Illinois lawmakers approved new gaming taxes inside the FY2027 budget, with prediction markets and fantasy sports operators both pulled into a wider revenue package.
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Illinois has chosen to tax prediction markets while it still fights over whether the state can regulate them at all. That makes the new budget more than a revenue bill. It also puts the state directly into the national fight over event contracts, Kalshi, Robinhood, Crypto.com and the CFTC.
The General Assembly approved SB 3019 as part of a roughly $56 billion budget package for FY2027. The measure adds new taxes across several digital sectors, including fantasy sports, digital assets, social media and prediction markets. Gov. JB Pritzker said the budget followed “seven years of fiscal discipline” and said he plans to sign it.
The prediction market section amends the Illinois Sports Wagering Act by adding “exchange wager” language. Operators would need approval from the Illinois Gaming Board, although the exact tax percentage for prediction market operators had not been fully detailed when the budget passed.
That creates an awkward legal setup. Illinois issued cease-and-desist letters to several prediction market companies, including Polymarket, Crypto.com and Kalshi, after claiming they offered unlicensed sports wagering. The CFTC then sued Illinois in April, arguing that federally regulated event contract markets fall under federal authority, not state gambling law.
Prediction markets have become one of the hottest legal fights in US gambling. Platforms such as Kalshi, Robinhood and Crypto.com offer contracts tied to sports, elections, economic data and other events. State regulators often view sports event contracts as gambling. The CFTC views them as federally regulated derivatives.
Illinois now joins Kentucky among states trying to tax trading exchanges. Yet collection may depend on how the federal court fight plays out.
DFS also gets a clearer framework. Fantasy sports operators would need a two-year license, with fees between $500 and $1,500. Illinois would tax fantasy sports gross receipts at 15%. DraftKings, FanDuel and Underdog rank among the biggest DFS operators active in the state.
The new DFS tax comes after Illinois already tightened sports betting taxes. Online sportsbooks face a progressive tax rate from 15% to 40%, plus a per-wager fee introduced last year. That fee charges operators 25 cents for each of the first 20 million online bets, then 50 cents for every wager after that.
Rep. Curtis Tarver said fantasy operators supported a regulated structure, according to ABC 7. The change gives Illinois a formal DFS license path while the state tries to capture more revenue from gaming-style digital products.