Kalshi, Other Prediction Markets Challenged as More States Raise Concerns
The Illinois Gaming Board (IGB) has issued cease-and-desist notices to Kalshi, Robinhood, and Crypto.com, citing violations of the state's Sports Wagering Act and Criminal Code. The board has accused the companies of operating unlicensed sports wagering platforms by offering contracts tied to the outcomes of sports events.
LISTEN TO THIS ARTICLE:According to the IGB, none of the companies have been granted licenses to offer such services within the state of Illinois. The letters demand an immediate halt to these operations, though they do not specify a deadline for compliance.
Related: Kalshi, Robinhood, and Crypto.com Face Shutdown in OhioThis regulatory action by Illinois follows closely behind similar enforcement measures taken by other states. Less than two days earlier, the Ohio Casino Control Commission confirmed it had sent enforcement letters to the same three companies.
Nevada and New Jersey have also intervened, with both states issuing cease-and-desist notices to Kalshi. Additionally, the New Jersey Division of Gaming Enforcement extended its notice to include Robinhood. These actions suggest a growing consensus among state regulators that the operations of these companies may be in breach of local gambling laws.
Massachusetts has also entered the fray. The office of Secretary of State Bill Galvin has subpoenaed Robinhood, indicating a formal investigation into its prediction market offerings. In Connecticut, the Department of Consumer Protection has an ongoing investigation into Kalshi. The department confirmed that this inquiry began in the fall, although officials have not provided a timeline for its conclusion or revealed what enforcement actions might follow.
At the heart of these investigations is the legal interpretation of sports event-based contracts. State regulators maintain that the services provided by companies like Kalshi and Crypto.com amount to unlicensed sports betting.
Kalshi, in particular, has been operating sports futures markets across all 50 states since before the Super Bowl and has recently expanded its offerings to include individual game outcome contracts during events such as March Madness. Robinhood has also partnered with Kalshi to power similar offerings on its platform. Crypto.com has been active in the space since late 2023, making it one of the earlier entrants in this segment of prediction markets.
More Regulation News
Political Pressure Against Prediction Markets Increasing
Political pressure on federal regulators is also increasing. Rep. Dina Titus of Nevada, co-chair of the Congressional Gaming Caucus, has called on the Commodity Futures Trading Commission (CFTC) to immediately suspend sports event trading nationwide. She has urged the commission to intervene to prevent what she characterized as ongoing unlawful activity, while various states continue to evaluate the legality of these contracts.
Rep. Titus has also requested that the CFTC block access to such markets for individuals physically located in Nevada. She has previously criticized these contracts as mechanisms that bypass state laws and lack the necessary integrity oversight and consumer protections typically required in regulated sports betting environments.
Major industry stakeholders, including the American Gaming Association and MLB, have echoed calls for the CFTC to clarify the legal status of sports-related contracts offered through prediction markets. These organizations have expressed concern that without firm federal guidance, these platforms may operate in a regulatory gray area that undermines the integrity of legal sports betting markets.
Kalshi has maintained that its activities fall under the jurisdiction of the CFTC, asserting that state-level interventions are overreaching. In response to the cease-and-desist order issued by New Jersey, Kalshi has filed a lawsuit, arguing that the state's actions infringe upon the federal authority of the CFTC, which it believes is solely responsible for regulating derivatives markets. This legal battle highlights the growing tension between state and federal oversight in the rapidly evolving landscape of prediction markets.
As the scrutiny intensifies, the Connecticut Department of Consumer Protection confirmed an ongoing investigation into Kalshi and others, as well, but did not specify when it might be completed or what conclusions may be drawn. While the precise concerns in Connecticut remain unclear, the inquiry adds to the broader wave of regulatory actions being directed at prediction market operators across the US.
Amid these developments, a key figure in Kalshi's regulatory team is departing. Eliezer Mishory, who served as Kalshi's Chief Regulatory Officer, is leaving the private sector to assume a position at the Securities and Exchange Commission. He will serve as the point person for the Elon Musk-run Department of Government Efficiency (DOGE), a move that comes at a critical moment as Kalshi faces increasing legal and regulatory scrutiny across multiple states.
RELATED TOPICS: Regulation
Latest News
Most Read
Must Read
Interviews
Sweepstakes Casinos: Thriving in an Ever-Changing Industry – Interview with Attorney Stephen C. Piepgrass
Feb 17, 2025
Interviews
Review this New Post
Leave a Comment
User Comments
Comments for Kalshi, Other Prediction Markets Challenged as More States Raise Concerns