LAS VEGAS – A stroll to the Global Gaming Expo is often done in the blinding Las Vegas sun, maneuvering down a sidewalk full of families, frat boys, seniors, and other assorted tourists. If you’re lucky, you’ll get to the Venetian Expo and G2E without breaking a sweat.
However, last Thursday, it was cloudy in the desert. It even looked like it might rain in Vegas. On Friday, it actually rained.
That seems like an apt enough metaphor for this year’s G2E, which was attended last week by approximately 25,000 lanyard-wearing members of the gambling industry. Everyone arrived in the sun and departed with clouds gathering, a storm brewing, and with a town about to be buffeted by forces it can’t control.
I, too, am at G2E this week, if anyone would like to chat. Already have a suspicion as to what everyone will be talking about, though. pic.twitter.com/DCL5i5Hlof
— Geoff Zochodne (@GeoffZochodne) October 6, 2025
In this belabored metaphor, the clouds and the storm are, of course, prediction markets. And it took all of two minutes to realize that this year’s G2E would really be the Global Prediction Markets Expo, a place where everyone could finally get the message about the disruptive force circling the industry.
“We don’t want to scare you folks, but we do need to open our eyes,” said David Bean, the vice chairman of the Indian Gaming Association, during one G2E discussion panel.
- Federally regulated prediction markets like Kalshi are enabling sports betting in all 50 states, bypassing traditional state and tribal gambling laws.
- This loophole is disrupting the U.S. gambling industry's decades-old regulatory framework and triggering legal, political, and business uncertainty.
- Industry leaders at the Global Gaming Expo warn of major consequences if courts uphold prediction markets, potentially reshaping gambling as we know it.
If you opened your eyes at the big, brick-and-mortar Circa Sportsbook on Fremont Street on Monday night, you would have seen a good crowd in the movie theatre-like structure. The many super-sized screens allowed patrons to watch playoff baseball and Monday Night Football at the same time. You would have also seen a commercial for Kalshi, a prediction market, during breaks in the action.
Kalshi offers a new way to wager on sports: betting “yes” or “no” on certain outcomes using so-called event contracts that are available in all 50 states, even the ones that haven't legalized sports betting.
You could have even used Kalshi to bet on Monday Night Football while you were standing right next to the counter at Circa, despite Kalshi lacking the same Nevada sports betting licenses required for Circa and others.
Kalshi can do this because it is federally regulated, floating above the state-level gambling rules. This is even as, per American Gaming Association research, the majority of people aware of sports event contracts view them as a form of gambling.
Are these contracts legal? Is it right to offer them? Is it fair? Great questions. The answer: don’t know and won’t know, maybe, for years.
An informed set of eyes last Monday would have also seen Circa CEO Derek Stevens standing atop his sportsbook, near a video poker machine that appears reserved for the boss. And the next day, in an interview with Covers, the always-besuited Stevens weighed in on prediction markets.
“I just have a hard time believing that this loophole, this element of being shrewd, is going to wipe out 50 or 60 years of organized, responsible, developed sports wagering,” Stevens said.
But, like everyone else, Stevens acknowledged that he will have to wait and see what happens. The courts, and probably the Supreme Court, will likely have to determine whether federally regulated exchanges like Kalshi must abide by state sports betting rules, or if federal law will preempt those requirements.
“It’s going to be another interesting year,” Stevens noted.
May you live in interesting times
Things are interesting enough in the here and now. The state of play for legal online sports betting in the U.S. at the moment is that it’s everywhere, whether you want it or not, courtesy of prediction markets. It has broken containment, and how or if this particular genie gets put back in the bottle is anyone’s guess.
The Professional and Amateur Sports Protection Act held back regulated sports betting for a time in the U.S., but the Supreme Court put an end to that in 2018. States then grabbed the baton and ran with it, becoming the gatekeepers of legalized sports wagering.
However, late last year, Crypto.com decided to test those boundaries with federally regulated Super Bowl betting markets. While the Biden-era version of the Commodity Futures Trading Commission (CFTC), the regulator of the prediction markets, pushed back, the Trump-era CFTC has taken a much more hands-off approach. Now you can (for now, anyway) get down on sports anywhere in the U.S. using Trump-advised prediction markets and their sports event contracts.
Granted, prediction markets still aren't doing the same kind of brisk business as state-regulated online sportsbooks are doing in the U.S. right now. They are also fighting in courts across the U.S. against state gambling regulators trying to stop the trading of sports event contracts. Meanwhile, though, prediction markets are gaining traction as they continue to branch out from facilitating wagering on elections and economics to the much more controversial area of sports.
Kalshi, for instance, is eyeing $50 billion in annualized volume. While volume isn't the same thing as handle (some of that volume is what people are betting, some is market makers matching that bet, and some has nothing to do with sports), Americans still bet more than $88 billion at legal sportsbooks through the first seven months of 2025 alone, according to the AGA. In other words: way more than they bet on sports with a prediction market.
Kalshi recently raised $300M+ at $5B from Sequoia, a16z, Paradigm and others.
— Tarek Mansour (@mansourtarek_) October 10, 2025
Since then, we've grown over 3x, hit $50B of annualized volume, and became the largest prediction market in the world.
And today…Kalshi goes global.
140+ countries. 1 liquidity pool. pic.twitter.com/Z2myzRw9bA
At any rate, prediction markets were understandably The Thing at this year’s G2E.
Last year you could say sweepstakes casinos were A Thing, maybe, at G2E, but with state legislatures passing more anti-sweeps legislation and regulators cracking down, that threat to authorized gambling seems diminished. This year, the biggest concern was something no one was even talking about last year, a federally regulated force threatening to undo decades of state-led gambling regulation.
“You can call it whatever you want, but it’s still gambling, and if it's gambling, it needs to play by the rules that uphold state and tribal sovereignty,” American Gaming Association CEO Bill Miller said during his keynote speech at G2E. “Those rules matter, and here's why: Over the past 50 years, we've evolved a uniquely American approach to gaming. It's an approach that has been the foundation of our success. This system gives the people a voice on if, where and when to allow gaming, state by state, tribe by tribe. Voter approval at the state level, it creates a social contract between the communities and our industry.”
Put differently, the status quo of legalized gambling in the U.S. (that “uniquely American approach to gaming”) is being challenged by prediction markets, the federal regulation of which currently puts them beyond the reach of states and tribes.
Le freak, c'est chic
The prediction business may not stop at sports betting either. Already people are kicking around the idea of online prediction casinos. Research firm Eilers & Krejcik Gaming wondered aloud in a report last week that “[a]s Kalshi continues growing its sports offering, we wonder whether the company is considering another boundary-pushing expansion – a casino-like product.”
“The opportunity is hard to ignore,” EKG added, estimating U.S. online casino gambling as an approximately $100 billion revenue opportunity for operators. Moreover, only around 12% of American adults currently have access to legalized iGaming.
Of course, any prediction casino would have to fight to make it stick. And the fight would be fierce.
“That asymmetry makes casino look like a massive opportunity but the potential pushback from regulators, courts, and Congress could be significant,” EKG noted.
I think there’s no “could be” about it; people would freak out. People are already freaking out enough whenever the notion of state-regulated online casinos are floated. Online casinos going live across all 50 states would cause a meltdown, and not just because it would break regulatory norms.
For proof, a G2E attendee needed to look no further than across the street to the giant concrete foundation of what will be a giant guitar-shaped hotel: the future Hard Rock Las Vegas, which is set to open in 2027 on the former site of the Mirage. It’s a multibillion-dollar project, the success of which hinges, at least in part, on the premise that people will still travel to Vegas and stay inside a giant guitar. How would occupancy and gaming revenue at the big guitar be affected by prediction casinos?
Check, mate
The trickle-down effects are not nothing, either. The IGA’s Bean, for instance, mentioned conversations he had with a small- and medium-sized casino operator, who came to realize that prediction markets could be costing or curbing their businesses.
“Are all the states that are collecting a substantial amount of state revenue going to say, ‘oh, there’s some very shrewd young people that came up with this … we’re not going to take any more tax revenue?’” Circa’s Stevens asked.
Consider this as well: I gave a guy $10 on the Strip last week after he beat my Covers colleague in a game of chess. After this tabletop dissection played out, the chessmaster was telling us about how he is out there bettering the community, helping to get people off the streets and improving their minds via the power of chess.
Now, this may or may not be true, but if people like me and my colleague aren’t coming to Vegas and paying up for lost chess games, it definitely won't be true. Other business models would be pressured as well, even if prediction markets just stick with sports betting and steer clear of online casinos.
“You get a product in the marketplace that’s unregulated in the context of gaming … not taxed, is competitively a major disadvantage for us,” said Bill Hornbuckle, CEO and president of casino-operator MGM Resorts International, during his G2E keynote remarks. “Are we following [prediction markets]? Would we be a fast follower if for some reason it were to break through? Absolutely. But it does invite … the notion that the federal government will step into our space. And that is something this industry has historically and categorically said ‘thank you, but no thank you,’ for decades.”
So, the fight over sports event contracts offered by prediction markets is already fierce, even if it’s just to uphold the traditional roles of gambling regulation.
Polymarket whale @Substantial-Service has $50,000 on Toronto tonight.
— Polymarket Sports (@PolymarketSport) October 17, 2025
Tail or fade? pic.twitter.com/9x97xTdseq
Yet Hornbuckle was still allowing for the possibility that prediction markets are here to stay. So are others, such as FanDuel-owner Flutter Entertainment. A sports-less FanDuel prediction app is supposedly coming soon; it also wouldn’t take much to throw some sports event contracts on the app if the courts ultimately give the thumbs-up to those products.
Because, at the end of the day, there is a non-zero chance that the U.S. Supreme Court will give the green light to nationwide sports betting through CFTC-regulated event contracts. And even if sports betting via prediction markets are killed a month from now, a year from now, four years from now, etc., does that immediately kill the demand for what they offered? Does all that wagering just dissipate and/or flow back to state-regulated sportsbooks?
I don’t know if you can say for certain that would be the case. After Napster shut down in 2001, did everyone start buying CDs again?
Woe is thee
This is why there is another dimension to the prediction market predicament, which is the ongoing burdening of state-regulated gambling.
For example: If you’re an Illinois sports betting operator, you’ve had to absorb a significant tax hike and a new per-bet tax altogether over the past few years. The math may not be mathing as good for you in the state as it once did. Meanwhile, you're now competing with prediction markets that don't have to worry about any of this.
Michael Dugher, executive chair of the United Kingdom’s Betting and Gaming Council, warned during one G2E panel about over-regulation and over-taxation of legalized gambling.
The lesser-regulated and taxed gambling entities, he noted, can offer more goodies to bettors than those playing by rules that may weigh on competitiveness, pushing players offshore.
“You’ve got to stop doing the things that cause this in the first place,” Dugher said.
MGM is pushing hard to restore the 100% gambling loss tax deduction CEO Bill Hornbuckle said during today's G2E conference; he said company would have to "play out" the scenario if the deduction is not restored
— Ryan Butler (@ButlerBets) October 7, 2025
But there is questionable political capital in going to bat for gambling, especially with the Pew Research Center recently chiming in with a survey that suggests a lot of American adults see legalized sports betting as a bad thing. And the hits keep on coming for legal sports betting.
On Thursday, the New York Post published a story headlined "NYC-area boys using bar mitzvah money to gamble as sports betting addiction on the rise with teens."
On Friday, ESPN reported that "[a]t least nine sportsbooks in 13 states and one Canadian province detected" suspicious betting on small-conference college basketball last season. Who would stick their neck out for sportsbooks at this particular moment?
There is a growing problem in our high schools and even middle schools - kids betting with real money on sports. I’m working this fall on ways to stop this before it gets worse. https://t.co/Muw4LhfiJU
— Senator Katie Boyd Britt (@SenKatieBritt) October 16, 2025
However, let’s go back and consider what the Pew survey actually says for a second: “Today, 43% of U.S. adults say the fact that sports betting is now legal in much of the country is a bad thing for society.”
Well, I have some news for these adults: sports betting is technically legal in all of your country, not just “much” of it, via prediction markets. Is that a “bad thing”? Is it worse than sports betting contained to the states that actually want it?
The horse has left the barn
Because, at the moment, legal sports betting is not contained at all. The Pew survey is built on a state-regulated premise of gambling that is being directly challenged. So, in that context, as well as the possibility that prediction markets are here to stay, what do you do if you're a gambling state or a state-regulated gambling operator?
Right now, you wait-and-see what the court battles yield. You also take some comfort in the fact that the prediction market product is still pretty basic compared to the SGP factories being run under the watch of state gambling regulators.
“The quality of the [online sportsbook] product, and what it's able to deliver for the consumer relative to the prediction markets, is so much stronger,” DraftKings CEO Jason Robins said during G2E.
You could, if you dare, also make the argument that “the system is working,” as was done in the context of the latest ESPN bombshell.
"Although the underlying suspicious activity is, of course, concerning, we are proud to be a part of a group of invested stakeholders diligently collaborating to combat bad actors in sport," an IC360 spokesperson said.
But what if (and, yes, it’s a big “if") sports event contracts are declared totally fine by the Supreme Court? What if prediction markets, using the money they earn from facilitating wagering in mega-states like California and Texas, improve their product to a point that it’s a real threat to state-regulated sportsbooks? What if regulatory threats to state licensees to not get involved in the prediction business feel a lot less threatening? What then?
All bets, as they say, may be off.
“If the courts rule that these contracts are indeed legal, I think what we’ve built over the last seven years post-PASPA, I’ll use the phrase ‘would be severely undermined,’” said Tres York, vice president, government relations at the American Gaming Association, during G2E.
