Illinois Appeals Order Limiting State Rules on Swaps at CFTC Venues

Illinois appealed a preliminary injunction that limits enforcement of specified state licensing, fee and tax provisions against swaps, including sports event contracts, listed on or available through CFTC-regulated derivatives venues.

Signed by U.S. District Judge Martha M. Pacold, the Oct. 30 order covers swaps listed on or available through designated contract markets and futures commission merchants regulated by the Commodity Futures Trading Commission. The preliminary order does not settle Illinois’ ultimate authority to tax the covered activity.

On Oct. 2, Pacold granted the injunction motions in part, finding the covered state licensing requirements likely preempted by federal law. That ruling left the question of fee preemption open for further argument. The formal injunction entered Oct. 30 and included the specified fees and taxes.

Coinbase, Kalshi, the United States and the CFTC sought the earlier injunction. The case is part of a wider dispute over federal oversight of prediction markets, in which Coinbase has sought exclusive federal oversight.