Legal Question in Consumer Law in Illinois

Illegal and non-taxable are totally different issues.

"Illegal": TECHNICALLY every video game, when sold to a consumer/end-user, includes a "license" to use the game for personal, non-commercial purposes, and may or may not include a right to assign the license through resale of the game. Once you start selling games the question will become whether it is a personal sale, or a business enterprise. And then again only the holder of the licensing rights (like a Microsoft when it comes to Xbox) will be the one who cares.

"Taxable": At least in Illinois EVERY "sale at retail" is subject to what most people refer to as "sales tax" with a major exception: "The isolated or occasional sale of tangible personal property at retail by a person who does not hold himself out as being engaged (or who does not habitually engage) in selling such tangible personal property at retail, or a sale through a bulk vending machine, does not constitute engaging in a business of selling such tangible personal property at retail within the meaning of this Act" (35 ILCS 120/1). So once again it will depend on whether you are just getting rid of your games or whether you are now in the business of selling used games.

OTHER Tax issue: whether or not sales tax is due, the other primary tax issue is income tax: if you are selling these games at a profit you technically may owe income tax on the profit. Whether used video games can be classified as capital assets to quality for capital gains treatment taxes is something else again.