{"id":79157,"date":"2026-10-06T22:41:09","date_gmt":"2026-10-06T22:41:09","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/kalshi-ends-federal-court-losing-streak-with-partial-win-over-illinois\/"},"modified":"2026-10-06T22:41:09","modified_gmt":"2026-10-06T22:41:09","slug":"kalshi-ends-federal-court-losing-streak-with-partial-win-over-illinois","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/kalshi-ends-federal-court-losing-streak-with-partial-win-over-illinois\/","title":{"rendered":"Kalshi Ends Federal Court Losing Streak With Partial Win Over Illinois"},"content":{"rendered":"<p><b>(Originally posted on : Bitcoin News )<\/b><br \/>\n<\/p>\n<div>\n<div class=\"@container mb-[25px] rounded-sm overflow-clip py-0.5 pr-0.5 pl-2.5 bg-success-100\">\n<div class=\"flex flex-col gap-m overflow-clip rounded-[6px] !bg-success-10 p-3 @[420px]:p-m\">\n<h2 class=\"m-0 flex items-center gap-s text-[19px] !text-[#1c1c1c] md:text-[20px]\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"16\" height=\"10\" viewbox=\"0 0 16 10\" fill=\"none\" class=\"shrink-0 text-success-100\" aria-hidden=\"true\"><path d=\"M1 1.5h14\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><path d=\"M1 8.5h10\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><\/svg><span>Key Takeaways<\/span><\/h2>\n<ul class=\"m-0 flex list-none flex-col gap-m pl-0\">\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">Judge Martha Pacold found Kalshi\u2019s title-game contracts are likely swaps under the Commodity Exchange Act.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">Illinois\u2019 licensing rules and a related criminal provision are likely preempted and cannot be enforced.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h2>Judge Says a Swap Is a Swap<\/h2>\n<p>Kalshi has won a partial preliminary injunction against Illinois, its <a href=\"https:\/\/gamingamerica.com\/news\/1103465\/swaps-being-fun-does-not-make-them-illegal-how-significant-is-kalshis-legal-win-in-illinois\" target=\"_blank\" rel=\"noopener noreferrer\">first federal court win<\/a> since a Minnesota judge <a href=\"https:\/\/news.bitcoin.com\/igaming\/minnesota-judge-blocks-prediction-market-ban-but-says-some-contracts-arent-swaps\/\">blocked that state\u2019s prediction market ban<\/a> in July. On Oct. 2, U.S. District Judge Martha M. Pacold of the Northern District of Illinois <a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.ilnd.498112\/gov.uscourts.ilnd.498112.99.0.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">granted in part requests from Coinbase, the U.S. government, and Kalshi<\/a>, finding the state\u2019s sports wagering license regime and a related criminal provision likely preempted by federal law.<\/p>\n<p>For now, the ruling stops Illinois from requiring Kalshi to hold a state license, which would have limited trading to people 21 and older who are physically in the state, and restricted which sports events its contracts can track. Compliance, Pacold wrote, would force Kalshi \u201cto build a market solely for Illinoisans,\u201d under threat of criminal penalties.<\/p>\n<p>Other courts have rejected that argument. The Sixth Circuit said last month that geofencing may be costly, but \u201c<a href=\"https:\/\/news.bitcoin.com\/igaming\/sixth-circuit-turns-kalshis-own-words-against-two-state-loss\/\">expensive does not mean impossible<\/a>,\u201d and state courts in Massachusetts, Nevada and Michigan have ordered Kalshi to geofence. In Connecticut, Judge Vernon Oliver found compliance unlikely to add much cost because <a href=\"https:\/\/news.bitcoin.com\/igaming\/connecticut-judge-says-kalshi-sports-contracts-were-never-swaps\/\">Kalshi is already building geofencing<\/a> for other states.<\/p>\n<p>Coinbase, the lead plaintiff, announced a partnership with Kalshi in December 2025 and <a href=\"https:\/\/decrypt.co\/356236\/coinbase-rolls-out-kalshi-powered-prediction-markets-across-united-states\" target=\"_blank\" rel=\"noopener noreferrer\">rolled out Kalshi-powered prediction markets<\/a> in January, letting its 100 million users trade Kalshi contracts with cryptocurrency held on Coinbase. The U.S. government and the Commodity Futures Trading Commission (CFTC) brought their own case, and the court decided the three suits together.<\/p>\n<p>Pacold tailored her ruling to contracts on who wins a title game, such as \u201cWill the Chicago Cubs win the 2026 World Series?\u201d She found such contracts are likely swaps. \u201cWhatever the potential for gambling, a swap is a swap, and the Commodity Exchange Act requires it to be traded on a designated contract market, beyond state regulation,\u201d she wrote.<\/p>\n<p>That breaks with the Ninth Circuit, which held in August that the contracts are not swaps because they are bets. Pacold cited that ruling directly when she wrote that \u201cswaps are swaps whether they are used to gamble.\u201d She agreed with the Sixth Circuit that an \u201cevent\u201d can include who wins a game, but rejected the argument, which that court accepted, that the event itself must be inherently economic.<\/p>\n<p>Pacold set a limit: any link between a contract and financial consequences must be \u201cconcrete and articulable.\u201d Coinbase conceded that a bet on the color of the sports drink dumped on a coach after a Chicago Bears win would not qualify.<\/p>\n<p>Illinois argued that a CFTC rule bars gaming contracts, making Kalshi\u2019s listings illegal anyway. Pacold said the state \u201cmay have a case,\u201d but noted the CFTC \u201chas never held that Kalshi\u2019s contracts are impermissible gaming contracts\u201d and backed Kalshi in the litigation. Separately, the CFTC has <a href=\"https:\/\/news.bitcoin.com\/igaming\/cftc-wants-event-contracts-defined-as-swaps-but-not-casino-games\/\">proposed defining event contracts as swaps while excluding casino games<\/a>.<\/p>\n<h2>No Action on State Fees<\/h2>\n<p>The judge did not rule on the states proposed fees. A new Illinois state budget law adds a 1.75% transaction fee on an exchange\u2019s first five million \u201cexchange wagers\u201d and 3.5% after that, on top of a 15% fee on gross receipts and a per-wager fee of 25 or 50 cents. \u201cRegulatory uniformity, however, does not necessarily entail uniformity in cost,\u201d Pacold wrote, but a fee that effectively regulates the market could still be preempted. \u201cWhat defendants cannot do overtly, they cannot do covertly,\u201d she added. The judge ordered further briefing on the matter.<\/p>\n<p>The decision splits from a Wisconsin ruling within the same federal appeals circuit. In July, U.S. District Judge William Griesbach denied the CFTC a preliminary injunction against Wisconsin, finding similar contracts likely are not swaps. That case is <a href=\"https:\/\/defirate.com\/news\/federal-judge-grants-kalshi-coinbase-partial-injunctions\/\" target=\"_blank\" rel=\"noopener noreferrer\">now before the Seventh Circuit<\/a>.<\/p>\n<p>The Third Circuit sided with Kalshi in New Jersey in April, while the Ninth and Sixth Circuits ruled against it. New Jersey <a href=\"https:\/\/news.bitcoin.com\/igaming\/kalshis-scotus-pregame-wait-for-the-cftc-to-rewrite-the-rules\/\">asked the Supreme Court to resolve the split<\/a> on Sept. 2, and <a href=\"https:\/\/www.supremecourt.gov\/search.aspx?filename=\/docket\/docketfiles\/html\/public\/26-338.html\" target=\"_blank\" rel=\"noopener noreferrer\">Robinhood<\/a> and <a href=\"https:\/\/www.supremecourt.gov\/search.aspx?filename=\/docket\/docketfiles\/html\/public\/26-344.html\" target=\"_blank\" rel=\"noopener noreferrer\">Crypto.com<\/a> filed their own petitions against the Ninth Circuit\u2019s Nevada ruling on Sept. 10 and 11. Kalshi\u2019s response to New Jersey is due Nov. 9.<\/p>\n<div class=\"not-prose my-3 lg:my-4\">\n<div class=\"overflow-hidden rounded-lg !bg-[#E8EDFA] p-[9px] hidden md:flex md:flex-row md:gap-3 lg:hidden\"><a aria-hidden=\"true\" tabindex=\"-1\" class=\"relative size-[150px] min-w-[150px] shrink-0 overflow-hidden rounded-[15px]\" href=\"https:\/\/news.bitcoin.com\/sixth-circuit-turns-kalshis-own-words-against-two-state-loss\/\"><\/p>\n<div class=\"absolute left-2 top-2\"><img alt=\"Bitcoin.com News\" loading=\"lazy\" width=\"28\" height=\"28\" decoding=\"async\" data-nimg=\"1\" class=\"size-7\" style=\"color:transparent\" srcset=\"\/_next\/image\/?url=%2Fimages%2Fuploads%2Fbitcoin_news_newlogo.svg&amp;w=32&amp;q=75 1x, \/_next\/image\/?url=%2Fimages%2Fuploads%2Fbitcoin_news_newlogo.svg&amp;w=64&amp;q=75 2x\" src=\"https:\/\/news.bitcoin.com\/_next\/image\/?url=%2Fimages%2Fuploads%2Fbitcoin_news_newlogo.svg&amp;w=64&amp;q=75\"\/><\/div>\n<p><\/a><\/div>\n<div class=\"overflow-hidden rounded-lg !bg-[#E8EDFA] p-[9px] hidden lg:flex lg:flex-row lg:gap-4\"><a aria-hidden=\"true\" tabindex=\"-1\" class=\"relative size-[150px] min-w-[150px] shrink-0 overflow-hidden rounded-[15px]\" href=\"https:\/\/news.bitcoin.com\/sixth-circuit-turns-kalshis-own-words-against-two-state-loss\/\"><img alt=\"Sixth Circuit Turns Kalshi\u2019s Own Words Against It in Two-State Loss\" loading=\"lazy\" decoding=\"async\" data-nimg=\"fill\" class=\"object-cover\" style=\"position:absolute;height:100%;width:100%;left:0;top:0;right:0;bottom:0;color:transparent\" sizes=\"150px\" srcset=\"\/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=32&amp;q=75 32w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=48&amp;q=75 48w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=64&amp;q=75 64w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=128&amp;q=75 128w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=256&amp;q=75 256w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=384&amp;q=75 384w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=640&amp;q=75 640w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=828&amp;q=75 828w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=1080&amp;q=75 1080w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=1200&amp;q=75 1200w, \/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=1920&amp;q=75 1920w\" src=\"https:\/\/news.bitcoin.com\/_next\/image\/?url=https%3A%2F%2Fstatic.news.bitcoin.com%2Fwp-content%2Fuploads%2F2026%2F07%2Fkalshi-was-warned-of-spotify-manipulation-before-settling-3-3m-market-150x150.png&amp;w=1920&amp;q=75\"\/><\/p>\n<div class=\"absolute left-2 top-2\"><img alt=\"Bitcoin.com News\" loading=\"lazy\" width=\"28\" height=\"28\" decoding=\"async\" data-nimg=\"1\" class=\"size-7\" style=\"color:transparent\" srcset=\"\/_next\/image\/?url=%2Fimages%2Fuploads%2Fbitcoin_news_newlogo.svg&amp;w=32&amp;q=75 1x, \/_next\/image\/?url=%2Fimages%2Fuploads%2Fbitcoin_news_newlogo.svg&amp;w=64&amp;q=75 2x\" src=\"https:\/\/news.bitcoin.com\/_next\/image\/?url=%2Fimages%2Fuploads%2Fbitcoin_news_newlogo.svg&amp;w=64&amp;q=75\"\/><\/div>\n<p><\/a><\/p>\n<div class=\"flex min-w-0 flex-1 flex-col justify-center gap-2\">\n<p class=\"m-0 line-clamp-2 text-base leading-[1.3] !text-[#67656E]\">A federal appeals court ruled Sept. 25 that Ohio and Tennessee can enforce their gambling laws against Kalshi&#8217;s sports contracts.\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><a href=\"https:\/\/news.bitcoin.com\/igaming\/kalshi-ends-federal-court-losing-streak-partial-win-over-illinois\/\">Source link <\/a><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Originally posted on : Bitcoin News ) Key Takeaways Judge Martha Pacold found Kalshi\u2019s title-game contracts are likely swaps under the Commodity Exchange Act. Illinois\u2019 licensing rules and a related criminal provision are likely preempted and cannot be enforced. Judge Says a Swap Is a Swap Kalshi has won a partial preliminary injunction against Illinois, [&hellip;]<\/p>\n","protected":false},"author":3947362403,"featured_media":79158,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[32],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/79157"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/3947362403"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=79157"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/79157\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/79158"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=79157"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=79157"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=79157"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}