Kalshi sues Illinois over law banning sports prediction contracts
Kalshi sued Illinois officials in federal court, arguing a new state law banning sports-event prediction contracts conflicts with federal law and would cause irreparable harm.
Kalshi filed a lawsuit Tuesday in the U.S. District Court for the Northern District of Illinois, naming Governor J.B. Pritzker, Attorney General Kwame Raoul and members of the Illinois Gaming Board. The company challenges Illinois Senate Bill 3019, passed as part of the state’s fiscal 2027 budget. The law broadens the definition of an “exchange wager” to include contracts traded on prediction markets tied to sporting contests, includes a 0.2% tax on cryptocurrency transactions and takes effect July 1.
In the complaint, Kalshi argues the Illinois statute conflicts with the Commodity Exchange Act and the Commodity Futures Trading Commission’s federal authority. The filing says the law would prevent Kalshi from offering certain sports-event contracts to Illinois residents and amounts to an unlawful intrusion on federal jurisdiction.
The complaint warns of immediate and lasting harm if the law takes effect. The filing states, “If Kalshi complies with the new state law by ceasing to offer its sports event contracts in Illinois, that would put Kalshi in violation of the CFTC’s uniformity requirements, harm Kalshi’s commercial interests, and require the company to implement complex and expensive technological solutions to limit access in Illinois — incurring costs that would not be recoverable when Kalshi ultimately prevails in the action.”
Kalshi also argued that trying to operate under Illinois’ licensing and regulatory regime would be costly and restrictive, and that ignoring the state’s requirements could expose the company to criminal penalties under state law.
The lawsuit adds to an ongoing legal dispute between state gaming regulators and the CFTC over whether prediction-market contracts are “swaps” subject to federal oversight. The CFTC, led by Chairman Michael Selig, has asserted exclusive authority under the Commodity Exchange Act and has filed lawsuits challenging state limits on prediction markets, including recent actions related to Kentucky. Kalshi asked the federal court to resolve the conflict and block enforcement of SB 3019 before the law goes into effect on July 1. The case will proceed in federal court as the parties address questions of federal preemption and regulatory authority.
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