Sports betting regulators in Illinois have set their sights on eradicating prediction market platforms.
The Illinois Gaming Board sent cease-and-desist orders to Kalshi, Robinhood, and Crypto.com dated April 1, claiming that those companies are operating illegally without a sports betting license with their sports-event outcome contracts that act like wagers.
Kalshi, which burst on the scene last fall with election trading markets, got into the sports outcome business earlier this year with Super Bowl and March Madness markets. The company linked with Robinhood to list those offerings on its popular trading platform.
“The IGB is aware that Kalshi is engaged in sports wagering activity in Illinois over the internet and on mobile devices,” the regulatory body said in a letter to Kalshi. “The IGB has neither licensed nor authorized Kalshi to engage in sports wagering activity. Consequently, Kalshi’s activity constitutes illegal gambling in violation of Illinois law. Accordingly, Kalshi and anyone affiliated with its operations are directed to cease and desist this illegal activity.”
The IGB added that failure to comply with the order may result in civil or criminal penalties.
Cease-and-desist letters with the same wording were sent to Robinhood and Crypto.com saying that both are in violation of Illinois law, which states, “No person or entity may engage in a sports wagering operation or activity in Illinois unless licensed by the IGB,” and that, “it is unlawful to knowingly establish, maintain or operate an Internet site 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.”
Prediction markets offered
Kalshi has been offering markets on individual NCAA tournament games where users can purchase contracts for one team over another. That led to a handle of over $200 million in the first weekend of March Madness.
Alongside Kalshi, Robinhood has been offering similar markets. Crypto.com has a sports section on its site and app with prediction markets for the NBA, European soccer, and hockey.
There are currently 10 licensed online Illinois sports betting operators, which generated $1.4 billion in wagers during January.
Joining a growing list
Illinois is the latest state to take aim at prediction markets, but not the first. Ohio sent cease-and-desist orders to the same three companies on Monday after regulators determined that the sports-event contracts fell under the state’s sports betting laws, which require a license to operate.
Nevada told Kalshi to stop allowing sports prediction markets in the Silver State last month. Following an extension, Kalshi filed a lawsuit against the Nevada Gaming Control Board, arguing that the prediction market company is regulated by the Commodity Futures Trading Commission, a federal regulator, and not any particular state agency.
Kalshi filed the same lawsuit against New Jersey after Garden State regulators also sent the company a cease-and-desist letter. Connecticut regulators are currently investigating Kalshi.
