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Kalshi has sued Illinois officials in federal court to block a new state law that would treat sports event contracts as gambling products under state rules.
The prediction market operator says the law conflicts with federal commodities rules because Kalshi operates as a CFTC-regulated designated contract market.
SB 3019 Takes Effect July 1
Kalshi filed the complaint on June 23 in the U.S. District Court for the Northern District of Illinois. The case names Illinois Attorney General Kwame Raoul, Governor JB Pritzker and officials from the Illinois Gaming Board as defendants. The lawsuit challenges SB 3019, which Illinois enacted as part of its latest budget package.
The measure treats contracts or swaps tied to sporting contests as exchange wagers when they are offered or traded on a prediction market. Kalshi says the law would force it to stop offering sports event contracts to Illinois users, seek a state license or risk enforcement when the provisions take effect on July 1.
Kalshi Argues Federal Law Preempts Illinois
Kalshi’s core argument is preemption. The company says the Commodity Exchange Act gives the CFTC exclusive jurisdiction over event contracts traded on federally designated contract markets.
The complaint says Illinois cannot place a separate state gambling regime on top of that federal structure. Kalshi also argues that state-specific access rules would clash with CFTC requirements for contract markets to provide impartial access.
Kalshi Seeks Injunction Against Enforcement
The company is seeking preliminary and permanent injunctive relief. It also wants a court declaration that Illinois cannot enforce SB 3019 or other state gambling laws against Kalshi’s federally regulated exchange.
A temporary block would allow Kalshi to keep serving Illinois users while the court reviews the broader preemption dispute.
CFTC Jurisdiction Fight Reaches Illinois
The Illinois case adds to a fast-moving fight between prediction market firms, state gaming regulators and the CFTC. The CFTC has taken the position that CFTC-registered exchanges fall under its exclusive jurisdiction when they list event contracts.
The agency has also sued several states, including Illinois, over efforts to apply state gambling rules to prediction markets.
State officials have argued that sports prediction contracts look like sports betting and should be subject to state control. Kalshi and the CFTC say the products are event derivatives traded on federally regulated markets.
Sports Contracts Remain Legal Pressure Point
The lawsuit keeps the focus on sports markets, where prediction platforms have moved closer to traditional betting products while relying on federal derivatives law. A ruling for Kalshi would strengthen the company’s ability to offer sports event contracts across state lines.
A ruling for Illinois would give states more room to tax, license or restrict prediction markets operating inside their borders. The first procedural test is whether the court blocks enforcement before SB 3019 takes effect on July 1.
