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Yes, it is illegal. That is why Fanduel and Draftkings have tried to pretend what they're doing isn't sports gambling but have still gotten soft shut downs in New York & Illinois, and a full out ban in Iowa. If you want to argue that you won't get in trouble if you gamble on sports online, that is true, it's not worth their resources to go after people.
They will go after sites (Draft Kings & Fanduel) if they start making too much money and they will go after bookies if they are bored; but in neither case will they bother going after a better.... that doesn't make it legal though.
They can't regulate servers that don't reside in the United States. It is not illegal to gamble online in Illinois. http://www.illinoisgambling.org/