Illinois regulator investigates Kalshi for illegal sports wagering
The Illinois Gaming Board (IGB) is currently investigating Kalshi, a federally regulated financial exchange platform that allows users to trade on real-world events, over alleged unlicensed sports wagering activities. IGB has sent cease-and-desist notice to Kalshi, a case that mirrors similar legal challenges faced by the company and its affiliated platforms in other states like Nevada, New Jersey, and Ohio.
The company was investigated for operating outside the legal framework, which may have violated the Illinois Sports Wagering Act governing the acceptance of sports bets within the state. Tarek Mansour, Kalshi CEO, and Eliezer Mishory, Kalshi Chief Regulatory Officer and General Counsel, have been included in the email. According to the IGB, the investigation suggests that Kalshi has been accepting sports wagers on a variety of events. This includes individual athlete statistics and entire sporting events, through online platforms, mobile devices and other methods.
Under Illinois law, it is unlawful to engage in sports wagering activities without proper licensing from the IGB. Section 230 ILCS 45/25-20(a) clearly states that only licensed entities can offer such services within the state. Kalshi’s alleged activities could thus be seen as a direct violation of this provision, potentially subjecting them to legal action.
Legal action mirrors similar challenges faced by Kalshi
The legal action mirrors the other legal battles that Kalshi has found itself at the centre of with gaming regulators in Nevada and New Jersey. Both states have issued cease-and-desist orders targeting Kalshi’s sports event contracts, sparking a debate over the boundaries of federal and state regulatory authority.
The Nevada Gaming Control Board (NGCB) kicked off the controversy in early March by demanding that Kalshi stop offering sports event contracts in the state by 14 March. Shortly after, the New Jersey Division of Gaming Enforcement (DGE) followed suit, issuing a similar order to both Kalshi and Robinhood on 27 March. While Robinhood complied with the directive, Kalshi has chosen to challenge the orders in court, claiming that the states are overstepping their jurisdiction.
Kalshi’s legal argument against Nevada centres around the Commodity Exchange Act (CEA), which grants exclusive regulatory authority over futures trading to the Commodity Futures Trading Commission (CFTC). As a federally regulated derivatives exchange, Kalshi argues that state-level intervention undermines the clear intent of Congress to centralise oversight under federal law.
Kalshi’s Co-Founder and CEO Tarek Mansour has publicly defended his company’s position, taking to social media to criticise what he sees as a fundamental misunderstanding of prediction markets by state regulators. “While they are not our regulators, both states have issued cease-and-desist orders that fundamentally misunderstand prediction markets and undermine the foundation of U.S. financial markets, which are regulated by the federal government,” Mansour wrote.
