Kalshi has filed a federal lawsuit challenging Illinois's new sports prediction market law, arguing it violates federal authority as the company pursues a $40 billion valuation. According to a filing submitted Tuesday in the U.S. District Court for the Northern District of Illinois, Kalshi sued Illinois Governor JB Pritzker, Attorney General Kwame Raoul, members of the Illinois Gaming Board, and other state officials. The complaint targets Illinois Senate Bill 3019, which was signed into law last week as part of the state's fiscal year 2027 budget package and is scheduled to take effect on July 1. Kalshi argues that the legislation unlawfully interferes with the Commodity Exchange Act by treating sports event contracts offered on federally regulated prediction markets as sports wagers subject to state licensing requirements.
According to Kalshi's latest listings, the prediction market operator has expanded its CFTC-regulated crypto perpetuals lineup to 13 digital assets after launching new contracts tied to Zcash, Near Protocol, and Shiba Inu. The additions bring the total supported crypto assets alongside Bitcoin and other altcoins. The contracts are available through a structure approved by the U.S. Commodity Futures Trading Commission and do not carry expiration dates. Zcash perpetuals are being offered with up to 2x leverage, while Near contracts allow leverage of up to 2.6x. Shiba Inu's perpetual contract, listed under the ticker KSHIB, also carries a maximum leverage ratio of 2x. Dogecoin perpetuals are also listed as part of the latest wave of CFTC-approved crypto contracts. Recent product launches have also extended Kalshi's regulated offerings, with the company adding perpetual crypto futures on June 24.
The Illinois lawsuit adds to a series of legal disputes over whether states or the federal government has primary authority over sports-related prediction markets. The CFTC, now led by Commissioner Michael Selig, has maintained that prediction market event contracts fall under its jurisdiction because they qualify as swaps under federal law. Federal regulators have already challenged similar state actions, including recent litigation involving restrictions imposed in Kentucky. The disputed legislation also introduced a 0.2% tax on cryptocurrency transactions, a measure that has already drawn criticism from several participants in the digital asset industry. Legal analysts have suggested that the conflicting positions taken by state gaming regulators and federal authorities could eventually require resolution by the U.S. Supreme Court if lower courts continue reaching different conclusions.
The lawsuit comes as Kalshi continues expanding its business with sports-related contracts accounting for roughly 65% of trading volume, according to company data. Multi-outcome combination contracts introduced last year have become one of its fastest-growing products. The company has reportedly entered discussions to raise fresh funding at a valuation of about $40 billion, up from the $22 billion valuation it secured less than two months ago. The regulatory uncertainty has prompted traditional exchanges to enter the prediction market space, with Cboe Global Markets launching its first prediction market products through the Cboe Predicts suite, offering binary options on the Mini-S&P 500 Index with Charles Schwab expected to add access in the coming months.
Outside the United States, Kalshi is facing challenges in India. An updated members' agreement published on Wednesday shows the company has added India to its list of restricted jurisdictions. Indian authorities have classified prediction-market platforms under the Promotion and Regulation of Online Gaming Act 2025, arguing that products involving real-money speculation on uncertain outcomes can fall within prohibited betting activity regardless of how operators describe them. The regulatory scrutiny highlights the global challenges facing prediction market platforms as they expand their offerings, with Cboe Global Markets launching its first prediction market products in the United States while facing similar international restrictions.
