Illinois has appealed a federal court injunction that bars the state from licensing, taxing or prosecuting sports event contracts on CFTC-regulated exchanges. The appeal heads to the Seventh Circuit Court of Appeals in Chicago, which now holds multiple prediction market cases on its docket as the CFTC continues its legal fight against states that have moved to regulate platforms such as Kalshi and Coinbase.
Illinois has appealed a federal court order that blocks the state from licensing, taxing or prosecuting sports event contracts listed on CFTC-regulated exchanges, as first reported by ReadWrite on Nov. 3, 2026. The appeal sends the fight to the Seventh Circuit Court of Appeals in Chicago, which already has prediction market cases on its docket.
Judge Martha Pacold’s order in the Northern District of Illinois converts her early-October ruling into a formal injunction. The order covers contracts listed on CFTC-regulated platforms such as Kalshi and Coinbase.
The injunction reaches three state tools: the Sports Wagering Act, the criminal gambling statute and an Illinois Gaming Board internet-wagering rule. The budget’s prediction market fees fall along with the licensing rules because they apply only to providers holding a state license.
Pacold’s earlier ruling had left the tax question open and called for more argument on the fees. This latest order resolves that ambiguity by sweeping the fees into the injunction.
State Enforcement Efforts Preceded the Injunction
The Illinois Gaming Board had already moved against prediction market operators before the court intervened. The board sent cease-and-desist letters to KalshiEX, Crypto.com and Robinhood on April 1, 2025, according to ReadWrite. Polymarket received a separate letter on Jan. 27, 2026.
Those letters cited the Sports Wagering Act (230 ILCS 45) and the criminal code (720 ILCS 5/28-1(a)).
Lawmakers then pursued a legislative route. Gov. JB Pritzker signed a budget containing a new prediction market framework on June 16. Under the package — which includes SB 3019 — prediction markets became exchange wagers under the Sports Wagering Act and required a Gaming Board license.
Each transaction carried a tax that would climb once a licensee passed five million exchange wagers. In September, Republican Rep. Travis Weaver filed House Bill 5811 to repeal the exchange-wager tax while leaving the licensing rules intact.
Fiscal Stakes for Illinois
Fiscal 2026 was the first year of the state’s per-wager tax on licensed sports wagering. The injunction removes both a potential revenue stream and an enforcement path.
Legislators had anticipated a legal challenge and kept the tax’s revenue out of their budget projections. Licensed online and mobile sportsbooks in Illinois face their own separate costs: a first license costs $15 million and runs four years, with each four-year renewal priced at $1 million.
A Rare Court Win for Kalshi
Courts remain divided on whether state gambling laws can reach CFTC-regulated sports contracts. Pacold’s order represents a rare win for Kalshi and the federal regulator. Before her early-October decision, Kalshi had lost 16 consecutive federal court rulings, according to ReadWrite.
In her opinion, Pacold found the state’s laws in conflict with federal law because they control “what can be sold, as well as where it can be sold and to whom.”
The CFTC sued Arizona, Connecticut and Illinois on April 2, 2026, over their actions against federally registered designated contract markets. CFTC Chairman Michael Selig said the agency would defend market participants against “overzealous state regulators.”
Multiple Prediction Market Appeals Now Before the Seventh Circuit
The Seventh Circuit now holds several prediction market cases, positioning it as a key venue for determining whether federal commodity regulation preempts state gambling laws. The outcome could shape how states approach prediction market oversight going forward.
We will continue to track this case as it moves through the appeals process. For crypto casino users and prediction market participants, the ruling could define which platforms remain available in regulated markets.
