Illinois appeals to Seventh Circuit after judge blocks prediction market tax
A federal judge issued a preliminary injunction around late October blocking Illinois from enforcing a prediction markets licensing and tax law that state legislators passed in June. Judge Martha Pacold ruled that Illinois officials including Attorney General Kwame Raoul cannot enforce state gaming laws against prediction markets operators. The state has appealed the ruling to the Seventh Circuit. The law would have required prediction market platforms to pay state fees and taxes tied to sports event contracts.
The appeal keeps alive a state tax template that five other states could copy if it survives. Illinois designed its law to capture revenue from CFTC-registered platforms without conceding federal preemption, and an Seventh Circuit reversal would give Louisiana, Missouri, Ohio, Tennessee, and Utah a fresh model for squeezing platforms that cannot easily exit populous markets. Kalshi already faces felony charges and a $61.2 million demand in Utah, plus parallel suits in Louisiana and Missouri; each new state law adds a litigation front and legal bill.
A second circuit ruling against preemption would deepen the split already pushing the Supreme Court toward a cert grant. The CFTC and DOJ joined Kalshi's side in Utah, but federal cover has not stopped state criminal exposure for its co-founders. Polymarket and Robinhood, which absorbed Missouri orders without suing, must now decide whether Illinois-style taxes are the less costly path than courtroom fights in every state.
The Illinois appeal joins five active state enforcement actions against CFTC-registered platforms, deepening the circuit split that former CFTC counsel and the NFL have already urged the Supreme Court to resolve.