Illinois is pushing back against efforts to block the enforcement of its gambling laws against sports and election prediction markets, arguing that these products are ordinary wagers rather than federally regulated financial instruments.
In a 43-page response, the state's Attorney General Kwame Raoul's office countered claims made by the Commodity Futures Trading Commission, Kalshi, and the Coalition for Fair Markets, saying they are unlikely to succeed in their bid for a preliminary injunction.
The filing maintained that sports and election event contracts are not "swaps" under the Commodity Exchange Act, and even if they were, Congress did not intend to displace state gaming laws.
"Ordinary citizens understand that it is gambling to wager money on which team will win a baseball game or which candidate will win an election," the state wrote.
Illinois argued that prediction markets offer "event contracts" that allow residents to wager money, while claiming those products "are not gambling, however, but rather are sophisticated financial instruments used for hedging risk."
The state sought to preserve state control over sports prediction markets by arguing that this description conflicts with both the Commodity Exchange Act and Congress's purpose in regulating swaps.
Illinois rejected the argument that downstream financial effects transform these contracts into swaps, saying that Congress defined a "swap" as an agreement that provides a payout based on an event that is inherently economic in nature.
The state also noted that athletic competitions and elections "are not inherently financial, economic, or commercial in the same sense as a change in interest rates or the relative value of two currencies."
Illinois's latest filing follows months of increasingly public opposition from Illinois regulators, including a memorandum issued by the Illinois Gaming Board stating that "Predictions markets" constitute gambling activity under Illinois law.
The state argued that the plaintiffs failed to show irreparable harm and said the balance of equities favors continued enforcement, stating that the public suffers when unregulated gambling occurs on the prediction markets' platforms.
The Illinois Gaming Board has "the experience and expertise necessary to ensure that sports wagering is done safely and responsibly," the filing stated, as the state asked the court to deny the requested preliminary injunctions.
