- Prediction market firm Kalshi is suing Illinois officials over a new state law it says bans its sports event contracts.
- The company argues the Illinois legislation, effective July 1, illegally usurps the CFTC‘s exclusive federal authority.
- The lawsuit is part of a broader jurisdictional clash that some experts believe could reach the U.S. Supreme Court.
Prediction markets company Kalshi filed a lawsuit against Illinois state officials on Tuesday, alleging a new law banning its sports contracts violates federal authority. The case, filed in U.S. District Court for the Northern District of Illinois, names Governor JB Pritzker and Attorney General Kwame Raoul as defendants.
Consequently, Kalshi claims the state law directly conflicts with the U.S. Commodity Futures Trading Commission (CFTC)‘s regulatory oversight. The company states it will face “irreparable harm” when Illinois Senate Bill 3019 takes effect on July 1.
The legislation amended the state’s definition of an “exchange wager” to include prediction market contracts on sporting events. This subjects companies like Kalshi to the same licensing rules as sports betting operators.
However, the company argues that complying would violate CFTC uniformity requirements and incur substantial costs. “If Kalshi complies with the new state law by ceasing to offer its sports event contracts in Illinois, that would put Kalshi in violation of the CFTC’s uniformity requirements,” said the complaint.
The Illinois law was passed as part of a state budget package that also included a heavily criticized 0.2% tax on crypto transactions. The full legislative text of the amendment is available online.
Meanwhile, this lawsuit marks the latest clash in a federal-state jurisdictional battle over prediction markets. The CFTC, led by Commissioner Michael Selig, asserts exclusive authority, classifying these event contracts as “swaps.”
Some experts now predict these escalating legal fights may eventually be decided by the U.S. Supreme Court. This follows recent CFTC action against similar restrictions in Kentucky.
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