Illinois Republican Rep. Travis Weaver introduced House Bill 5811 on September 2, with the aim of repealing the state’s tax on “exchange wagers.”

If approved, the bill would eliminate references to the prediction market tax from the Illinois Sports Wagering Act. Governor JB Pritzker signed the tax into law in June, and it went into effect in July.

The tax imposes a levy of 1.75% on the value of any agreement, contract, transaction, or swap offered, traded, or executed on a prediction market or exchange related to a sporting contest or event. The rate increases to 3.5% after 5 million exchange wagers.

The Illinois Gaming Board has not yet released its July revenue report, making the amount collected under the new tax uncertain. The levy is in addition to other taxes and payments required under the Sports Wagering Act.

The proposed repeal comes as state regulators continue to challenge prediction market operators. The Illinois Gaming Board has issued cease-and-desist letters to Polymarket, Crypto.com, Kalshi, and Robinhood over alleged unlicensed sports wagering activity.

The U.S. Commodity Futures Trading Commission (CFTC) has also contested Illinois’ efforts to regulate prediction markets, arguing that the markets fall under its exclusive federal jurisdiction.

The CFTC amended its lawsuit against Illinois in June to challenge the new tax, stating that the state’s fees interfere with the agency’s authority to regulate and monitor federally regulated designated contract markets (DCMs).