Judge blocks state rules on Kalshi, other prediction sites

Sports fans in Illinois can continue to play their hunches on Kalshi and other "prediction markets," after a federal judge blocked the state's attempt to put rules on those sites. However, Illinois leaders may still be able to take a cut of the transaction fees those sites charge players.

The ruling issued October 2 in federal district court in Chicago hinges on the legal definition of "gambling."

To state leaders and many lawmakers, people putting down money to predict the outcome of, say, Sunday's Bears-Packers game sure sounded like betting on sports.

So the Legislature passed a series of measures setting up age limits and other rules, and imposing a tax on the transaction fees charged by prediction market sites.

Kalshi and others sued the state, and the judge has ruled that because players on prediction markets are betting against each other and not the house, those wagers aren't technically "bets," but something called "financial swaps."

That means they can only be regulated by the feds, and not by individual states.

But the judge says she's still considering whether the state has the authority to collect transaction fees.