Kalshi wins partial injunction in Chicago; judge leaves Illinois's new prediction-market fees unresolved

According to Bitcoin.com News, Illinois's new budget law has three charges, and one of them is tiered ^[8]. An exchange pays 1.75% on its first five million "exchange wagers" and 3.5% after that. It also pays a per-wager fee of 25 or 50 cents and 15% of gross receipts ^[8]. If the transaction fee is a share of trade value, the flat 25-cent charge is the bigger of the two on any trade under about $14.29 ^[20]. At 50 cents the break-even is about $28.57 ^[21].

Pacold's opinion points both ways on these fees ^[9][10]. "Regulatory uniformity, however, does not necessarily entail uniformity in cost," she wrote ^[9]. She also held that a fee that effectively regulates the market could still be preempted. "What defendants cannot do overtly, they cannot do covertly," Pacold wrote ^[10]. She did not rule on the fees and ordered further briefing ^[11].

The swap holding puts her at odds with the Ninth Circuit, which held in August that the contracts are bets and therefore not swaps ^[12]. She cited that ruling and wrote that "swaps are swaps whether they are used to gamble" ^[13]. She agreed with the Sixth Circuit that an "event" can be who wins a game. She rejected the view, which that court accepted, that the event itself must be inherently economic ^[14]. Her order is Kalshi's first federal court win since a Minnesota judge blocked that state's ban in July ^[2]. At the appellate level the count is one circuit for Kalshi (the Third, in New Jersey in April) and two against ^[15][22].

For now, the injunction saves Kalshi from building a separate product for one state. Without it, Pacold wrote, compliance would force Kalshi "to build a market solely for Illinoisans," under threat of criminal penalties ^[5]. Kalshi does not have to build that market while the order holds. It does still trade in Illinois under a fee schedule nobody has yet ruled on ^[11].

The fee question can go three ways. Pacold could find the whole schedule is regulation by other means and extend the injunction to cover it. She could let it stand as a cost. Or she could split the charges and treat them differently. I think the fees survive in some form, because her sentence on uniformity accepts that an exchange under federal rules can face different costs in different states ^[9]. The case against that view is the size of the stack: a 15% cut of gross receipts on top of per-trade charges is the kind of fee a court could treat as regulation ^[8][10]. If she strikes the schedule outright, that view is wrong.