Illinois appeals after judge blocks its 3.5% event contract tax

Five prediction market cases now sit before the Seventh Circuit, including two from Wisconsin.

The hit

A federal judge has blocked Illinois from enforcing its new prediction markets tax & licensing rules against CFTC-regulated exchanges. U.S. District Judge Martha Pacold entered the preliminary injunction on Friday, favouring Kalshi, Coinbase & the CFTC, according to The Gambling Wire. Illinois officials have appealed the ruling to the Seventh Circuit.

Why it matters

The ruling stops Illinois collecting its planned transaction tax or requiring a sports betting licence from exchanges offering sports event contracts, at least while the case continues. It does not settle whether such contracts are legal under state gambling law. With five related cases now before the Seventh Circuit, the outcome could set precedent for how other states try to tax or licence prediction markets.

The record

Injunction entered	30 October 2026, by Judge Martha Pacold
Illinois transaction tax blocked	1.75%, rising to 3.5% after 5m transactions
Parties protected	Kalshi, Coinbase & CFTC-regulated exchanges
Appeal filed by	Illinois officials, to the Seventh Circuit
Related cases before Seventh Circuit	5 total: 3 Illinois, 2 Wisconsin

What happens next

Watch the Seventh Circuit, which now has five related prediction-market cases including Wisconsin disputes involving the CFTC & Kalshi’s fight with the Ho-Chunk Nation over IGRA claims.

Sources: SBC Americas – Illinois appeals to Seventh Circuit after judge blocks prediction markets law · Gambling Insider – Illinois prediction market injunction, Utah operators exit

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