Illinois' robust sports betting market, with some of the highest tax rates in the country, is set to impose additional gaming levies.
The state approved new taxes for prediction market operators and fantasy sports sites, according to the Chicago Sun-Times and Bloomberg Law.
Key Takeaways
- The $56-billion budget was approved by the legislature Monday.
- Gov. JB Pritzker supports the new levies on fantasy sports, digital assets companies, social media companies, and prediction markets.
- Taxing trading exchanges is part of a more complicated process.
The General Assembly approved SB 3019, which includes a package that also taxes digital assets and social media companies, and inserted it into the $56-billion budget for 2027, which was approved Monday. The new levies could generate $65 million in revenue for Illinois.
Gov. JB Pritzker said he plans to sign the budget, which will go into effect July 1.
Enjoying Covers content? Add us as a preferred source on your Google account“Every element of the budget for the upcoming fiscal year was thoroughly deliberated with the aim of achieving widespread affordability for all Illinoisans,” Pritzker said. “It builds upon seven years of fiscal discipline and efforts to make our state competitive in national and international industries.”
Complicated process
Prediction market sites are being brought under Illinois’ Sports Wagering Act, which is being amended to include “exchange wager” in the language of the law. Illinois will require prediction market operators to obtain a license from the state’s gaming board.
Exact percentages for prediction markets weren’t immediately unveiled. Illinois became the second state to approve a tax on trading exchanges, joining Kentucky, though it’s a complicated process.
The Illinois legislature recently had considerable debates about prediction markets, which are offering sports, election, economic, and other event contracts in a state with legal sports betting.
Legal issues
The Prairie State is currently mired in a legal battle against trading exchanges and the Commodity Futures Trading Commission (CFTC).
After Illinois sent cease-and-desist letters to prediction market companies Kalshi, Robinhood, and Crypto.com, the CFTC filed a lawsuit against the state in April. The federal agency that regulates markets operated by trading exchanges has sued multiple states that are trying to take action against prediction market companies.
There are more than a dozen states involved in legal issues surrounding event contracts, which is dominating prediction market news.
Still, the Illinois legislature passed a tax on those operators, but it remains to be seen if and how it will take effect.
Fantasy tax
The state budget requires fantasy sports operators to obtain a two-year license, costing between $500 and $1,500. The state will levy a 15% tax on gross receipts.
Rep. Curtis Tarver said fantasy operators requested the change to create a regulated framework, per ABC 7. DraftKings, FanDuel, and Underdog are three of the biggest fantasy operators in Illinois.
Illinois sports betting uses a progressive tax system on operators, ranging from 15% to 40%. The state implemented a per-wager tax last summer, charging online sportsbooks 25 cents for the first 20 million bets and 50 cents on subsequent wagers. The surcharge filled Illinois' coffers with nearly $11 million in March.
