Illinois is asking a federal judge to reject requests that would temporarily block the state from enforcing its gambling laws against sports and election prediction markets, arguing the products are ordinary wagers instead of federally regulated financial instruments.
In a 43-page response filed in the U.S. District Court for the Northern District of Illinois and reviewed by ReadWrite, Attorney General Kwame Raoul’s office said the Commodity Futures Trading Commission, Kalshi, and the Coalition for Fair Markets are unlikely to succeed in their bid for a preliminary injunction. According to the state, “Sports and election event contracts are not ‘swaps'” under the Commodity Exchange Act and, even if they were, “Congress did not intend to displace state gaming laws.”
The filing answers motions brought by the CFTC, Kalshi, and the industry coalition in consolidated litigation over Illinois’ efforts to stop Kalshi from offering sports and election event contracts without complying with Illinois gaming laws.
“Ordinary citizens understand that it is gambling to wager money on which team will win a baseball game or which candidate will win an election,” the state wrote. Illinois said prediction markets “offer ‘event contracts’ that allow Illinois residents to wager money” while claiming those products “are not gambling, however, but rather are sophisticated financial instruments used for hedging risk.”
Illinois seeks to preserve state control over sports prediction markets
Illinois argued that description conflicts with both the Commodity Exchange Act and Congress’s purpose in regulating swaps. The state said swaps are derivatives tied to underlying financial assets, while Kalshi’s contracts instead pay out based on sports contests or election results. It also argued the law addresses the occurrence of an event rather than the outcome of one. As the filing states, “An ordinary American interpreting the word ‘event’ would conclude that the Kentucky Derby is an event. But [which horse] wins the Kentucky Derby is an outcome of that event, not a separate event in and of itself.”
The state also rejected the argument that downstream financial effects transform these contracts into swaps. “Congress defined a ‘swap’ as an agreement that provides a payout based on an event that is inherently economic in nature,” Illinois argued, adding that athletic competitions and elections “are not inherently financial, economic, or commercial in the same sense as a change in interest rates or the relative value of two currencies.”
The latest filing follows months of increasingly public opposition from Illinois regulators. In October 2025, the Illinois Gaming Board issued a memorandum stating that “‘Predictions markets’ constitute gambling activity under Illinois law.” The board also warned that operating platforms allowing wagers on sports or elections without an Illinois license is unlawful and cautioned that violations in other states could affect licensing suitability in Illinois.
Illinois noted that it previously sent cease-and-desist letters to companies including Kalshi and Robinhood. Other states, including Pennsylvania, Arizona, Ohio, and Tennessee, have also raised concerns or issued warnings about prediction markets.
Beyond the legal merits, Illinois argued the plaintiffs failed to show irreparable harm and said the balance of equities favors continued enforcement. “The public plainly suffers when unregulated gambling occurs on the prediction markets’ platforms,” the filing states, adding that the Illinois Gaming Board has “the experience and expertise necessary to ensure that sports wagering is done safely and responsibly.” The state asked the court to deny the requested preliminary injunctions.
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