Illinois First State to Implement Event Contract Tax
Jesse M. Cox Published 03/06/2026
Illinois has introduced its state budget for the upcoming fiscal year, and it includes a new and unique twist. It's certainly going to be an inclusion that will get the attention of federal government officials.
Illinois is implementing a tiered tax on event contracts that are offered by federally regulated prediction market sites. Operators of these prediction market sites will be required to pay a new tax on every sports event contract traded on their platforms. Once a site reaches five million trades in a fiscal year, that tax rate will increase. This new tax would go into effect on July 1, 2026.
Illinois will tax event contracts as much as 3.5 percent
Illinois Governor J.B. Pritzker introduced the sports event contract taxation plan during his budget address. The tiered structure will start at a 1.75% rate for each event contract relating to sports. Once a prediction market site reaches five million trades on its platform in a single fiscal year, the rate of taxation jumps up to 3.5%. All taxes collected from the event contract levy would go directly into the state's Sports Wagering Fund.
Non-sports event contracts will be exempt from this new levy. This will be the first state tax to target sports event contracts traded through prediction markets.
"We passed taxes on social media platforms, digital ad tax, prediction markets, fantasy sports, cryptocurrency, all these new things that call for some taxation," Illinois House Speaker Emanuel "Chris" Welch told WTTW. "And that’s what helped us close the budget. Nothing on regular, everyday people."
Expect that the Feds will push back on this plan
The Trump Administration, through the Commodities Futures Exchange Commission (CFTC), is already in court fighting the state of Illinois to determine whether prediction markets fall under state or federal regulation. The CFTC is the federal regulator of prediction markets. States regulate sports betting. And state attorneys general are arguing that sports event contracts are nothing more than sports betting under an assumed name.
That being the case, they insist that sports-event contracts should be regulated by state governments. Naturally, the federal government disagrees, leading to the ongoing court battles.
This tax plan is a new twist entering the fray. Illinois is the first state to attempt to draw state tax revenue directly from prediction market sites.
"This will lead to more legal filings from the [predictiom market] side, predicted Fairplay.gov. "The CFTC has already sued Governor J.B. Pritzker, Attorney General Kwame Raoul, and the Illinois Gaming Board over [prediction markets]."
Illinois event contract tax is similar to the state's sports betting tax
The move to place a tax on prediction market sports-event contracts closely resembles the tax placed last year on sports betting by the Illinois government.
Under this plan, a tax levy of 25 cents is imposed on every wager placed with a sports betting operator up to 20 million bets. After that threshold is crossed, the tax rate on each sports bet increases to 50 cents.
This decision received a poor reception by the Illinois sports betting operators. To combat the revenue losses, some sportsbooks were choosing to impose minimum bet limits on players. Other sports betting sites put into place a per-bet transaction fee.
Some Illinois lawmakers have been seeking to repeal this per-bet tax. Data shows that it has hurt the state's overall betting numbers.