Sports Betting in Illinois: Tax Controversies and Declining Wagers

Sports betting in Illinois is a complex field characterized by strict rules and laws. Players are only allowed to wager with state-approved operators licensed by the Illinois Gaming Board (IGB). A recent report now shows that the gambling market in the US state is grappling with challenges, particularly regarding declining betting figures and the introduction of new tax laws.

The focus is particularly on the so-called Prediction Markets, which will be subject to a new transaction tax in the future. This happens amidst a legal dispute between Illinois and the Commodity Futures Trading Commission (CFTC), which is legally challenging the state's attempt to regulate these markets. The developments in Illinois could have implications for other US states and indeed global gambling markets.

Numbers and facts

Sports betting has been legal in Illinois since 2019, with the first retail bet accepted on March 9, 2020, and online betting launched on June 18, 2020. Players must be at least 21 years old and physically located in Illinois to place wagers. The Illinois Gaming Board (IGB) is the governing authority that regulates the market, issues licenses, and publishes a list of authorized operators.

A notable change is taxation. The state applies a progressive tax system to adjusted gross receipts, with rates ranging from 20 percent to 40 percent. Since July 2025, a per-wager tax has also been imposed on operators. This burden is now extended to 'exchange wagers' for which a transaction tax of 1.75 percent, rising to 3.5 percent after five million wagers, is due.

The effects of this tax policy are already palpable. From September to December 2025, total wagers in Illinois significantly decreased compared to the previous year. In December 2025, 25 percent fewer bets were placed than in December 2024. Overall, the decline amounted to approximately 27.6 million fewer wagers during these four months, resulting in a tax revenue shortfall of around $6.9 million. This led Representative Daniel Didech to introduce House Bill 5143, which aims to repeal this per-wager tax. He noted:

“The bill comes as official data show ticket counts declining even when handle remains resilient, indicating bettors are placing fewer but larger wagers to offset rising costs.” - Chavdar Vasilev, Global Wire Editor at Gambling Insider (reporting on Rep. Daniel Didech's statements).

Background

The discussion around the taxation and regulation of prediction markets in Illinois is particularly explosive. The Commodity Futures Trading Commission (CFTC) sued the state in April 2026, arguing that state regulation of such markets encroaches on federal jurisdiction over derivative markets. Coinbase also supported the CFTC's lawsuit against Illinois, highlighting the extent of the controversy.

These developments illustrate the complex regulatory landscape in the US gambling sector, where each state sets its own rules. The situation in Illinois reflects a broader debate in which financial and gambling jurisdictions vie for control and definition of prediction markets. At the same time, increased taxation directly affects betting behavior. Operators like FanDuel passed on the additional costs to their customers, leading to a decline in betting numbers and prompting lawmakers to reconsider tax policy.

Why it matters for German players

German players are familiar with a similar regulatory density, albeit in a different way. Since the Gambling State Treaty 2021 (GlüStV 2021) came into force, the online gambling market in Germany has been strictly regulated. The Joint Gambling Authority of the Federal States (GGL) issues licenses to providers who must adhere to clear rules. These include a deposit limit of 1,000 euros per month and a stake limit of 1 euro per spin for online slots.

The Illinois case shows that even in strictly regulated markets, adjustments are necessary if tax policies deter players or lead to market distortions. For German players, this means they should always rely on the GGL whitelist to find legal and safe providers. The LUGAS system, which serves to monitor gambling behavior and protect against gambling addiction, is another feature of the German market that strongly influences providers, just like the regulations in Illinois.

What it means for GGL-licensed casinos

The situation in Illinois underscores that excessive taxation of gambling providers ultimately impacts the end customer and can negatively affect the entire market volume. For GGL-licensed casinos in Germany, this is an important insight. Although there is no direct per-wager tax in Germany as in Illinois, the existing levies and strict regulations mean significant financial and administrative burdens for providers.

Should regulations in Germany be further tightened or taxation increased, similar effects to Illinois could occur: players might bet less frequently or with higher stakes to offset costs, or even move to the black market. Policy makers should closely follow developments in the US to maintain a healthy balance between tax revenues, player protection, and market viability. The GGL is continuously working on optimizing the framework conditions.