Illinois appeals federal court's preliminary injunction decision

Federal Judge Martha M. Pacold issued a ruling blocking Illinois regulators from targeting prediction platforms subject to the CFTC. The state appealed the ruling and took the matter to the Seventh Circuit Court of Appeals. It is not known when the court will take up the case. In the meantime, the platforms can keep operating in Illinois.

Judge Pacold's preliminary injunction, issued in October, halts state actions against platforms offering sports-themed contracts. The ruling covers fees and taxes, licensing requirements, and administrative and criminal penalties. As a result, Illinois's effort to establish oversight of this sector has largely come to a halt.

In July, the Illinois administration introduced a bill proposing that prediction market transactions be taxed the same way as sports betting. The bill set a rate of 1.75 percent for the first five million transactions and 3.5 percent for transactions above that limit. Kalshi and the CFTC sued the state after the bill was proposed. In April, Governor JB Pritzker introduced an executive order banning state employees from using confidential information in event-based betting.

Kalshi also has separate lawsuits against the states of Missouri and Louisiana. The company argues that only the CFTC has authority over these contracts. The states contend that these contracts are sports betting offered under a different label and should be subject to state law. Because of the conflicting rulings, the issue is considered likely to reach the Supreme Court. Attorneys general from 39 states and the District of Columbia have asked the Supreme Court to hear New Jersey's lawsuit against Kalshi.