On October 23, 2025, the Illinois Gaming Board (IGB) released a memo that firmly positioned the state against the participation of sportsbooks in sports prediction markets, declaring such activities as illegal gambling. This decision by Illinois adds it to a list of states taking similar stances. The regulator emphasized that any involvement in or facilitation of trades on sports prediction markets without proper licensing is against the law, thus putting at risk the entities involved.
The memo from IGB Administrator Marcus Fruchter underscored the legality issues, stating unequivocally: Conducting any internet activities that allow individuals to gamble based on sports, contests, or political outcomes without an IGB-issued license is unlawful. The notice also warned that illegal gambling activities could jeopardize a company’s eligibility for licensure in Illinois. Further, the notice pointed out that violations of gaming laws in other jurisdictions or partnerships with violators could similarly affect licensure prospects.
Following Ohio, Arizona, Michigan, and Nevada, Illinois is now the fifth state to specifically caution sportsbooks regarding sports contracts. This stance follows Ohio’s initial warning in August and subsequent advisories by Arizona and Nevada in September and October, respectively. Regulators in these states have stressed that even if activities occur outside state borders, they could still jeopardize licenses held within their jurisdiction.
The IGB’s actions are part of a broader regulatory movement across the United States. Several states have already sent cease-and-desist letters to exchanges like Kalshi, with New York being the latest to do so. Earlier this year, the IGB contacted Kalshi and its partners, including Robinhood and Crypto.com, expressing concerns over their operations related to prediction markets.
Adding to the regulatory landscape, Arkansas Attorney General Tim Griffin recently declared prediction markets akin to illegal sports betting, citing the lack of proper licensing. His statement joins a collective stance taken by nearly thirty state attorneys general, who filed an amicus brief supporting this view in a case involving Kalshi in New Jersey.
Despite these regulatory warnings, major sportsbooks are showing interest in the burgeoning market of sports prediction. In Illinois, where there are currently ten licensed online sportsbooks, industry giants FanDuel and DraftKings dominate the market. Together, they account for approximately 75% of the state’s betting handle and revenue. Both companies have announced plans that indicate a foray into event contracts trading.
In August, FanDuel began a partnership with CME Group, a move that aligns with its strategic expansion into event-related trading markets. DraftKings followed suit by acquiring Railbird, a company recognized as a designated contract market (DCM) approved by the Commodity Futures Trading Commission (CFTC). While neither company has explicitly stated that these new ventures will include sports contracts, speculation is rife. A legal representative from Flutter, FanDuel’s parent company, hinted at the possibility of sports contracts being featured on their new platforms.
Moreover, the regulatory filing in May with the National Futures Association (NFA) featured executives from Fanatics, another sportsbook licensed by the Illinois Gaming Board. These executives are seeking approval for their status as a swap and introducing broker, indicating further industry interest in prediction markets.
This burgeoning interest in sports prediction markets among major sportsbooks, despite regulatory caution, highlights a significant tension within the industry. On one hand, companies are eager to explore new revenue streams and expand their service offerings. On the other hand, regulatory bodies are working to ensure that these activities comply with legal standards to maintain the integrity of the betting landscape.
Industry analysts suggest that the allure of prediction markets lies in their potential to attract a new segment of users who are more interested in financial market-like trades than traditional sports betting. However, this potential must be balanced with the compliance challenges and the risk of regulatory repercussions.
There is also a counterpoint to consider: proponents of sports prediction markets argue that these platforms offer a form of social forecasting, tapping into collective wisdom to predict outcomes. They posit that this could enhance market efficiency and provide valuable insights across various domains. Nevertheless, regulators remain cautious, prioritizing consumer protection and the prevention of illegal gambling activities.
As the debate continues, the actions of the Illinois Gaming Board—and those of other states—will likely have significant implications for the future of sports prediction markets in the U.S. The regulatory landscape is evolving, and operators must navigate this complex environment carefully to ensure compliance while exploring new business opportunities.
In summary, the Illinois Gaming Board’s recent warning against sports prediction markets underscores the regulatory challenges facing the industry. While there is evident interest from major operators in this new market, compliance with legal standards remains paramount. As states continue to define their positions on the legality of these activities, the balance between innovation and regulation will be crucial in shaping the industry’s future.
Erik Agary is a seasoned writer at True Games Reviews, specializing in gaming, casino games, and interactive entertainment. With a passion for all things digital, Erik dives deep into the latest trends and developments in the gaming world, offering insightful reviews and detailed analysis. His expertise spans across multiple gaming platforms, ensuring comprehensive coverage that resonates with both novice and experienced gamers alike.
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