Prediction market operator Kalshi has filed a lawsuit against the State of Illinois, challenging new laws that would regulate and tax sports-related event contracts offered on its platform.
Illinois considers Kalshi and similar companies to be unlicensed sports betting operators and recently approved new taxes and licensing requirements as part of the state’s $55.9 billion budget. Beginning July 1st, prediction market operators would be required to obtain an Illinois sports wagering license and pay taxes on sports-related wagers.
Kalshi argues its event contracts are regulated exclusively by the Federal Commodity Futures Trading Commission (CFTC), not individual states, and contends Illinois’ new requirements violate federal law.
The company also objects to the state’s $15 million licensing fee and geolocation requirements, saying they conflict with federal rules requiring nationwide access to its markets.
The lawsuit is the latest development in an ongoing dispute between Illinois regulators and prediction market companies over whether the contracts should be treated as sports wagers or federally regulated financial products. The CFTC has also challenged Illinois’ efforts to regulate the markets, arguing the contracts are more comparable to commodities futures than traditional sports betting.