Illinois Hits Prediction Markets With Per-Trade Tax

Illinois lawmakers approved a $55.8 billion fiscal year 2027 budget this week that includes a per-trade tax on sports prediction markets, mirroring the state's existing per-wager tax structure for regulated sports betting.

Why It Matters

As of June 2026, Illinois already operates one of the most aggressive sports betting tax regimes in the United States, and extending that per-wager logic to prediction markets signals the state views these platforms as functionally equivalent to sportsbooks — a framing that operators like Kalshi and Robinhood will almost certainly contest. A per-trade tax is particularly punishing for high-frequency market participants: unlike a revenue-share or gross gaming revenue model, it applies regardless of whether the platform or user turns a profit. If other states adopt Illinois's template, the U.S. prediction market sector could face structural cost headwinds before it reaches meaningful scale. Operators should price this risk into any Illinois expansion plans now.

Context

Illinois introduced a tiered, per-wager sports betting tax in 2024 — rising as high as 40 percent of adjusted gross revenue — that drew sharp criticism from major sportsbook operators (per SBC Americas). Sports prediction markets occupy a legal gray zone nationally: federally regulated by the CFTC rather than state gaming commissions, they have argued state gambling taxes do not apply to them. Illinois's budget move directly challenges that position.

What's Next

The fiscal year 2027 budget takes effect July 1, 2026, making a legal challenge from prediction market operators the most likely near-term milestone. Watch for CFTC commentary or federal preemption arguments in the weeks that follow.

Gambling involves financial risk. Trade and wager only what you can afford to lose. Source: SBC Americas.