Illinois federal court hands Kalshi its first win in months — 'swaps are swaps'

Kalshi's losing streak is over. On Friday, Judge Martha M. Pacold of the U.S. District Court for the Northern District of Illinois granted an injunction that stops Illinois from treating the platform's sports event contracts as gambling — and from collecting a transaction fee the state wrote into its budget specifically to squeeze prediction markets. The ruling ends what InGame tallied as fifteen consecutive federal-court defeats for the company.

Illinois had attacked on two fronts: cease-and-desist letters to Kalshi and Coinbase, and a budget amendment imposing a per-trade 'exchange wager' fee set higher than the fees Kalshi itself charges — a design that would have made most Illinois trades unprofitable regardless of the legal theory. Pacold's injunction covers both.

The reasoning that broke the streak

Pacold's opinion draws a clean line: the case was never about whether the contracts are gambling — it's about whether they are swaps under the Commodity Exchange Act. 'People may view these contracts as gambling, but little in the statutory definition turns on what people think,' the court wrote, noting the definition turns on commercial function. A casino with a designated contract market license offering weather contracts, the opinion suggested, would be doing finance — and Kalshi offering sports contracts is the same question.

• The injunction covers both Illinois gambling-law enforcement and the 'exchange wager' transaction fee.
• Plaintiffs: Kalshi, Coinbase (which distributes Kalshi contracts), the CFTC, and the Coalition for Prediction Markets.
• The ruling is a district-court injunction — Illinois can appeal to the Seventh Circuit, adding a fourth circuit to the conflict.
• Fifteen prior federal rulings had gone against Kalshi across Nevada, Ohio, Tennessee and other jurisdictions.

A deeper split, not a resolution

Far from settling the question, the Illinois win deepens the conflict the Supreme Court is being asked to resolve. The Third Circuit sided with Kalshi in New Jersey; the Ninth and Sixth sided with states; now a district court in the Seventh Circuit's footprint has sided with Kalshi again — on reasoning that leans harder into the swaps definition than the Third Circuit did. The patchwork now has more holes, not fewer.

The Illinois decision lands on top of an already tangled federal picture — New Jersey's Supreme Court petition, Nevada's Ninth Circuit rehearing fight, and the Sixth Circuit loss that started the enforcement wave.