Federal Judge Temporarily Blocks Illinois from Enforcing Gambling Laws Against Kalshi

A federal judge has temporarily blocked Illinois from enforcing parts of its gambling laws against Kalshi's sports event contracts, including licensing rules that would have limited which contracts can be offered and restricted trading to people aged 21 and over. On Friday, Judge Martha Pacold of the Chicago federal district court handed an injunction that prohibits the state from enforcing these rules.

Judge Pacold wrote that although event contracts offered by platforms such as Kalshi and Polymarket do resemble betting and gaming, they are most likely within the remit of federal regulation, suggesting they may be swaps. Kalshi founder Luana Lopes Lara said that the decision was 'beautiful.'

Illinois has even banned state employees from using prediction markets over concerns of using insider information for unfair gain. The state pushed for a new tax in its latest budget that would have seen a percentage of the fees charged by prediction companies on event contracts paid to the state as tax, but expecting legal pushback, Illinois did not factor such contributions into the bill. Judge Pacold has decided against the age restriction and contract restrictions, but has not rendered an opinion on the tax on fees.