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Kalshi has sued Illinois over its new prediction market licensing law, arguing federally regulated event contracts are outside the state's reach. The platform says it will be irreparably harmed when the law takes effect July 1.
What's the Scoop?
- The Lawsuit: Kalshi filed in the U.S. District Court for the Northern District of Illinois against Attorney General Kwame Raoul, Governor JB Pritzker, and other state officials. It is seeking a temporary restraining order, preliminary injunction, and permanent injunction blocking enforcement.
- What's Being Challenged: Pritzker signed SB3019 last week, a broad budget and revenue bill that also creates a 0.2% "privilege tax" on digital asset transactions and requires prediction market platforms to obtain an Illinois license. Kalshi says the licensing regime is preempted by the Commodity Exchange Act because its event contracts trade on a CFTC-regulated designated contract market, giving the agency exclusive jurisdiction.
- Kalshi's Bind: Kalshi says the law leaves it stuck between state and federal rules. Pulling its sports contracts from Illinois, it argues, would violate CFTC uniformity requirements, while complying would require costly geoblocking it may never recover even if it wins.
- Who Gets to Regulate: The suit adds to the broader fight over whether prediction markets are federally regulated derivatives or state-regulated gambling products. The CFTC has asserted exclusive jurisdiction and sued several states, including Illinois, while states argue sports event contracts violate local gaming laws.
