Illinois Latest State to Take Aim at Sports Event Contract Markets For Illegal Betting

• The Illinois Gaming Board has issued three cease-and-desist notices for sports event contract markets
• The regulatory board sent the orders to Crypto.com, Kalshi, and Robinhood
• Illinois joins New Jersey, Ohio, and Nevada as states taking action against the sports event contract markets

Illinois is the latest state to level a haymaker at the sports event contract market companies.

The Illinois Gaming Board has issued cease-and-desist notices to Kalshi, Crypto.com, and Robinhood, ordering the companies to stop offering their sports event prediction contracts to Illinois residents.

The Illinois Gaming Board notes the companies are believed to be “engaging in unlicensed sports wagering in violation of the Illinois Sports Wagering Act.”

Latest State to Take Action

The Illinois Gaming Board has ordered the companies to cease offering the “illegal activity.” No deadline to comply was included in the notices. Failure to do so, the board notes, may subject the companies to civil or criminal penalties.

The board notes it is unlawful for companies to knowingly establish, maintain, or operate an internet site that permits a person to play a game of chance or skill for money or make a wager upon the result of a sport, game, contest, election, or political nomination.

“Under Illinois law, ‘sports wagering’ means accepting wagers on sports events or portions of sporting events, or on individual statistics of athletes in sports events or combination of sports events, by any system or method of wagering, including, but not limited to, in person or over the internet through websites or on mobile devices,” Marcus D. Fruchter, Administrator, wrote in the orders.

Illinois is the latest state to take action against the companies. New Jersey and Nevada recently sent cease-and-desist notices to both Kalshi and Robinhood, while Ohio also sent notices to Kalshi, Robinhood, and Crypto.com.

So what happens next? Will the companies remove the markets, or will Kalshi levy legal action as it did in New Jersey and Nevada?

Will Kalshi Sue in Illinois?

As more states are starting to follow suit and send cease-and-desist notices to companies offering these types of markets, it remains to be seen how many states Kalshi will sue for their actions.

KalshiEX filed lawsuits against both the New Jersey Division of Gaming Enforcement (NJ DGE) and Nevada Gaming Control Board (NGCB) this past week for cease-and-desist notices sent to the company regarding their sports event prediction markets.

The company believes neither of the state regulatory bodies have the right to intrude on the government’s “exclusive” authority to regulate prediction markets.

Counsel for Kalshi argues that Congress previously gave the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction to regulate futures trading on approved exchanges. As the CFTC has allowed Kalshi to launch its sports event contract markets, state law cannot “intrude on the comprehensive federal scheme for regulating designated exchanges.”

Kalshi Co-Founder and CEO Tarek Mansour recently took to social media to defend the company’s lawsuits against the state regulatory bodies.

“While they are not our regulators, both states have issued cease and desist orders that fundamentally misunderstand prediction markets and undermine the foundation of U.S. financial markets, which are regulated by the federal government. We have made every effort to engage proactively with both Nevada and New Jersey and try to educate them about prediction markets, how they are regulated, and how critical they are… but our words fell on deaf ears,” he wrote.

Kalshi could very well follow suit and sue the Ohio Casino Control Commission and Illinois Gaming Board for the cease-and-desist notices.