Overview
Kalshi’s own affirmative challenge to Illinois, distinct from the federal government’s suit against the state. It targets SB 3019, which folded prediction markets into the Sports Wagering Act and added an operating tax — signed June 16, 2026, with the prediction-market provisions effective July 1. Kalshi pleads Supremacy Clause preemption: because the Commodity Exchange Act gives the CFTC exclusive jurisdiction over event contracts traded on a designated contract market, Illinois cannot require a state gambling licence.
What makes this different in kind from the other pre-emptive suits is the tax claim: most challenge a licensing or enforcement regime, while Illinois also sought revenue. Kalshi moved for an emergency TRO and preliminary injunction on June 25, 2026; the hearing was stricken on a joint status report, briefing completed in July, and the Executive Committee reassigned the case to Judge Pacold as related to the federal suit.
On October 2, 2026 Judge Pacold decided all three Illinois injunction motions in one opinion, granting each in part and continuing it in part. Both sides had argued over a representative title contract (“will the Chicago Cubs win the 2026 World Series?”), and she held such contracts are likely “swaps” under the Commodity Exchange Act, so Illinois’s sports-wagering licensing rules and the related criminal provision are likely preempted as applied to them. She did not decide the challenge to Illinois’s fees, including the new 1.75% and 3.5% prediction-market transaction fees, and ordered further argument: a fee “without more” might not conflict with federal law, but a sufficiently heavy one could. In an October 8 joint report, all parties, Illinois included, said further briefing on the fee challenge is unnecessary: the 1.75% and 3.5% transaction taxes apply only to licensees, so an injunction against the licensing requirement will also keep them from being imposed on Kalshi. The ruling cuts against the Sixth Circuit’s September 25 decision and the Wisconsin district court’s July denial, and it is not binding outside this court. (Read from the memorandum opinion and order, filed in all three cases.)
On October 30, 2026 Judge Pacold granted Kalshi’s motion and entered the preliminary injunction (ECF 64), identical in all three Illinois cases. It bars Illinois from enforcing its sports-wagering licensing law and related criminal provisions, “including by enforcing licensing requirements, associated fees, taxes,” as related to swaps, including sports event contracts, listed on or available through CFTC-regulated exchanges and brokers. That covers the 1.75% and 3.5% transaction taxes as applied to Kalshi. The Attorney General, Governor and Gaming Board members appealed to the Seventh Circuit the same day. It is a preliminary injunction, not a final judgment.