{
  "$type": "site.standard.document",
  "bskyPostRef": {
    "cid": "bafyreiemo25fvgy6iqccgcllxx5m4yviwux7unlu4tq2vylfz6motqhhji",
    "uri": "at://did:plc:ha7wpngv4f2qwrk5hta4ktbb/app.bsky.feed.post/3mp5mjevkm5a2"
  },
  "coverImage": {
    "$type": "blob",
    "ref": {
      "$link": "bafkreihv3ign3uul3xkac27qhrsqgmbhuxvzt46uuu6bo6escw23ruq7ru"
    },
    "mimeType": "image/jpeg",
    "size": 92409
  },
  "path": "/politics/2026/06/25/kalshi-lawsuit-illinois-tax-pritzker-prediction-markets",
  "publishedAt": "2026-06-25T21:50:59.330Z",
  "site": "https://chicago.suntimes.com",
  "textContent": "<p>The prediction market behemoth Kalshi filed suit this week to block a new Illinois tax on financial exchanges like theirs that state gambling regulators have decried as illegal sports betting.</p><p>Kalshi’s federal lawsuit, filed in Chicago, seeks an injunction against the transaction taxes ranging from 1.75% to 3.5% that state lawmakers voted to slap on every “exchange wager” beginning next month on the prediction markets that have exploded in popularity over the past few years.</p><p>But Kalshi — and the Trump administration’s Commodity Futures Trading Commission — maintain that the “event contracts” traded on their markets don’t constitute gambling and can only be regulated by the federal government.</p><p>The CFTC asserted its position as the sole arbiter on prediction market regulation earlier this year when it sued to block state-level regulation efforts in Illinois as well as Arizona and Connecticut. New Jersey is also among the states grappling with how to handle the booming world of prediction markets.</p><p>Illinois Gaming Board administrator Marcus Fruchter issued cease-and-desist letters in April to Kalshi and its top competitors — Polymarket, Crypto.com and Robinhood — for engaging in “illegal gambling in violation of Illinois law.”</p><p>Prediction markets allow customers to buy “yes” or “no” contracts on the outcomes of myriad events, on everything from whether a baseball team will win a game to whether a politician will win their election.</p><p>While nearly indistinguishable from traditional sportsbooks on a practical level to the average consumer, it’s not considered betting because users are trading against each other and there’s no “house” profiting off the consumer’s loss.</p><p>It’s also led to numerous allegations of insider trading since the platforms can incentivize people to profit off classified information. A U.S. Army solder is facing federal fraud charges after allegedly making more than $400,000 on a series of well-timed Polymarket bets on the removal of Venezuelan President Nicolás Maduro earlier this year.</p><p>Gov. JB Pritzker signed an executive order <a class=\"Link\" href=\"https://chicago.suntimes.com/politics/2026/04/21/pritzker-prediction-markets-ban-illinois\" target=\"_blank\" ><u>barring state employees</u></a> from using insider information to bet on prediction markets.</p><p>Companies like Kalshi make money by charging transaction fees when users buy contracts. Illinois’ law would take a 1.75% state cut of each transaction, doubling the tax rate to 3.5% after a company’s first five million “event wagers.”</p><p>In their suit, Kalshi argues that violates the Supremacy Clause of the U.S. Constitution by encroaching on federal law.</p><p>“Kalshi is fundamentally different from state-regulated sportsbooks and casinos,” said Jacki McGavick, a spokesperson for Kalshi. “Courts have already recognized our status as a federally regulated exchange. Illinois is wasting its time and taxpayers’ dollars.\"</p><p>Anticipating a legal fight, Illinois lawmakers did not bank on tax revenue from the new prediction market levy in the state budget approved in Springfield <a class=\"Link\" href=\"https://chicago.suntimes.com/springfield/2026/05/31/illinois-budget-crypto-tax-prediction-markets-fantasy-sports\" target=\"_blank\" ><u>last month</u></a>, and signed by Pritzker <a class=\"Link\" href=\"https://chicago.suntimes.com/springfield/2026/06/16/pritzker-signs-illinois-budget-trump-social-media-tax\" target=\"_blank\" ><u>last week</u></a>. The budget takes effect next month.</p><p>Other controversial new taxes on big social media companies and cryptocurrency exchanges could face legal fights, too.</p><p>“Prediction companies are seeking to use the courts to avoid complying with the same rules and consumer protections that apply to other wagering operators in Illinois,” a Pritzker spokesperson said in a statement. “The state of Illinois will continue defending Illinois’ authority to regulate these activities and protect consumers.\"</p>",
  "title": "Kalshi sues to block new Illinois tax on prediction markets",
  "updatedAt": "2026-06-25T23:12:52.731Z"
}