Illinois Considers Steeper Sports Betting Taxes and New Rules for Prediction Markets – rg.org

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Illinois lawmakers are once again looking at the state’s gambling tax structure, this time proposing to raise rates further while extending oversight to the fast-growing prediction market industry. Sports betting has become one of Illinois’ more reliable revenue streams, with the state comptroller’s office reporting more than a billion dollars collected from sports betting taxes since 2023 alone.

The most recent fiscal year change already delivered a sharp jump in collections, from $393 million in FY25 to $612 million in FY26, largely thanks to a new per-wager fee introduced as part of the current budget year. That money flows into the state’s general revenue fund, helping cover everything from pensions to medical and human services programs.

Despite the revenue growth, actual wagering volume slipped when comparing May 2025 to May 2026, a trend the Sports Betting Alliance says reflects bettors being squeezed out of the legal market by high taxes and competition from neighbouring jurisdictions with friendlier rules. The group has cautioned that a shrinking legal handle benefits no one in the long run, particularly as cheaper, less regulated alternatives gain ground.

That concern is part of what’s driving the second half of the bill, which would classify prediction markets as exchange wagers under the Sports Wagering Act, exposing them to the same 15 percent gross revenue tax as traditional sportsbooks.

Kalshi, one of the largest prediction market operators, is fighting back in court, arguing it already answers to federal regulation through the Commodity Futures Trading Commission and should not be bound by Illinois’ proposed tax. The case is currently before the U.S. District Court for the Northern District of Illinois, and the law will stay on hold until that dispute is resolved.

Quinn is a seasoned sports journalist from Vancouver, Canada. He’s an editor for RG, a betting analyst, and a regular writer for Gino Hard, an NHL website that covers all things hockey. Quinn was previously a senior editor for ClutchPoints for 4.5 years. He is an ex-athlete himself, having played college baseball in the United States in his younger years. Quinn is a Swiss Army knife and has covered most sports, including soccer, baseball, basketball, football, tennis, and more.

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