A federal judge has barred Illinois from enforcing its new tax on prediction market operators, extending an injunction that earlier blocked the state’s licensing rules. Illinois has appealed, according to Bloomberg Law, which dated its report November 2.
Judge Martha Pacold of the U.S. District Court for the Northern District of Illinois issued the tax ruling on a Friday, Bloomberg Law reported. The plaintiffs are KalshiEX, Coinbase Global and the Commodity Futures Trading Commission, which the report says won an early-October preliminary injunction against Illinois’s licensing laws. That first ruling left the tax open for further argument. Bloomberg Law adds that the fees apply only to providers licensed by the state.
The Chicago Sun-Times reported on the October ruling that the judge found these trades fall under federal jurisdiction, specifically the CFTC, and that parts of the Illinois law are likely preempted. Kalshi and Coinbase sued in June. At that stage the judge signaled she might be open to upholding a state tax on transaction fees, the Sun-Times said, which makes the later tax injunction a notable step beyond the first order.
The visible reporting does not describe the grounds of the appeal or when it will be heard. Several other states are also contesting these platforms, and the Sun-Times noted the question is expected to reach the U.S. Supreme Court eventually. For now, operators regulated by the CFTC are shielded from both Illinois’s licensing regime and its tax while the appeal runs.
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Sources:
Bloomberg Law: Illinois Prediction Market Tax Blocked by Judge, State Appeals
Chicago Sun-Times: Federal judge sides with Kalshi, blocks new Illinois rules on prediction markets
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