Illinois lawmakers have approved a fiscal year 2027 budget package that introduces a new tax on sports-event prediction market contracts while also creating a formal regulatory framework for daily fantasy sports (DFS).
The move places Illinois among the latest states seeking to capture tax revenue from the rapidly growing prediction market sector. The new measure arrives as the state remains locked in a legal dispute with the federal government over who has authority to oversee prediction market operators. The Commodity Futures Trading Commission (CFTC) filed a lawsuit against Illinois in April after the state attempted to regulate federally supervised prediction market platforms.
Under the newly approved budget, sports-event prediction market contracts will face state taxation, a step lawmakers say is designed to address differences between traditional sports betting operators and federally regulated prediction market companies. The broader FY2027 budget totals approximately $55.9 billion and includes several new revenue measures affecting industries such as fantasy sports, cryptocurrency and digital advertising.
In addition to the prediction market tax, the legislation establishes a dedicated licensing and taxation structure for daily fantasy sports operators. Until now, DFS contests had operated without a comprehensive statewide framework tailored specifically to the sector. The new rules are expected to provide clearer oversight and compliance requirements for fantasy sports companies operating in Illinois.
The prediction market provisions could trigger further legal challenges, as states across the US continue to debate whether event-based prediction contracts should be treated similarly to sports betting products. Several jurisdictions have already questioned the regulatory status of prediction market operators, arguing that they compete with licensed sportsbooks while operating under a different federal framework.
Illinois’ budget package now awaits implementation as the state prepares for the new fiscal year, with the gambling and prediction market industries closely watching how the tax and regulatory changes will be enforced.