Illinois lawmakers have introduced legislation that could remove state tax provisions and definitions affecting sports-related prediction markets following a legal dispute involving prediction-market operator Kalshi and the Commodity Futures Trading Commission (CFTC).
House Bill 5811, introduced by Republican State Representative Travis Weaver, proposes eliminating the definition of “exchange wager” from the Illinois Sports Wagering Act and repealing the transaction tax applied to certain sports-event contracts traded through prediction markets.
The proposal comes after Illinois included prediction-market sports contracts within its gambling framework through changes connected to the state’s fiscal-year 2027 budget. The move has faced challenges from both Kalshi and the CFTC over whether states can regulate federally registered prediction-market exchanges.
Key Facts
| Category | Details |
| Legislation | Illinois House Bill 5811 |
| Sponsor | State Representative Travis Weaver |
| State | Illinois |
| Subject | Prediction market sports-event contracts |
| Proposed change | Remove exchange wager definition and related tax |
| Current status | Introduced legislation |
| Related legal dispute | Kalshi and CFTC challenges |
Illinois Proposal Would Remove Exchange Wager Definition
Under Illinois’ amended sports betting framework, certain sports-event contracts offered through prediction markets were classified as “exchange wagers.”
The state definition covers agreements, contracts, transactions, or swaps offered, traded, or executed through prediction markets or exchanges connected to sporting contests.
HB 5811 would remove this definition from the Sports Wagering Act, preventing those contracts from being treated under the same category.
Representative Weaver told CDC Gaming that he introduced the bill to build support before lawmakers return for future legislative sessions.
Proposed Tax Repeal Would Affect Prediction Market Contracts
The Illinois budget introduced a transaction tax specifically targeting exchange wagers.
The tax structure applies:
- A 1.75% tax on the first five million exchange wagers conducted by a platform during the fiscal year.
- A 3.5% tax on exchange wagers above five million.
HB 5811 would repeal these provisions.
The proposal does not affect Illinois’ existing tax structure for traditional sportsbook operators, which includes graduated taxes on adjusted sports wagering receipts.
Kalshi and CFTC Challenge Illinois Regulation
The Illinois prediction-market rules have become part of a wider legal dispute over whether states can regulate sports-event contracts offered through federally registered exchanges.
According to CDC Gaming, the CFTC filed a lawsuit challenging Illinois efforts to regulate sports-event contracts, arguing that state requirements could conflict with federal commodities law. Kalshi separately challenged Illinois licensing requirements for prediction markets.
Illinois officials have defended the measures as consumer-protection rules intended to address gambling-related concerns.
What the Bill Could Mean for the Market
If passed, HB 5811 could change how Illinois treats prediction-market contracts tied to sporting events.
Potential effects include:
- A different regulatory framework for prediction-market operators.
- Changes to compliance requirements for companies offering sports-event contracts.
- Further debate over the division between financial markets and sports wagering regulation.
However, the bill’s outcome remains uncertain because it has not yet become law.
The broader legal dispute between states, federal regulators, and prediction-market companies may continue influencing how these products are treated across the United States.
Current Status
Illinois HB 5811 remains a proposed measure.
The bill does not currently remove prediction-market taxes or licensing requirements. Any changes would depend on legislative approval and developments in ongoing legal challenges involving Kalshi, the CFTC, and Illinois authorities.
FAQs
Illinois HB 5811 is a proposed bill that would remove the state’s definition of “exchange wager” and repeal related taxes affecting certain prediction-market sports contracts.
No. The tax has not been removed. HB 5811 is only proposed legislation.
Kalshi challenged Illinois’ prediction-market licensing requirements, arguing that state regulation conflicts with federal commodities law.
No. The proposed bill would not change Illinois’ existing sportsbook tax structure.
