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Illinois lawmakers are reviewing legislation that would place prediction market platforms under state oversight while imposing a large tax on operator revenue. Senate Bill 4168 proposes a regulatory structure for trading exchanges offering event contracts, including licensing requirements, enforcement authority, and a tax on adjusted gross revenue.
The proposal arrives as prediction markets gain attention across the United States. Platforms such as Kalshi and Polymarket allow users to trade contracts tied to real world outcomes, including elections, economic indicators, and major events.
Good to Know
Sen. Michael Hastings introduced the Prediction Market Regulation and Taxation Act on Thursday. The proposal would require companies offering event contract trading to obtain a master license before operating inside Illinois.
The license would cost one million dollars per year and would require annual renewal. Once licensed, prediction market operators would fall under oversight from Illinois gaming regulators.
Under the proposal, exchanges would also pay a tax equal to 50 percent of adjusted gross revenue generated within the state. Lawmakers included the provision as a way to ensure prediction market companies contribute tax revenue similar to other gambling related industries.
Any operator offering event contract trading without the required license could face classification as illegal gaming activity under Illinois law.
The proposal grants enforcement powers to Illinois regulators. Illinois Gaming Board would oversee licensing decisions and compliance for prediction market exchanges operating in the state.
Regulators would gain authority to issue cease and desist orders to companies operating without approval. Civil penalties could apply to violations, and cases involving unlawful activity could move toward criminal prosecution through referral to appropriate authorities.
Illinois Gaming Board would also receive authority to suspend or revoke licenses if operators fail to comply with regulatory requirements or tax obligations.
Supporters of the proposal argue that a formal regulatory structure would create clearer oversight of prediction markets as the sector grows.
Prediction market operators such as Kalshi and Polymarket argue that federal law already provides regulatory oversight through Commodity Futures Trading Commission.
Those companies maintain that event contract trading falls under commodities market regulation rather than state gambling laws. Under that view, platforms believe they can operate across all fifty states while complying with federal requirements.
Several states have begun reviewing whether additional state level regulation should apply to prediction market platforms offering event contracts to local users.
Illinois now joins a group of states evaluating legislative responses to the expanding sector.
Senate Bill 4168 represents the second legislative effort in Illinois this year aimed at regulating prediction markets.
Earlier in February, Rep. Edgar Gonzalez Jr. introduced House Bill 5059. That proposal carries the name ORACLE Act and outlines a broader regulatory framework for event contract trading platforms.
The ORACLE Act includes provisions covering minimum age requirements, bans on certain types of prediction markets, and responsible gaming protections designed for users participating in event contract trading.
The proposal received its first reading on February 10 before moving to Illinois House Gaming Committee for further review.
Both proposals highlight increasing attention from lawmakers as prediction markets grow alongside sports betting and other regulated wagering sectors.
Discussion around prediction market regulation is also developing at the federal level. On the same day Illinois lawmakers introduced Senate Bill 4168, two United States senators introduced separate legislation addressing the use of prediction markets by government officials.
The federal proposal would prohibit public officials from participating in prediction markets for financial gain. The restriction would apply to positions including President, Vice President, and members of Congress.
Supporters of the federal bill argue that public officials could possess insider information that might influence trading activity within prediction markets.