TLDR Illinois has appealed a federal ruling that blocks it from regulating prediction market platforms. Judge Martha M. Pacold’s injunction bars state taxes, licensing rules, and enforcement actions. The ruling freezes a July proposal to tax prediction market trades at 1.75% and 3.5%. Kalshi is also suing Missouri and Louisiana, saying only the CFTC can regulate it. Attorneys general from 39 states and DC have asked the Supreme Court to hear New Jersey’s case against Kalshi.
Illinois has filed an appeal with the Seventh Circuit Court of Appeals after a federal judge blocked the state from regulating prediction market platforms. The ruling stops the state from taxing, licensing, or taking enforcement action against platforms overseen by the Commodity Futures Trading Commission (CFTC).
The order came from U.S. District Judge Martha M. Pacold. It leaves platforms such as Kalshi free to keep offering sports-related contracts in Illinois while the appeal moves forward.
What the Injunction Blocks
In October, Judge Pacold entered a formal preliminary injunction against Illinois. The order builds on her earlier judgment, which granted preliminary relief in part.
The injunction bars Illinois regulators from taking any steps to regulate CFTC-regulated prediction platforms. This covers fees and taxes, licensing requirements, and civil or criminal enforcement actions.
The ruling largely shuts down the state’s efforts to gain some control over the sector. Illinois had been working on several fronts to oversee prediction markets this year.
In July, Illinois lawmakers proposed a bill to tax prediction market transactions in a similar way to sportsbooks. The plan called for a 1.75% tax on the first five million trades.
Trades beyond that five million threshold would have been taxed at 3.5%. Kalshi and the CFTC quickly challenged the proposal by filing a lawsuit against the state.
State officials had raised concerns