Illinois appeals injunction restricting state regulation of prediction platforms
Regulation1 min read
In brief
- Illinois has appealed to the Seventh Circuit against a federal injunction on prediction platforms.
- Judge Martha M. Pacold's October injunction covers fees, taxes, licensing and civil or criminal enforcement.
- Kalshi says only the CFTC can regulate it; states say its sports contracts are sports betting.
Illinois is challenging the decision before the Seventh Circuit. Federal judge Martha M. Pacold recently decided that Illinois regulators may not go after prediction platforms overseen by the CFTC.
Pacold issued a formal preliminary injunction against Illinois in October, which stops the state's regulators from acting against platforms that list sports-related contracts. The order extends to fees, taxes, licensing rules and both civil and criminal enforcement. The timing of any action by the appeals court on the petition is not clear.
Lawmakers in Illinois put forward legislation in July that would tax prediction market transactions the way sportsbooks are taxed. The state envisioned a 1.75% tax on the first five million trades, rising to 3.5% on any further trades. Kalshi and the Commodity Futures Trading Commission (CFTC) quickly responded with a lawsuit against the state.
In April, Governor JB Pritzker introduced new restrictions aimed at curbing potential abuse linked to the sector. His executive order barred state employees and officials from using confidential information to take part in event-based betting platforms.