The American Gaming Association wanted to know whether customers could tell a sportsbook from a prediction market. It commissioned YouGov to ask 2,025 registered voters online between Aug. 1 and 8. The margin of error is 2 percent.
About 85 percent of those polled see sports event prediction markets as gambling. The same share says sports betting should be offered only through state-licensed sportsbooks and online platforms. “Americans know a sports bet when they see one,” AGA CEO Bill Miller said.
The trade group says the result should tell elected officials in the states and in Washington that sports prediction markets are gambling and should be regulated that way.
Two regulators, one product
Prediction markets answer to the Commodity Futures Trading Commission, and adults in all 50 states can trade on them. Contracts cover sports, but also things like the timing of a Federal Reserve rate cut or whether Bad Bunny will be Spotify’s top artist.
The AGA and gaming regulators in eight states, Nevada among them, say the exchanges are cutting into their business by copying sports betting. Regulators sent cease and desist letters. Kalshi, the New York-based exchange at the center of the fight, responded with lawsuits that are pending in Nevada and New Jersey. Nevada has sued Crypto.com and Robinhood Derivatives as well.
Kalshi CEO Tarek Mansour said the platform took in more than $441 million in trading over four days starting Sept. 4, the opening weekend of the NFL regular season. He wrote that NFL games were “probably nothing” next to the company’s results, and said volume was similar during the 2024 presidential election.
Analysts do not see a big threat yet. Jeffries analyst David Katz put prediction market volume at 7 percent of what is legally wagered at sportsbooks. Citizens Bank analyst Jordan Bender wrote that “we do not view betting exchanges as a competitive threat to profitability for existing [sportsbook] operators.” Nevada sportsbooks, meanwhile, took almost $4.4 billion in wagers through July, up more than 3 percent from a year earlier.
Cracks in the industry’s front
DraftKings and FanDuel, the two largest sports betting providers, are looking at the space. DraftKings applied in August to join the National Futures Association, an early step toward entering prediction markets. That same month, FanDuel’s parent, Flutter Entertainment, said it would partner with the Chicago Mercantile Exchange on a possible event contracts platform.
“Right now, a lot of cards are being turned over in real time,” DraftKings CEO Jason Robins said at a Bank of America conference in August. “The question is, what happens with states?”
Gaming attorney Daniel Wallach said any legal uncertainty helps Kalshi, and he does not expect a resolution within 12 months.
The topic will be hard to avoid at the Global Gaming Expo, which runs Oct. 6-9 at The Venetian Expo. Robins and Flutter CEO Peter Jackson are expected to address it. Mansour was not asked to give a keynote, a slot reserved for gaming CEOs and industry organizations. Two breakout sessions will cover prediction markets, one on how states deal with illegal and unregulated gaming and one on how event contracts challenge “the paradigm for regulated gaming.”
Sara Slane, a former AGA senior vice president who became Kalshi’s head of corporate development in April, plans to attend. She argued on LinkedIn that prediction markets cannot function under differing state rules, and that state overreach “could be devastating” for federally regulated exchanges.
