Chavdar Vasilev is a journalist covering the casino and sports betting market sectors for CasinoBeats. He joined CasinoBeats in May 2025 and reports on industry-shaping stories across the US and beyond, including legislative debates, market...
Read Full BioThe Illinois Gaming Board (IGB) is the latest state regulator to warn licensed sportsbooks against engaging in prediction markets.
In a memorandum dated October 23, the regulator cautioned that any licensee operating or associated with unlicensed event contracts could face suspension of their license in Illinois.
“It is unlawful to knowingly establish, maintain or operate an Internet site 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,” the notice reads.
“‘Prediction markets’ constitute gambling activity under Illinois law.”
The IGB added, “If a party engages in or facilitates illegal gambling activity, such conduct may impact that party’s suitability for licensure.”
Fifth State Joins the Crackdown
Illinois becomes at least the fifth state regulator to issue such a warning this year.
The Ohio Casino Control Commission was the first to issue a warning in August. It said that sportsbooks “may not engage in or facilitate trading of event contracts.” The regulator added that even if a sportsbook were to exclude Ohio residents from the markets, this would not “alleviate the suitability concern.”
The Arizona Department of Gaming followed in September, reminding licensees that prediction markets “constitute unlicensed wagering.” The notice included a letter the regulator sent to the Commodity Futures Trading Commission (CFTC) in June expressing concerns with sports event contracts.
Nevada and Michigan regulators issued similar guidance in October. The Nevada Gaming Control Board warned that it considers that “wagering occurs whether the contract is listed on an exchange regulated by the Commodity Futures Trading Commission (CFTC) or elsewhere.”
Together, these actions form a clear regulatory stance that state-licensed sportsbooks cannot participate—directly or indirectly—in markets resembling gambling outside established frameworks.
DraftKings & FanDuel Eye the Space
The timing of Illinois’ memo coincides with major sportsbook operators signaling interest in the prediction market sector.
Just days before, DraftKings acquired Railbird Technologies and its CFTC-designated exchange arm. The deal came months after speculation that the operator was eyeing an entry into prediction markets.
The company announced plans to launch a “DraftKings Predictions” app. The app will cover outcomes across “finance, culture, and entertainment” and allow connectivity to multiple exchanges. Notably, DraftKings did not mention sports event contracts in the release.
The omission mirrors the strategy rival FanDuel took. In August, it announced a partnership with CME Group to create a federally regulated platform for event contracts. Similarly, in the announcement, FanDuel did not mention sports markets.
Recently, reports surfaced that the CME Group is considering offering sports event contracts. Still, there’s no indication whether FanDuel will be involved.
Still, both FanDuel and DraftKings aim to capitalize on the growing interest in event-based trading. We have yet to see whether they will get involved in sports event contracts amid the regulatory pressure.
State vs. Federal Tension
Illinois’s action lands amid a wider clash between federal and state regulators over who should govern event-based trading. Sports event contracts occupy a legal gray area between wagering and financial derivatives, prompting both lawsuits and legislative scrutiny.
At the federal level, the CFTC treats many event contracts as derivatives under its jurisdiction. However, the agency’s interpretation of Rule 40.11, which prohibits gaming-related contracts, has drawn criticism from critics and some lawmakers. They argue it lacks clarity on where gambling ends and futures trading begins.
The issue could hinge on future court rulings—or on whether the CFTC, under newly nominated chair Michael Selig, decides to define its authority more clearly. Until that happens, the boundary between financial and gaming regulation will remain unsettled.
For multi-state operators like DraftKings and FanDuel, this patchwork means that entrance into prediction markets would need to navigate both federal oversight and state gambling statutes.
