Illinois regulator slams Kalshi for “illegal gambling” in cease-and-desist letter

The Illinois Gaming Board (IGB) has issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com as regulatory pressure ramps up on the sports event contracts space. 

The trio of prediction markets have been accused of offering unlicensed sports wagering and are therefore in violation of both the state Sports Wagering Act and Illinois Criminal Code. 

IGB’s letters are addressed to Kalshi CEO Tarek Mansour and chief regulatory officer (CRO) Eliezor Mishory, Robinhood CEO Vlad Tenev and Crypto.com CEO Kris Marszalek, as well as president and COO Eric Anziani. 

Despite being addressed by the IGB, Kalshi CRO Mishory has since departed the company to spearhead the Department of Government Efficiency (DOGE) team at the Securities and Exchange Commission (SEC), as confirmed by Mansour on X.

Mansour said it was a “bittersweet moment” for the company to lose Mishory to Elon Musk’s budget cutting taskforce.

All three prediction platforms list multiple markets that enable any user aged 18 and over in all 50 US states to trade contracts on the outcomes of certain games and competitions. 

As per the cease-and-desist orders, Illinois law defines sports wagering as any company that accepts wagers on games or “portions of sporting events.” 

The regulator has reaffirmed that no “person or entity” can establish a sports wagering operation in the state unless it has been granted a license by the IGB. 

The regulator has in turn alleged that all three businesses’ activities in the state constitute as “illegal gambling in violation of Illinois law.”

The letters, which are near identical, detail how the IGB is aware that Kalshi, Robinhood, and Crypto.com are engaged in unauthorized sports wagering activity online within Illinois. 

Each of the three companies have been warned “anyone affiliated with its operations are directed to cease-and-desist this illegal activity,” before the authority noted that failure to do so may subject each to civil or criminal penalties. 

This latest development from the IGB represents the fourth state regulator to issue a cease-and-desist order to Kalshi, while Robinhood has also been the subject of attention from three state bodies. 

The Nevada Gaming Control Board (NGCB) was the first to publicly push back against the sports event contracts space with a letter ordering Kalshi to halt its operations in the state. 

Soon after, the New Jersey Division of Gaming Enforcement (DGE) followed suit, but included Robinhood in its warning. Robinhood uses Kalshi’s tech to power its prediction offering.

The Ohio Casino Control Commission (OCCC) also took aim at Kalshi and Robinhood, as well as being the first state regulator to directly address Crypto.com, the first company to release sports event contracts just before Christmas. 

Kalshi has since filed lawsuits against both the NGCB and DGE as a result, noting that the cease-and-desist orders do not take into consideration the fact that Kalshi’s model is peer-to-peer swaps, rather than the traditional sportsbook. 

Both suits were filed in late March, but a court hearing against the DGE scheduled for today, April 2, was adjourned after both parties agreed that a temporary restraining order (TRO).

However, Kalshi remains in pursuit of a preliminary injunction, which would halt the DGE from enforcing any law that would be used to regulate its sports event contract offering, with the exchange currently federally regulated by the Commodity Futures Trading Commission (CFTC). 

Meanwhile, The Connecticut Department of Consumer Protection’s (DCP) gaming division has told EGR North America that it has been investigating Kalshi since fall of last year. 

The regulator did not disclose when the probe would conclude, nor what action could be taken.