Kalshi Sues Illinois, Seeks to Block Prediction-Market Law

Kalshi filed a complaint this week in the U.S. District Court for the Northern District of Illinois against Governor J.B. Pritzker, Attorney General Kwame Raoul and other state officials, asking a judge to block provisions of SB3019 that require prediction-market platforms to obtain an Illinois license effective July 1. The company seeks a temporary restraining order, a preliminary injunction and a permanent injunction.

SB3019 is a budget and revenue bill that also imposes a 0.2% charge on the value of digital-asset transactions or services provided to Illinois customers. Kalshi contends the licensing requirement would force it to stop offering certain contracts to Illinois users or to build technical barriers to block Illinois access when the law takes effect.

Kalshi argues the state law is preempted by federal law because its event contracts fall under the Commodity Exchange Act and the company is registered with the Commodity Futures Trading Commission as a designated contract market. The complaint states that complying with the Illinois licensing requirement would conflict with CFTC uniformity rules and harm the company’s commercial interests.

The filing asserts that SB3019 “expressly violates the CEA’s \”exclusive jurisdiction\” provision by asserting concurrent state jurisdiction over sports events contracts traded on federally regulated DCMs,” and that the statute “intrudes on the field of exchange-traded derivatives” and forces regulated entities to choose between violating federal or state law.

The lawsuit arrives amid a dispute between federal and state regulators over authority to oversee prediction markets, particularly contracts tied to sporting events. The Commodity Futures Trading Commission has sued multiple states, including Illinois, to assert exclusive federal jurisdiction. State officials have countered that some prediction market offerings may violate state gaming and gambling laws.

Kalshi’s complaint warns that the July 1 effective date will cause irreparable harm, pointing to the operational and commercial costs of geofencing or other measures to block Illinois users and noting those costs would not be recoverable if the company prevails. The filing asks the court to halt enforcement of the licensing scheme while the legal challenge proceeds.

Offices for Governor Pritzker and Attorney General Raoul did not immediately respond to requests for comment. State officials have previously defended the authority to regulate businesses operating within Illinois and to protect local consumers under state law.