Illinois Licensing Rules Blocked by Federal Judge in Kalshi and Coinbase Win

A federal judge in Illinois has granted partial injunctions to Kalshi and Coinbase against the state's licensing rules for sports wagering, finding that they likely conflict with federal law. U.S. District Judge Martha M. Pacold ruled on October 2 that the contracts at issue, tied to championship outcomes such as the winner of the 2026 World Series, fall under the Commodity Exchange Act and are subject to federal regulation.

The ruling comes after a cease-and-desist letter from the Illinois Gaming Board in April 2025 led to three lawsuits, including one from Coinbase. The CFTC entered the dispute on April 2, arguing that state restrictions interfere with the national system Congress established for derivatives markets.

Pacold reserved a decision on Illinois' wagering fees, which include a 1.75% fee on an exchange's first five million sports-related wagers in a fiscal year and 3.5% on those beyond that threshold. The challenge also involves existing gross-receipts and per-wager charges.