More than six months after the Illinois Gaming Board (IGB) sent case-and-desist letters to certain prediction market operators that offer sports contracts, the regulator has warned its licensed sportsbooks about stepping into that space.
The IGB sent a memo to its licensees on Oct. 23 to reiterate its stance that any company partaking in or facilitating trading on sports via prediction markets is engaged in illegal gambling.
“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,” read the notice from IGB Administrator Marcus Fruchter.
“If a party engages in or facilitates illegal gambling activity, such conduct may impact that party’s suitability for licensure in Illinois. Additionally, suitability for Illinois licensure may be impacted by activity that violates the gaming laws or rules of another state or tribal government, as well as the extent to which a party is partnering or associating with another party that is engaged in such activity.”
States continue pile-on
Illinois is at least the fifth state in which the gaming regulator has directed its licensed sportsbooks to steer clear of sports contracts.
The Ohio Casino Control Commission was first to do so in August, the Arizona Department of Gaming followed suit in September and followed the gaming control boards of Michigan and Nevada in October. In most of those cases, like in Illinois, the regulators warned licensees that participating in sports contracts even outside the state could jeopardize their in-state operator licenses.
Many other states have sent C&D notices to Kalshi and/or other exchanges, most recently New York. The IGB sent such correspondence to Kalshi, its partner Robinhood and Crypto.com in April.
Last week, Arkansas‘ Attorney General issued a formal opinion that stated that prediction markets offer illegal sports betting without licensure. AG Tim Griffin was one of nearly three-dozen state AGs who signed an amicus brief that was filed in June in Kalshi’s legal case in New Jersey court.
Several Illinois sportsbooks take preliminary steps
Illinois has 10 licensed online sportsbooks. The two that together account for around three-quarters of the market by handle and revenue, FanDuel and DraftKings, have both publicly announced plans to set up new platforms for event contracts trading.
FanDuel partnered with CME Group in August while DraftKings acquired Railbird in October; both CME Group and Railbird operate as designated contract markets (DCMs) under Commodity Futures Trading Commission (CFTC) approval, offering a range of trading markets on various events.
Neither DraftKings nor FanDuel explicitly said their new ventures would offer sports contracts in their respective announcements, but a Flutter legal representative confirmed that FanDuel was considering that step.
Meanwhile, a filing with the National Futures Association (NFA) in May listed executives from Fanatics, another IGB-licensed sportsbook, among the intended leaders of an entity that applied for status as an approved swap firm and introducing broker.
