- Kalshi has filed a federal lawsuit against Illinois over a new 15% tax on sports-related prediction market revenue.
- The tax is scheduled to take effect on July 1, prompting legal action from the company and the Trump-era CFTC to prevent its enforcement.
- This case is part of a broader national conflict over whether prediction markets constitute gambling under state law or federally regulated swaps.
Kalshi sued the state of Illinois in federal court on Wednesday, challenging the state’s authority to tax prediction markets as a form of gambling. The lawsuit targets a new law signed by Governor JB Pritzker last week, which establishes a 15% tax on gross receipts from sports-related prediction market wagers, set to begin on July 1.
Illinois argues these markets are a form of state-regulated sports betting. However, Kalshi and the Trump administration’s CFTC contend they are swaps overseen exclusively at the federal level. Consequently, the company’s complaint argues the state is imposing an illegal tax on a federally regulated activity.
The CFTC has already amended an existing lawsuit against Illinois and filed for a preliminary injunction to stop the tax. Meanwhile, this legal fight is the latest in a nationwide battle between states and the federal government over the classification of prediction markets. Both red and blue states assert platforms like Kalshi offer unregulated gambling, while the federal government has aggressively defended the sector.
With lawsuits active in nearly every federal jurisdiction, the issue is likely destined for the U.S. Supreme Court. The outcome will determine whether prediction markets fall under state gambling laws or federal financial regulations.
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