Illinois has become the latest state to warn its licensed sportsbooks about participating in prediction markets, underscoring growing regulatory pressure across the U.S. gambling industry.
On October 23, the Illinois Gaming Board (IGB) issued a memo to all licensees reaffirming that trading or facilitating trades on sporting events through prediction markets constitutes illegal gambling under state law. The warning follows cease-and-desist letters sent earlier this year to operators including Kalshi, Robinhood, and Crypto.com for allegedly offering unlicensed wagering products tied to sports outcomes.
IGB Reinforces Its Stance on Sports Contracts
The IGB’s notice, signed by Administrator Marcus Fruchter, stressed that Illinois law prohibits companies from operating online platforms that allow wagering on sports, contests, or elections without an official license.
“It is unlawful to knowingly establish, maintain or operate an Internet site that permits a person to play a game of chance or skill for money or other thing of value, or that permits a person to make a wager upon the result of any sport, game, contest, political nomination, appointment or election via the Internet without an IGB-issued license,” the notice read.
The memo warned that participation in or facilitation of such unlicensed betting could affect an operator’s suitability for licensure in Illinois. Fruchter added that regulatory standing might also be influenced by violations in other jurisdictions or by partnerships with entities engaged in similar conduct.
More States Move to Restrict Prediction Market Activity
Illinois joins a growing list of states directing sportsbooks to avoid event or sports contracts. Regulators in Ohio, Arizona, Michigan, and Nevada have issued comparable warnings this year, cautioning that unlicensed participation — even beyond state lines — could endanger in-state licensure.
The crackdown follows a national debate on whether event-based contracts amount to gambling. Earlier this month, Arkansas Attorney General Tim Griffin issued an opinion labeling prediction markets as unlicensed sports betting. Griffin was among nearly three dozen state attorneys general who signed an amicus brief in June supporting stricter oversight in Kalshi’s New Jersey legal case.
Meanwhile, multiple states, including New York, have dispatched cease-and-desist letters to prediction market platforms, showing widespread skepticism about the blurred lines between legal financial trading and unregulated gambling.
Major Operators Explore Event Trading Ventures
Illinois has 10 licensed online sportsbooks, led by FanDuel and DraftKings, which together control about three-quarters of the state’s betting handle and revenue. Both companies have recently moved toward the event-trading sector through new ventures.
In August, FanDuel partnered with the CME Group, while DraftKings acquired Railbird in October. Both CME Group and Railbird are registered with the Commodity Futures Trading Commission (CFTC) as designated contract markets (DCMs), allowing them to operate in the futures and derivatives space.
Although neither confirmed plans to introduce sports contracts, a Flutter Entertainment representative acknowledged that FanDuel is evaluating that option.
A May filing with the National Futures Association (NFA) also listed executives from Fanatics, another IGB-licensed sportsbook, among the proposed leaders of an entity applying for status as a swap firm and introducing broker.
The IGB’s latest warning highlights how regulators remain wary even as sportsbooks pursue new, finance-adjacent markets in a rapidly evolving betting landscape.
Source:
“Illinois latest state to turn up heat on sportsbooks over prediction markets”, sbcamericas.com. Oct 27, 2025
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