Kalshi, CFTC Involved in Separate Illinois Prediction Market Lawsuits
Jesse M. Cox Published 29/06/2026
There are two separate lawsuits ongoing in Illinois that involve the prediction market site Kalshi. Kalshi filed a federal lawsuit against Illinois Governor J.B. Pritzker, Attorney General Kwame Raoul, and the Illinois Gaming Board, seeking to block state licensing and tax requirements set to take effect July 1. Illinois plans to implement a 15% sports betting tax on Kalshi's sports-event contracts.
Meanwhile, the Chicago Mercantile Exchange (CME) sued the U.S. Commodity Futures Trading Commission (CFTC) and its chairman, Michael Selig, challenging a recent decision by the CFTC to allow Kalshi's prediction market platform to list perpetual futures in partnership with cryptocurrency exchange Coinbase.
Illinois would be the first state to tax prediction market sites
Seeking to ease the loss of federal funding in several areas, Illinois Governor Pritzker included a 15% sports betting tax on prediction market site sports-event contracts in the spring as part of the state's $55.9 billion budget. By doing so, Illinois became the first state to propose taxing prediction market sites as sports betting sites.
States across the union have been arguing in court that sports-event contracts are nothing more than sports betting in disguise. That being the case, they should be taxed at the same rate as sportsbooks are by state gaming regulators.
However, prediction market sites counter that they are already federally regulated by the CFTC. They argue that a state regulator cannot supersede a federal regulator.
Kalshi claims it will suffer irreparable harm
This is the basis for the Kalshi lawsuit. "This action challenges the State of Illinois's clear violation of the Supremacy Clause with respect to the regulation of event contracts," Kalshi wrote in its complaint, according to reporting by Capitol News Illinois.
Kalshi claims that the company will suffer irreparable harm if this new tax goes ahead. Senate Bill 3019 proposes a tax on sports-event contracts. It amends Illinois' Sports Wagering Act to add a 1.75% tax on the first 5 million sports wagers per fiscal year made on prediction markets, and 3.5% for wagers made afterward.
Kalshi would face criminal penalties for failure to comply if the company doesn't pay the taxes. The suit was filed in the U.S. District Court for the Northern District of Illinois. Kalshi is seeking emergency treatment for a temporary restraining order and preliminary injunction to prevent enforcement of the new law before it takes effect on July 1.
The CFTC is battling Illinois on two legal fronts
In April, the CFTC also filed suit in Illinois in support of prediction market sites like Kalshi and Polymarket. This suit asserts the CFTC's jurisdiction over prediction markets. It was filed after the Illinois Gaming Board sent cease-and-desist letters to operators, including Kalshi and Polymarket.
The CFTC finds itself on the opposite end of a lawsuit that involves Kalshi's recent decision to begin offering perpetual futures. The CME is suing the CFTC, arguing that the CFTC is countering its own argument with prediction markets when ruling in favor of perpetual futures trading.
This CME suit alleges that perpetual futures were originally treated as swaps under the 2010 Dodd-Frank financial reforms. It was a view that the suit says the CFTC had previously accepted. Now the CME argues that the federal regulator is acting arbitrarily and capriciously in approving them as futures. The suit seeks to void the CFTC's approval to enable Kalshi to trade perpetual futures.
Perpetual futures, also known as perpetual contracts, are derivatives that track the prices of underlying assets. These include cryptocurrencies. Investors can use high levels of leverage in trading perpetual futures.