Kalshi has filed a lawsuit against Illinois over the state’s attempts to regulate prediction markets. The Commodity Futures Trading Commission (CFTC) had already sued the state and has also taken action against Kentucky to protect Kalshi and other licensed platforms. Meanwhile, esports markets continue to attract increased trading volume on Kalshi, with IEM Cologne seeing over $100 million.
Illinois passed legislation requiring prediction markets to pay $1 million for a license to continue offering markets on sporting events. Additionally, it imposes a 15% tax rate on revenue generated from sports markets. The new rules are effective July 1.
In its lawsuit against the state, Kalshi said as a result of the new law, it “will be subject to criminal penalties in Illinois unless it either ceases to offer Illinois residents sports event contracts that are perfectly lawful in the eyes of Kalshi’s exclusive federal regulator or pays Illinois millions of dollars and submits to the State’s regulatory regime.”
It adds that bowing to Illinois’ regulations would also “put Kalshi in direct violation of federal law because the CFTC requires that all DCMs offer nationwide, uniform access to their markets.”
Kentucky Latest State Sued By CFTC
The CFTC also filed a lawsuit against Illinois in April, alleging that it is improperly asserting the right to regulate sports markets under state law. At the same time, it took action against Arizona and Connecticut.
Since then, it has filed lawsuits against state regulators in New York, Minnesota, Rhode Island, Wisconsin, and New Mexico. It added Kentucky to that list this week.
While filing the lawsuit, CFTC Chair Michael Selig said the agency was taking the action to protect its federal authority.
Like Illinois, Kentucky passed a bill that limits and taxes prediction markets. In response, the Coalition for Fair Markets, which includes Kalshi, Polymarket US, and Crypto.com, sued the state on June 12. Kentucky then sued Kalshi and Polymarket on June 17 before the CFTC sued Kentucky on June 23.
Esports Prediction Markets Grow Amid Legal Battles
Amid all the lawsuits across the country, Kalshi continues to offer markets on almost everything, including major esports events.
This month’s IEM Cologne saw users trade over $100 million on the platform, according to Esports Insider. It accounted for 63% of all Kalshi esports betting volume during the week of June 7–13.
The peak day for trading was June 19, which saw over $10 million in volume thanks to the Team Spirit versus Falcons semi-final at the LANXESS Arena.
Rival platform Polymarket is also investing in esports and this week partnered with GRID, which will see the company integrate official real-time esports data, ad-free live streams, and interactive match widgets.
Both companies have had to restrict access from users in Nevada, but with the CFTC’s backing will hope to avoid such a measure in Illinois, Kentucky, or any of the other 17 states with ongoing legal battles.