Kalshi Sues Illinois Over 15% Tax On Sports Prediction Market Contracts

Kalshi is suing Illinois over a new law that taxes contracts traded on prediction markets, as the dispute between state regulation and federal oversight intensifies.

Decrypt reports that Illinois created a 15% tax on revenue from sports-related prediction market wagers, with the fund set to go into effect on July 1.

@coindesk

Decrypt also says Kalshi warned that “On July 1, 2026… Kalshi will be subject to criminal penalties in Illinois unless it either ceases to offer Illinois residents sports event contracts” or pays and submits to Illinois’s regulatory regime.

Crain’s Chicago Business places the filing in the context of Illinois’s efforts to regulate the prediction-market platform, describing it as the latest legal salvo over the state’s new taxes.

CBS News says the Commodity Futures Trading Commission has clashed with states over prediction markets, including by filing a lawsuit against Kentucky over efforts to crack down on Kalshi and Polymarket.

CBS News adds that “Including Kentucky, the CFTC has now initiated legal actions against nine states” and lists Arizona, Connecticut, Illinois, New York, New Mexico, Minnesota, Rhode Island and Wisconsin.

azcentral and The Arizona Republic

In the Illinois case, Cointelegraph says Kalshi alleged that Illinois Governor JB Pritzker, Attorney General Kwame Raoul, and other officials on the state’s gaming board “usurped” the authority of the US Commodity Futures Trading Commission (CFTC) over prediction markets.

Cointelegraph also reports that Kalshi claimed the legislation requiring prediction market platforms to be licensed in the state violated federal law and that the company would be “irreparably harmed” when the law takes effect on July 1.

Kalshi’s lawsuit frames the Illinois measure as a direct conflict with federal requirements for designated contract markets, arguing that compliance would force it to stop offering sports event contracts in Illinois or face criminal penalties.

Cointelegraph says Kalshi warned that if it complies by ceasing to offer sports event contracts in Illinois, it would “put Kalshi in violation of the CFTC’s uniformity requirements” and require “complex and expensive technological solutions” to limit access.

Decrypt reports that the Trump CFTC has sued to prevent enforcement of the Illinois law and filed a motion for preliminary injunction seeking to stop the state from instituting it next week.

CBS News says the legal fight could end up before the Supreme Court, with Stephen Piepgrass arguing the high court could divide control by giving states authority over certain sports wagers while allowing prediction markets to continue offering other sports-related trades.