Kalshi filed a federal lawsuit Wednesday against Illinois, claiming the state has no authority to tax its sports-related prediction market contracts.
Last week, Governor JB Pritzker signed a law creating a “Sports Wagering Fund,” effective July 1. It imposes a 15% tax on gross receipts from sports prediction wagers, treating them as state-regulated gambling rather than federally regulated swaps.
Kalshi argues its contracts are not gambling and that the tax will subject it to criminal penalties unless it pays the state or ceases offering perfectly lawful products.
The CFTC, which regulates Kalshi, amended its own lawsuit against Illinois last week and moved for a preliminary injunction to block the law. The dispute is the latest front in a nationwide war between states and the Trump administration over whether prediction markets constitute gambling. With suits in multiple federal jurisdictions, the matter is expected to reach the U.S. Supreme Court.