News: Illinois Warns Sportsbooks On Getting Into Prediction Markets
It's the fifth known state to tell gaming licensees that offering prediction markets could impact their suitability.
The Illinois Gaming Board warned its licensees that getting involved in prediction markets — in Illinois or elsewhere — could jeopardize their suitability in the state.
Here’s the key bit from the memo:
‘Prediction markets’ constitute gambling activity under Illinois law. …
…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
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The memo comes as chatter about DraftKings and FanDuel getting into prediction markets has ramped up in recent weeks. It appears that both will hope to offer sports prediction markets in at least some states, if they are not putting their existing gaming licenses at risk. Both are licensed in Illinois.
Last week, DraftKings acquired Railbird, an exchange that is registered with the Commodity Futures Trading Commission. DraftKings aims to launch a prediction markets app either later this year or early next year.
FanDuel has a partnership to offer a prediction market via CME Group in the coming months.
Illinois is the fifth known state to issue such a memo or letter, joining:
Illinois has sent cease-and-desist letters to existing prediction market operators, who continue to serve the state.
Also this weekend, New York’s regulator sent a cease-and-desist letter to Kalshi, which in turn filed a lawsuit against state officials early Monday morning.
Here’s an excerpt from the memorandum (full version available here):
To: All Licensees, Applicants and Stakeholders From: Marcus D. Fruchter, IGB Administrator Re: Prediction Markets
The Illinois Gaming Board (”IGB”) is issuing this Memorandum in response to recent inquiries regarding so-called “prediction markets,” including purported “sports events contracts.” We are taking this opportunity to reconfirm our position on this topic.
As a general matter, there is no right under Illinois law to engage in or profit from gambling through contract or otherwise. J&J Ventures Gaming, LLC v. Wild, Inc., 2016 IL 1198760, 26. Gambling is legal in Illinois only to the extent allowed under State law, such as the Illinois Gambling Act, Video Gaming Act, Sports Wagering Act, and Criminal Code of 2012.
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.
No person or entity may engage in a sports wagering operation or activity in Illinois unless licensed by the IGB. Under Illinois law, “sports wagering“ means accepting wagers on sports events or portions of sporting events, or on individual statistics of athletes in sports events or combination of sports events, by any system or method of wagering, including, but not limited to, in person or over the Internet through websites or on mobile devices. Sports wagering includes, but is not limited to, single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets.
“Prediction markets“ constitute gambling activity under Illinois law. Parties that participate in or facilitate such activity in Illinois without IGB licensure or authorization are engaged in illegal gambling.
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.