Sports betting and iGaming operators FanDuel and DraftKings have ended their membership with the American Gaming Association (AGA) because of their entry into the prediction market space.
Key Takeaways
- FanDuel and DraftKings plan to launch prediction market platforms soon.
- The AGA accepted their request to leave the expansive trade group.
- Both operators noted that their business directions are not aligned with the AGA.
The AGA said in a statement that the industry trade group accepted the request of FanDuel and DraftKings, the two gaming market-share leaders in the U.S., to “relinquish their membership, effective immediately.”
The decision by both operators to leave the AGA, which unites gaming and tribal operators as well as suppliers and other stakeholders in the industry, was first reported by InGame.
DraftKings, which plans to launch a prediction product by early 2026 after recently acquiring Railbird, said in a statement provided to Covers that it voluntarily moved on.
“As the company’s business strategy evolves – including with prediction markets – DraftKings determined that its plans no longer fully align with the AGA’s direction in certain areas and have decided to relinquish its membership,” a DraftKings spokesperson said.
FanDuel also provided confirmation, stating that the gaming company “decided to step back” from the AGA. The Flutter-owned operator announced during its Q3 earnings call that it will launch a separate event contracts platform through its partnership with the federally regulated CME Group in December.
“FanDuel has built our business by maintaining strong industry partnerships. We value the spirit of collaboration that comes with these relationships. But as we expand into prediction markets, we recognize this direction is not aligned with the American Gaming Association's current priorities for its member operators.
“FanDuel has always been the company that moves quickly, from daily fantasy to mobile sports betting to prediction markets. We build what consumers want and we operate with an unwavering commitment to integrity.”
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Market awareness
The idea of getting into prediction markets was too good for DraftKings and FanDuel to turn down.
Kalshi, a popular trading exchange, has seen massive growth because of its ability to offer sports contracts in all 50 states. Federally regulated by the Commodity Futures Trading Commission and challenged in legal sports betting states, what began with offering political prediction markets turned into markets involving the NFL, NBA, MLB, NHL, UFC, and more earlier this year. Dustin Gouker reported that 90% of Kalshi’s trading volume has come from sports contracts since this football season began.
And the space is growing. Polymarket, another big global exchange, is getting back into the U.S. soon after it left the market in 2022 due to regulatory issues.
Even daily fantasy sports operators, which FanDuel and DraftKings started as, have gotten in on the prediction game. PrizePicks began offering sports event contracts through a Kalshi partnership last week, and Underdog has been involved with Crypto.com most of this football season.
This has sparked legal issues in states with regulated sports betting, which claim that prediction markets are gambling. Several jurisdictions have issued cease-and-desist letters to trading exchanges that offer sport event contracts, and Kalshi and Crypto.com have even filed lawsuits in states like Nevada in an attempt to keep operating.
With no federal regulatory changes likely coming in the near future, FanDuel and DraftKings began exploring entry into the space earlier this year.
Taking a stand
Their recent decisions have made their memberships with the AGA a difficult workaround.
“We wish them the best, and we expect to maintain close ties in our mission to promote and protect legal, regulated gaming,” the AGA said in its Tuesday statement.
The AGA, founded in 1994, brings together legal casino, online, and tribal gaming operators, as well as gaming suppliers, service providers, and other industry stakeholders. The group primarily addresses legislative and regulatory issues, but also provides joint sports betting and iGaming data from legal U.S. markets.
The AGA and some of its members have publicly opposed prediction markets and warned that sports event contracts undercut regulated wagering. The AGA recently spoke out against the NHL forming a U.S. market partnership with Kalshi and Polymarket, stating that no professional sports league should be involved with companies “operating in defiance of state law and consumer protection norms.”
“Contrary to the league’s claims, the future of these platforms is far from certain, evidenced by the legal proceedings in multiple states, the view of well over half of the nation’s attorneys general, and state regulators determining these platforms to be illegal,” AGA president and CEO Bill Miller said last month. “This move sends a troubling message: that integrity, responsibility, and clear legality are optional in sports gaming.”
