Kalshi, Coinbase win partial ruling on Illinois sports contracts

Kalshi and Coinbase just won a meaningful round in the fight over who gets to regulate sports event contracts. On October 2, 2026, US District Judge Martha M. Pacold granted a partial preliminary injunction in Illinois, siding with the two companies and the Commodity Futures Trading Commission against state officials. The win comes with an asterisk. The judge found that Illinois licensing requirements likely conflict with federal derivatives law, but she left the state’s transaction fee rules unresolved and told the parties to come back with proposed injunction terms. What the court decided The core question was preemption. That is the legal doctrine under which federal law overrides state law when the two collide. Judge Pacold concluded that certain Illinois licensing requirements, including provisions under 230 ILCS 45, likely conflict with the federal Commodity Exchange Act. The CEA governs swaps and other derivatives, and it places them under the jurisdiction of the CFTC. The plaintiffs’ argument hinges on classification. If Kalshi’s sports event contracts count as swaps under the CEA, they fall under exclusive federal oversight rather than state gambling law. The court’s rulin...