Regulator joins multi-state effort to curb unlicensed sports contracts
The Illinois Gaming Board (IGB) has warned sportsbooks that participating in sports prediction markets constitutes illegal gambling. This action aligns with a growing number of states taking a firm stance on these emerging platforms.
In a memo issued October 23, IGB Administrator Marcus Fruchter emphasized that companies engaging in or facilitating trades on these markets risk violating state law. Moreover, they jeopardize their licensure in Illinois.
“It is unlawful to knowingly establish, maintain, or operate an Internet site that permits wagers on the outcome of any sport, game, contest, political nomination, or election without an IGB-issued license,” the notice stated.
Fruchter also warned that involvement in illegal activity outside Illinois could impact a company’s suitability for licensure in the state. Furthermore, partnerships with parties that do engage in such activities pose a risk.
Illinois Becomes Fifth State to Issue Warning
Illinois joins Ohio, Arizona, Michigan, and Nevada in cautioning licensed sportsbooks against entering the sports contracts market. Regulators have stressed that engaging in these activities—even across state lines—can jeopardize in-state licenses.
Other states, including New York and Arkansas, have issued cease-and-desist notices or stated publicly that prediction markets operate as illegal sports betting without proper licensing. Additionally, nearly 30 state attorneys general supported an amicus brief in Kalshi’s New Jersey court case, reinforcing this position.
Sportsbooks Proceed Despite Risks
Despite warnings, major operators continue exploring event contract platforms. Illinois hosts ten licensed online sportsbooks, with FanDuel and DraftKings controlling about 75% of the market by handle and revenue.
- FanDuel recently partnered with CME Group, a CFTC-approved designated contract market (DCM).
- DraftKings acquired Railbird, another CFTC-approved DCM, this month.
- Fanatics, also licensed in Illinois, filed with the National Futures Association to seek approval as a swap and introducing broker.
While these companies have not confirmed sports contracts on their platforms, legal representatives indicate they are considering such expansions. This keeps the regulatory spotlight on Illinois sportsbooks.
