operator's first 20 million annual wagers. It increases to $0.50 for wagers above that threshold.

Therefore, the proposed repeal would not provide a broader tax reduction for US online sportsbooks operating in Illinois.

Instead, it would specifically remove the newly created tax targeting prediction market exchange wagers. That distinction could become important as prediction markets continue competing with traditional sportsbooks for sports bettors.

HB 5811 Leaves the Bigger Fight Unresolved

Currently, HB 5811 remains in its introductory phase and has not advanced to a committee. Weaver is a member of the minority Republican Party, which could make the bill's path through the Democratic-controlled legislature more difficult. The legislation has also not yet received a committee assignment.

Even if HB 5811 advances, Illinois' prediction market dispute will continue.

The bill could eliminate the exchange-wager tax, but it would not settle whether states can regulate sports-related prediction contracts. That question remains at the center of the lawsuits involving Illinois, Kalshi, and the CFTC.

The broader conflict could eventually reach the US Supreme Court.

For now, HB 5811 represents a potential retreat from one part of Illinois' prediction market framework. Yet the bill faces an uncertain legislative path after its introduction by a minority-party Republican.

Its lack of a committee assignment means lawmakers have not yet begun formally considering the proposal beyond its introduction. Therefore, its immediate impact remains limited while the broader legal battle continues.

The bill's next movement through the Illinois legislature will be closely watched by prediction market operators, regulators, and the broader sports betting industry.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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