Illinois Gambling Tax Targets DFS Sites, Prediction Markets
A new Illinois gambling tax has been introduced as part of a huge $56 billion budget.
Illinois lawmakers passed the budget yesterday, and it includes levies on social media operators and various online gambling platforms, too.
At a Glance:
- New taxes target crypto traders and daily fantasy sports (DFS)
- Prediction market betting also taxed under new rules
- Illinois “in strongest position in decades,” says governor
- 15% tax on fantasy sports operators scheduled
- Only sports betting on prediction markets to be taxed
Prediction market contracts taxed, but only on sports
Illinois lawmakers approved a range of measures to raise funds, targeting crypto trading and bets made on daily fantasy sports sites.
However, sports betting on prediction markets is also subject to tax. That will certainly raise eyebrows at the CFTC, which is in an ongoing feud with Illinois lawmakers over who regulates the industry.
War in Iran fueling the need to tax more
America’s ongoing war with Iran is driving up gas prices, something that is hitting Americans’ wallets hard.
The introduction of harsh trade tariffs has created a perfect storm for consumers in Illinois and across the U.S.
The budget is the biggest yet in Illinois, with the Republicans calling it “irresponsible.” No Republicans voted for the new budget proposals.
Sports contracts taxed under new proposals
Under the new law, SB 3019, the Illinois Sports Wagering Act is to be altered to permit “exchange wagers.”
Those are the kinds of event contracts that Kalshi, Polymarket, and others currently offer.
By bringing contract trading under Illinois law, the state will be able to tax it at the state level.
A 1.75% surcharge will apply to every exchange wager. This rises to 3.5% for every 5 million wagers customers place over 12 months.
While that seems punitive, Illinois already has a similar law in place for online sportsbooks. The state introduced a per-bet tax last year worth 25 to 50 cents, depending on the number of bets placed. Consumers bore the brunt of the fee immediately.
New tax latest blow traded in CFTC vs Illinois battle
Illinois is no stranger to tussling with prediction markets. Last month, the regulatory body behind prediction platforms, the CFTC, sued Illinois for trying to clamp down on the market.
The Commodity Futures Trading Commission currently regulates prediction markets on a federal basis as derivatives platforms. However, Illinois is among the states arguing that prediction markets must be regulated in-state.
The CFTC has hit back, suing Illinois and other states like Arizona and Connecticut.
The new Illinois gambling tax on prediction markets is likely to enflame an already delicate legal situation between the two parties.
