Illinois Lawmaker Moves to Scrap Tax on Sports Wagering and Fantasy Contests

Illinois Rep. Travis Weaver has filed a bill that would tear down several taxes and licensing rules tied to sports wagering and fantasy contests in the state.

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The legislation, HB5814, was introduced in the 104th General Assembly and covers the 2025 and 2026 sessions. It goes after the exchange wager transaction tax, the privilege tax on fantasy contest operators, and the provisions that treat fantasy contests as something other than gambling.

The bill also removes the legal shield that kept fantasy contest players from being convicted of gambling under the Criminal Code of 2012. Weaver’s proposal takes effect immediately if it becomes law.

Exchange wager tax set for repeal

Under the current Sports Wagering Act, the state collects a transaction tax on exchange wagers. The rate sits at 1.75% of each exchange wager, then climbs to 3.5% once a licensee runs more than five million exchange wagers in a fiscal year.

That money flows monthly into the Sports Wagering Fund, and the Board certifies the amounts before the Comptroller and Treasurer move them to the General Revenue Fund. Weaver’s bill strikes that subsection entirely. 

The definition of “exchange wager” would still remain in the Act, covering any agreement, contract, transaction, or swap offered, traded, or executed on a prediction market or exchange tied to a sporting contest or event. What disappears is the tax attached to those wagers.

The bill also changes several other sections of the Sports Wagering Act, including the definitions, the sports wagering authorized section, the tax section, and the voluntary self-exclusion program.

The legislation does not touch the main sports wagering tax structure. The 15% tax on adjusted gross sports wagering receipts stays as is. So does the 2% tax on adjusted gross receipts from wagers placed within a home rule county with a population over 3,000,000, which goes to that county for its criminal justice system.

The tiered privilege tax on mobile and online sports wagering also remains, with rates starting at 20% for annual adjusted gross receipts up to $30,000,000 and rising to 40% for anything above $200,000,000.

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Fantasy contest rules and privilege tax also face removal

The bigger part of the bill targets fantasy contests. Right now, Sections 25-120 through 25-120.8 of the Sports Wagering Act lay out a full framework for fantasy contests.

That framework says fantasy contests do not count as gambling, sets up a licensing system for fantasy contest operators, and imposes a privilege tax on the privilege of holding a license to operate fantasy contests. Weaver’s bill repeals all of those sections.

It also changes the Criminal Code of 2012 to remove the provision that said participants in certain fantasy contests shall not be convicted of gambling. 

Weaver also fighting prediction market tax in separate battle

HB5814 is Weaver’s second move against gambling taxes in a matter of weeks. Earlier in September, the Republican lawmaker filed H.B. 5811, which took direct aim at Illinois’ new tax on prediction market trades. That bill came on Sept. 2 and proposed scrapping the state’s levy on what the law calls “exchange wagers.”

The tax itself only became law in June, signed by Gov. JB Pritzker, and it kicked in at the start of July. It charges 1.75% on the value of any “agreement, contract, transaction, or swap” offered, traded, or executed on a prediction market or exchange tied to a sporting contest or event. 

Once a licensee passes 5 million exchange wagers, the rate jumps to 3.5% per transaction. 

Kalshi is already in a legal battle with the state concerning the new tax, arguing that the law, which redefines exchange‑traded event contracts as “exchange wagers” and forces operators to obtain costly state licenses while limiting trades to Illinois residents, would put it in violation of federal rules mandating nationwide, impartial access.

Weaver’s H.B. 5811 would strip every reference to that prediction market tax out of the Illinois Sports Wagering Act.

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