Illinois Cracks Down on Prediction Markets Kalshi, Robinhood, and Crypto.com

Illinois has joined other states in taking action against prediction market platforms. It has issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com. The Illinois Gaming Board (IGB) decided these companies were helping illegal sports betting operations without the needed licenses.

Illinois Takes Action Against Unlicensed Sports Betting on Prediction Platforms

The regulators claimed these platforms offered contracts on sports outcomes. They view this practice as equal to traditional sports wagering, which needs an official license in the state. The letters dated April 1, told the companies to stop their operations in Illinois right away. The IGB cautioned that not following this order could result in civil or criminal penalties.

Kalshi, which at first centered on political betting markets, branched out into sports-related contracts this year. The platform drew notice during big events like the Super Bowl and March Madness letting users trade contracts based on game results. The company teamed up with Robinhood to offer these contracts on its trading platform.

Crypto.com, a big crypto exchange, has also been offering sports betting markets on leagues such as the NBA European soccer, and hockey. The IGB’s order pointed out that none of these companies hold a Master Sports Wagering License (MSWL), which you need to run legal sports betting operations in Illinois.

The Illinois action mirrors steps taken by regulators in other states. Ohio ordered the same three companies to stop and desist just days before, while Nevada and New Jersey also tried to stop Kalshi’s sports prediction markets. Kalshi has fought these actions in court, claiming that the Commodity Futures Trading Commission (CFTC) oversees its operations, not state-level gaming regulators.

Kalshi Fights Back Against State Crackdowns, Warns of Wider Economic Impact

Kalshi insists its platform follows the law, despite the crackdown. The company claims its contracts are financial instruments, not gambling products. It has sued both Nevada and New Jersey arguing that state regulators have gone too far.

Kalshi frames its legal fight as a wider question of who is in charge, cautioning that state meddling in markets under federal control could shake up the economy big time. The company argues these limits might mess with financial markets beyond sports, affecting things like gold, oil, and farm futures.

Talk about prediction markets is heating up across the US, with Illinois now joining other states taking a hard look at these platforms. Connecticut has also started digging into Kalshi’s business, while states like Washington and Michigan might be thinking about doing the same.

Legal fights are piling up, and the results of Kalshi’s court cases might set a standard for how the US regulates prediction markets. If judges side with the company, it could test state-level limits on financial betting markets. However, if states win, it might force businesses like Kalshi, Robinhood, and Crypto.com to get licenses or stop operating in many areas.