Prediction markets seemingly offer their traders the opportunity to bet on everything: elections, inanity, and, to the concern of some, sports.
Yet those exchanges won’t let you get down a bet on the fifth race at Fair Grounds on a random Friday, and comments made by the chief executive of Churchill Downs Inc. suggest there may be a good reason for this.
- Churchill Downs CEO Bill Carstanjen says prediction markets pose no real threat to the Kentucky Derby or pari-mutuel horse race betting, citing limited overlap and strong legal protections under the Interstate Horseracing Act.
- Prediction markets like Polymarket and Kalshi have seen only minimal engagement with horse racing events, with low trading volumes or no Derby-related contracts offered, reinforcing the idea that these platforms are unlikely to disrupt traditional wagering.
- Churchill Downs remains financially strong, reporting record revenues and profit growth, and announced a $500-million stock buyback, signaling confidence in their business model and low concern over competition from prediction markets.
CDI CEO Bill Carstanjen was asked during his company’s second-quarter earnings call on Thursday morning about how he views prediction markets and how they might affect Churchill Downs' key asset, the Kentucky Derby.
Carstanjen called it a “fascinating subject” that he pays a lot of attention to, including in his role as a member of the executive committee for the American Gaming Association.
“With respect to the Kentucky Derby and horse racing, we haven't seen it, and I think the nature of pari-mutuel wagering on horse racing doesn't make it as an attractive target for prediction market activity,” Carstanjen said. “So we haven't really seen it, and it isn't something that we're real concerned about.”
Laying down the law
The Churchill Downs CEO added that there is also the “important element” of the federal Interstate Horseracing Act, which Carstanjen said essentially gives them intellectual property and wagering rights for their product, horse racing.
“So, in essence, you need the approval of the content producer if you want to take wagering or conduct wagering activity on our races or other pari-mutuel horse races,” Carstanjen said. “So I think that's an impediment to that activity happening on that platform. But the platform, in and of itself, it's a subject of a lot of discussion in the country, and certainly we watch it. But it's not a risk or a particular concern for what we do with the Kentucky Derby and pari-mutuel wagering on horse racing.”
Polymarket, an offshore prediction market that is aiming to enter the regulated U.S. market, did offer de facto wagering on the 2025 Kentucky Derby. However, the trading volume for those Derby contracts (which allow users to bet "yes" or "no" on certain event outcomes) was just north of $1.2 million, making it relatively small.
Food for thought re: the gaming industry's response to the Big Beautiful Bill and its changes to wagering loss deductions...
— Geoff Zochodne (@GeoffZochodne) July 24, 2025
Churchill Downs says other tax-related provisions in the bill "will have a significant favorable impact on the Company’s current year cash tax expense." pic.twitter.com/Vf8cIdNrxy
Furthermore, Kalshi, a prediction market that is regulated by the U.S. Commodity Futures Trading Commission (CFTC), did not offer any event contracts tied to this year's Derby.
Kalshi declined to do so even as it continues to add more and more sports event contracts to its platform, essentially offering de facto online sports betting in the U.S. in all 50 states, rather than just those that have legalized event wagering. Sports event contracts have prompted pushback from state gaming regulators and certain members of the gambling industry, but have so far survived the various legal and regulatory challenges.
The fact that Kalshi has steered clear of offering horse racing betting odds could mean it has no interest in the sport or in getting in another legal fight, albeit this time with horsepeople.
Here come the numbers
Carstanjen’s comments also suggest that Churchill Downs sees their legal moat for horse racing as stronger than what states believed they had for sports betting.
At any rate, the comments make clear that Churchill Downs and perhaps the horse racing industry more broadly are not overly concerned about what prediction markets and sports event contracts could do to their business.
Churchill Downs indeed reported record net revenue and adjusted EBITDA on Wednesday, of $934.4 million and $450.9 million, respectively, for the second quarter ended June 30.
Quarterly profit was also up 4% from a year earlier, to $216.9 million, and CDI’s board of directors has approved a new $500-million stock buyback program.
“Our job is to drive shareholder value, to drive improvement, and we take that very, very seriously,” Carstanjen said during their conference call for analysts and investors on Thursday.
