Prediction Markets
in Illinois
Illinois became a caution state in May 2026 when Governor Pritzker issued an executive order directing state agencies to pursue action against prediction market operators. The Illinois Gaming Board's broad interpretation of gaming statutes creates state-level risk for non-CFTC platforms. CFTC-regulated Kalshi continues to operate under federal preemption.
The CFTC has sued Illinois over Pritzker's executive order.
Illinois is one of five states the CFTC is now suing in federal court to defend federal preemption over CFTC-licensed event-contract platforms. The agency filed its complaint after Governor Pritzker's May 2026 executive order directed state agencies to pursue prediction-market enforcement actions. On May 5, the CFTC won an identical preemption argument against Arizona before Judge Liburdi, who found three independent grounds for federal preemption. The same reasoning is now the CFTC's lead argument in the District of Illinois.
Read full coverage → Litigation scoreboard →Which platforms are available in Illinois?
| Platform | Status in IL | Notes |
|---|---|---|
| Kalshi | Available | CFTC-regulated DCM: federal preemption applies. No documented Illinois Gaming Board action against Kalshi as of May 2026. |
| Polymarket | Waitlist | QCEX invite-only. Illinois has not specifically blocked QCEX, but Pritzker's executive order creates elevated risk for non-CFTC platforms. |
| Manifold | Available | Play-money and sweepstakes cash available in Illinois. |
| PredictIt | Available | CFTC no-action exemption. Politics-only, $850 per contract cap. |
| Robinhood | Available | Economic and sports event contracts available in Illinois. |
Pritzker's executive order and the Illinois Gaming Board
Governor Pritzker's May 2026 executive order
In May 2026, Governor J.B. Pritzker issued an executive order alongside New York Governor Hochul directing state agencies to pursue enforcement actions against prediction market operators. The order characterized event contracts as gaming products requiring Illinois Gaming Board licensing, arguing that federal preemption does not extend to products that are "primarily gambling in nature."
The Illinois Gaming Board has a history of broad interpretation of the state's gambling statutes: it has previously sought to regulate fantasy sports contests and skill-based gaming machines that operators argued were outside its jurisdiction. Prediction markets face the same expansive interpretive approach.
Federal preemption vs. state gaming law
Kalshi's position (and the argument that prevailed in the October 2024 federal court injunction) is that the CFTC's jurisdiction over event contracts preempts state gambling law. Illinois is now testing this doctrine. If the Pritzker order leads to enforcement litigation, Illinois courts (and potentially the 7th Circuit) will weigh in on whether CFTC preemption holds against aggressive state gaming regulation.
- Kalshi: Continues to operate in Illinois under federal preemption. Monitor developments: if Illinois files an enforcement suit against Kalshi, expect litigation.
- Polymarket QCEX: Waitlist access. Illinois has not specifically blocked QCEX, but the Pritzker order elevates state-level risk for non-CFTC platforms.
- Non-CFTC platforms: Higher risk in Illinois given the executive order. The Gaming Board may interpret this as authority to issue cease-and-desist orders.
- Consider consulting an Illinois gaming or securities attorney before deploying significant capital on non-CFTC platforms.
Illinois prediction market tax rates
Illinois taxes all income at a flat 4.95%: one of the simpler state tax structures in the US. Unlike California's 13.3% top rate or New York's 10.9% + NYC surcharge, Illinois' flat rate is moderate and applies equally regardless of income level. Event contract profits are treated as ordinary income for Illinois state tax purposes.
Federal 1099-MISC reporting applies. Net losses deductible up to $3,000/year. Illinois conforms to federal treatment for this income category.
Other states
New York
Also has an May 2026 executive order. NYDFS harder than Illinois Gaming Board. Polymarket explicitly blocked.
Caution · CACalifornia
DFPI enforcement posture, highest state tax rate (13.3%). No executive order yet but watchful.
Open · TXTexas
No state income tax, no enforcement, full platform access. The contrast to Illinois.