A federal judge sided with Kalshi, finding that prediction markets are more like financial swaps, which are federally regulated, than gambling, which is subject to state oversight.

U.S. District Judge Martha M. Pacold’s opinion backs the companies’ ability to offer contracts on who wins a title game without submitting to Illinois’s sports-wagering licensing regime.

She found that the state’s age, geographic and trading restrictions would force Kalshi to build a market solely for Illinois residents, undermining federal regulatory uniformity.

The injunction’s precise terms still have to be drafted. Pacold ordered the parties to submit a proposed injunction by Oct. 29 and left challenges to Illinois’s wagering fees unresolved. The ruling therefore does not settle every state restriction or every type of sports contract.

The opinion resolves requests across three related cases involving Coinbase Financial Markets, KalshiEX, and the United States and CFTC, with the Coalition for Fair Markets and North American Derivatives Exchange participating as intervenors. Defendants include Illinois, Attorney General Kwame Raoul, Gov. JB Pritzker and Illinois Gaming Board officials.