Lynnae Williams Journalist
Lynnae is a journalist covering the intersection of technology, culture, and gambling. She has more than five years of experience as a writer and editor, with bylines at SlashGear and MakeUseOf. On the iGaming side,...
Read Full BioIllinois has become the latest state to take aim at the rapidly growing prediction market industry through proposed legislation. On February 4, Rep. Edgar González Jr. (D) introduced House Bill 5059, an almost direct clone of New York’s Oversight and Regulation of Activity for Contracts Linked to Events (ORACLE) Act.
The legislation would categorize prediction market platforms as gaming entities and remove their most popular event contracts, making it impossible for them to bypass state-level sports betting regulations and tax obligations.
As many states continue to engage in a whack-a-mole regulatory battle against federally regulated platforms like Kalshi and Coinbase, Illinois is turning up the heat by proposing legislation to permanently close the financial exchange gambling loophole many of them use to get around state-level oversight.
The legislation would do that by creating a permanent legislative wall against “event contracts” that allow users to wager on everything from the Super Bowl to elections under the guise of financial derivatives.
Surgical Strikes Against Sports Markets
The proposed legislation includes a set of rigid definitions designed to trap prediction markets within the state’s existing gambling laws. The bill explicitly defines an “Athletic event market” as “a prediction market that enables a consumer to open a speculative position on the outcome of a specific athletic event.”
As written, the bill specifically targets the results of individual games and prop bets, while excluding tournament winners from the statutory definition, potentially leaving those markets in regulatory limbo.
The legislation goes beyond sports event contracts, listing several other prohibited categories that would be off-limits to Illinois residents. These include “catastrophic event markets,” “political markets,” “death markets,” and “security markets.” Under the Act, “no prediction market platform provider shall permit any consumer under the age of 21 to register or to open any speculative position on a prediction market.”
High Stakes & Million Dollar Penalties
The Illinois bill would make noncompliance expensive, as it includes some of the most aggressive financial penalties in U.S. gaming history. If a platform is found to be in repeated violation of the act, the Attorney General can seek an injunction to force the provider to “cease operations in the State.”
If the prediction market ignores that order, they “shall incur a civil penalty of $1,000,000 per day that the prediction market platform provider is operating in violation of the order,” according to the bill’s text.
Besides Illinois and New York, Hawaii and Connecticut have also joined the legislative push to restrict prediction markets. While only Illinois and New York have used the ORACLE Act branding, the other bills have similar goals.
Last month, Hawaii introduced House Bill 2198, which similarly targets speculation on “athletics, politics, catastrophe, and death.” And on February 5, a Governor’s bill, House Bill 5038, was introduced in Connecticut, targeting the “bid-ask format” used by platforms like Kalshi and Coinbase.
The main focus of this bill is to put up an age wall that would prohibit anyone under 21 from registering or opening a position, and includes strict advertising bans for college campuses.
However, the fate of these state-level efforts is unclear because, as sports betting and gaming attorney Daniel Wallach pointed out in a post on X about the Illinois bill, until federal courts weigh in, attempts to regulate prediction markets “will get jammed up in the current preemption quagmire.”
Because these markets are regulated by the Commodity Futures Trading Commission, they argue that federal law overrides state gambling statutes. Until federal courts decide whether these contracts are legally financial swaps or simply unregulated betting platforms, bills like the ORACLE Act are likely to face years of litigation before they can be fully enforced.
