Kalshi is legally challenging a new law in Illinois that would require the prediction market operator to obtain a state license, arguing it would be “irreparably harmed.”
Key Takeaways
- Kalshi argues federal law preempts Illinois' licensing requirements.
- The prediction market operator is also worried about expensive geofencing technology.
- Illinois is just one of many states battling Kalshi and the CFTC.
Kalshi filed a lawsuit against Gov. JB Pritzker, Attorney General Kwame Raoul, and the Illinois Gaming Board, seeking a temporary and permanent injunction and declaratory relief, according to The Block.
Illinois added prediction markets to the Sports Wagering Act and included an operating tax in the state budget, which Pritzker signed June 16. The new prediction market provisions contained in SB 3019 take effect July 1, but Kalshi said in the complaint that Illinois’ licensing requirement is preempted by federal law.
"It expressly violates the (Commodity Exchange Act’s) 'exclusive jurisdiction' provision by asserting concurrent state jurisdiction over sports events contracts traded on federally regulated DCMs; it intrudes on the field of exchange-traded derivatives that Congress has reserved entirely for the federal government; and it forces regulated entities to choose between violating federal or state law," Kalshi wrote in the complaint.
Kalshi also claims the new law would put the operator in violation of the Commodity Futures Trading Commission’s (CFTC) regulatory requirements. Kalshi argues the law would harm its business by forcing it to deploy geofencing technology to block sports event contracts in Illinois, resulting in costs that "would not be recoverable when Kalshi ultimately prevails in this action."
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Costly harm
This latest prediction market news is part of an ongoing legal battle in the Prairie State.
Kalshi has been aggressively challenging state regulators in courts across the country, including in Nevada and Massachusetts, claiming in all of its cases that only the CFTC can regulate its prediction markets. More than a dozen jurisdictions are in legal battles.
The Illinois Gaming Board sent cease-and-desist letters to Kalshi, Robinhood, and Crypto.com in 2025. Federal regulators escalated the dispute in April when the CFTC sued Illinois, arguing the state's actions interfered with the agency's exclusive authority over federally regulated exchanges. That legal battle has expanded to eight other states, with the CFTC going to bat for prediction market operators.
Illinois and other states argue Kalshi and other trading exchanges are violating state gambling laws by offering sports contracts in jurisdictions with regulated, taxed sports betting.
