The Illinois Gaming Board (IGB) has become the latest in an ever-lengthening list of state gaming regulators accusing prediction markets operators of breaking the law by offering trading on sports event contracts.
The IGB has sent cease-and-desist notices to each of Kalshi, Robinhood and Crypto.com, asserting that the companies are offering unlicensed sports wagering in violation of the state Sports Wagering Act and Criminal Code.
The board added that it has “neither licensed nor authorized” any of the operators to offer sports wagering and demanded that they stop providing sports contracts, or else risk facing criminal penalties.
Unlike other state regulators, the IGB’s letters do not stipulate a specific date by which the companies need to comply.
The Illinois letters come less than 48 hours after the Ohio Casino Control Commission (OCCC) confirmed it sent enforcement letters to the three operators. Nevada and New Jersey also both issued a C&D to Kalshi, with the New Jersey Division of Gaming Enforcement (DGE) writing to Robinhood as well.
Robinhood has also been subpoenaed in Massachusetts by Secretary of State Bill Galvin. And, on Tuesday, Connecticut Department of Consumer Protection (DCP) Director of Communications Kaitlyn Krasselt told SBC Americas that the Gaming Division has an open investigation into Kalshi.
In all cases, states believe the production market operators are violating state law by offering services that equate to sports betting.
Kalshi has been offering sports futures markets in all 50 states since before the Super Bowl and has expanded its sports offerings, offering “to win” markets on individual games throughout March Madness. The company is also now powering a suite of sports-related contracts on Robinhood’s platform.
Crypto.com has been offering sports trading since late last year, predating Kalshi and Robinhood’s move into the space.
Titus calls for immediate suspension of sports trading
The scrutiny continues to mount.
On Tuesday afternoon, before the Illinois C&Ds, Nevada Rep. Dina Titus, the co-chair of the Congressional Gaming Caucus, urged the Commodity Futures Trading Commission (CFTC) to suspend sports event trading on prediction market platforms.
“I urge the Commission to exercise its authority to stay the listing of such contracts nationwide to ensure this unlawful activity does not persist as additional states, like New Jersey and Ohio have, determine if these contracts violate state law, and as a legal process unfolds in states, courts, and agencies,” Titus wrote in a letter.
Titus also asked the commission to ban prediction market users from trading on sports contracts while physically present in the state of Nevada. Earlier this year, Titus labeled sports event contracts ” a backdoor way” to circumvent state laws and regulations and offer sports betting without integrity monitoring or player protection safeguards.
Organizations such as the American Gaming Association and Major League Baseball have publicly implored the CFTC to make a firm decision on the legality of prediction markets offering sports event contracts without state sports betting licenses.
Kalshi argues states are out of line
In contrast, Kalshi believes its sports trading falls under the CFTC’s exclusive right to regulate derivatives markets.
In a lawsuit filed against New Jersey in response to that state’s C&D, Kalshi argued that states’ interventions infringe upon the federal authority of the CFTC.
One member of Kalshi’s legal team will no longer be supporting these efforts. Reuters is reporting that Kalshi Chief Regulatory Officer Eliezer Mishory is leaving his post in the private sector to take on a new role as the point person for the Department of Government Efficiency (DOGE) at the Securities and Exchange Commission.
