Kalshi Sues Illinois Over New State Tax on Sports-Related Prediction Markets

Kalshi sued Illinois on Wednesday, arguing in federal court that the state does not have the right to impose taxes on the prediction markets.

Last week, Illinois Governor JB Pritzker signed a bill be the rule that, in addition to making the whole country tax for crypto transactions, he also established a “Sports Wagering Fund.” The bill, which will be implemented on July 1, will tax receipts related to sports betting at 15%.

In imposing such a tax, Illinois asserted that sports betting markets are a type of state-regulated betting — not an exchange overseen by the CFTC at the federal level, as industry leaders and President Donald Trump’s administration have argued.

Now, Mr. Kalshi is suing the state of Illinois, arguing that the state has no right to tax gaming-related earnings — which, it says, do not generate gambling-related revenue.

“On July 1, 2026 … Kalshi will be subject to criminal penalties in Illinois unless he stops providing contracts for sports activities that are legal in the eyes of Kalshi’s own regulators or pays Illinois millions of dollars and submits to the state,” he said. complaint they read.

Kalshi’s lawsuit follows the lead of Trump’s CFTC, which last week amended an existing lawsuit against Illinois to challenge the state’s new tax. The CFTC also filed a request to block Illinois from implementing the law next week.

The debate over Illinois’ new tax is the latest issue in an ongoing, international battle between states and the federal government over the futures of the futures markets. The Trump administration has come aggressively to security about the developed part, though red and blue it also claims that platforms like Kalshi and its partner, Polymarket, are offering illegal gambling to customers under the age of 18.

Litigation on this issue is ongoing in nearly every federal district court at this time, and the issue is expected to be decided by the US Supreme Court.