Federal judge blocks Illinois from enforcing its prediction market rules against Kalshi and Coinbase
On 2 October 2026 a federal judge in Chicago granted Kalshi and Coinbase a preliminary injunction against Illinois’s licensing and criminal rules, finding many sports contracts are likely swaps under federal law. What was blocked, what was not, and why a Wisconsin ruling went the other way.
Kalshi and Coinbase won a rare court victory against a state in October. On 2 October 2026, US District Judge Martha Pacold in Chicago granted preliminary injunctions stopping Illinois from enforcing its new prediction market rules against them while the cases continue. The CFTC and the United States intervened on the platforms' side.
What the judge blocked
- Illinois's licensing requirements for prediction markets, and the criminal provisions tied to them.
- The rules Illinois wanted to enforce also required blocking traders under 21 and limited sports offerings.
The judge reasoned that many sports event contracts are likely swaps under the Commodity Exchange Act, which puts them under federal rather than state control.
What she did not decide
The judge said she was still considering whether Illinois can collect fees on transactions, so the state's tax claim survives for now. And this is a preliminary injunction, not a final judgment: Illinois can appeal to the Seventh Circuit.
Why it stands out
Most recent rulings have gone against the platforms. The Sixth Circuit ruled for Ohio and Tennessee on 25 September (Ohio's deadline), and the Ninth Circuit ruled for Nevada in August. A federal judge in Wisconsin, which is also in the Seventh Circuit, reached the opposite conclusion to Judge Pacold, so the two rulings could end up before the same appeals court. Meanwhile New Jersey's petition asks the Supreme Court to settle the question nationally (NFL brief), and the CFTC has proposed rules that would treat sports contracts as swaps (CFTC proposal).
What it means for Illinois users
Kalshi and Coinbase can keep operating their prediction markets in Illinois while the injunction stands. State-by-state availability changes quickly; check is Kalshi legal in your state? and Coinbase prediction markets.
