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Gaming Edge’s TL;DR
- Kalshi has filed suit in federal court to block Illinois from imposing a new 15% tax on prediction markets set to take effect July 1.
- The company argues the tax would cause irreparable harm and says its products are federally regulated futures contracts, not state-taxable betting.
Kalshi has sued Illinois Gov. JB Pritzker and Attorney General Kwame Raoul in federal court. The company is seeking both a preliminary injunction and a permanent injunction against a new 15% tax on prediction markets in the state.
Illinois has taken the position that prediction markets are not meaningfully different from sports betting and should be regulated and taxed. The state set the prediction markets tax at 15%, which is lower than Illinois’ progressive sports betting tax structure that can reach as high as 40%.
Kalshi, however, argues that it offers futures contracts rather than betting products. That distinction is central to the lawsuit because the company says its markets fall under federal jurisdiction instead of state gambling oversight.
Will court act before July 1?
This is not an isolated fight. Kalshi has lawsuits pending against almost 20 states, while the Commodities Futures Trading Commission, which argues that it solely regulates prediction markets, has filed suits against nine states.
That makes the Illinois case more than a tax dispute. It is also part of a larger argument over who gets to set the rules for prediction markets: state officials treating them like gambling products, or federal regulators treating them like futures contracts.
For users, the immediate issue is access. If the injunction is not granted, Kalshi may geofence Illinois from its services or seek a state license to operate there.
The key near-term date in this dispute is July 1, when Illinois’ new tax was scheduled to take effect. The main unanswered question is whether the federal court grants any injunction before then or later in the case.
Based on reporting by Dan Angell for The Lines.
