An Illinois federal court has blocked the state from applying its own gambling rules to Kalshi, a prediction market platform. Judge Martha Pacold ruled that oversight of such platforms falls under the jurisdiction of the Commodity Futures Trading Commission (CFTC), not state regulators.
The dispute hinges on how to classify sports event contracts. Kalshi argues they are derivatives under the federal Commodity Exchange Act—swaps with economic consequences subject to CFTC authority. States with legal sports betting disagree, contending that trading championship and match outcomes mirrors bookmaking without a state license. The absence of uniform rules means operators face different requirements across states rather than a single national framework.
Kalshi CEO Tarek Mansour said at DC Fintech Week 2026 that if states prevail, the industry will leave the US. The company has closed sports markets in Michigan through geofencing after the state sued in March. Coinbase separately suspended sports event contracts in Michigan following an agreement with the state gaming regulator. A final determination on the status of Kalshi, Polymarket and Underdog may rest with the US Supreme Court. Illinois' ruling does not resolve potential state tax obligations, and Kalshi's partnerships with Madison Square Garden and five Major League Baseball clubs would complicate any offshore move.
