- Illinois joins Minnesota as the second state to enact a law that regulated prediction markets in their respective states.
- Monday’s budget package included Senate Bill 4168, also known as The Prediction Markets Regulation and Taxation, which requires prediction markets to acquire a license.
- Legal opposition from the Commodity Futures Trading Commission (CFTC) is expected, but this law puts further pressure on state laws contradicting federal law.
CHICAGO – Illinois’s budget for fiscal year 2027 includes the text of a bill that requires prediction market companies to acquire a specific license to offer their services in the state. Predictions are treated similarly to legal sports betting operators under The Prediction Markets Regulation and Taxation Act, which creates a new category of licensing for the Illinois Gaming Board to oversee.
The prediction market regulation law includes text from SB 4168, which declares that no person shall operate a prediction market offering qualifying prediction market contracts to Illinois residents without first obtaining a master prediction market license from the Illinois Gaming Board and paying a $1,000,000 license fee to the Board. The “master prediction market license” has a $1 million annual renewal fee and operators must pay a 50% tax on their adjusted gross receipts from prediction market contracts.
Illinois is following in Minnesota’s footsteps as the first two states to enact laws that regulate prediction markets. Both states have received pushback from individual prediction market operators, as well as the CFTC who claim to hold exclusive rights to regulatory oversight of prediction markets that would now require a license to operate in Illinois.
Can Illinois Legally Regulate Prediction Markets?
The CFTC and even President Donald Trump have fought against state regulation and instead pushed for exclusive federal regulation. Illinois Governor JB Pritzker was one of many politicians who pushed back against President Trump’s comments, stating that the President wants federal regulation so that “his family and administration can keep profiting.”
A state law that contradicts a federal law could violate the Supremacy Clause of the US Constitution, but the courts will be the ones to determine if there is a conflict between state law governing what federal law addresses. There’s also the possibility that the US Commodity Exchange Act could prevent state regulation in Illinois or Minnesota.
