Consider this: If you live anywhere in the U.S., and you’re old enough and financially able enough (BET RESPONSIBLY), you could bet on sports if you wanted.
- Sports bettors have ample ways to wager right now, perhaps more than in the past, with state-regulated sportsbooks now joined by rapidly expanding prediction markets.
- Prediction markets are drawing major betting volume and investment, but they face legal challenges and concerns about consumer protection, sports integrity, and whether they should even exist.
- With sportsbooks increasing promotions and new products ahead of football season, bettors could benefit from intense competition, though that advantage may not last.
It’s just that depending on where you live, a bet could mean driving to a brick-and-mortar sportsbook, pulling up an online sports betting app on your phone, or, as is all the rage these days, logging into a federally regulated prediction market platform.
That last one has made de facto sports wagering available across most of the U.S. under the watch of the Commodity Futures Trading Commission (CFTC). And the two states that currently restrict sports prediction markets, Michigan and Nevada, still have state-regulated online sportsbooks. A third state that is near to similar restrictions, Washington, still has in-person wagering at casinos.
So “legal” sports betting in one form or another is nationwide. There are outs for bettors.
“If prediction markets existed 25 years ago, then I’d be worth a hundred billion dollars,” famous sports bettor Billy Walters reportedly said last week at the BetBash conference.
Now, you are not Billy Walters. You may not even be Billy Wins Occasionally. But you’ll still be able to be Billy Can Bet Responsibly If He Wants this football season, and with more options than you might have had in the past.
Because a few years ago, consumer choice looked to be going in a different direction. The betting was still there, but the legalized sports betting industry was starting to crystallize and consolidate.
The anti-Prop 27 campaign has declared victory over the online sports betting measure: pic.twitter.com/vYVqBHzfRz
— Geoff Zochodne (@GeoffZochodne) November 9, 2022
The number of states left to launch was shrinking, and the holdouts were holdouts for good reasons; significant challenges were facing anyone thinking of legalizing sports betting in California or Texas.
Moreover, there were fewer names in the space.
Operators that had rushed in – looking to cash in – were disappointed and stopped trying. One investment bank estimated that 31 companies that had joined the legal online gambling market since 2018 had either shut down, pulled back, planned to close, or been acquired.
“We do not expect exits to materially slow in the coming years with elevated cost of capital, an increase in consumer protection/regulation, and market share consolidating amongst the larger players,” Citizens analyst Jordan Bender wrote.
But Bender later added this: “The greatest chance to disrupt the industry is through a new innovative product offering, in our view, similar to bet365's surge in the UK following its development of the in-play betting product in the early 2000s.”
Well, that happened. It’s just that your opinion may vary about the “innovative” nature of this disruption, which is undoubtedly sports prediction markets.
Prediction markets are federally regulated exchanges on which users can buy or sell “yes” or “no” contracts tied to certain events. And for a while, they were pretty tame, until operators added elections and then, in late 2024, sporting events to their contract menus.
The U.S. Senate Committee on Indian Affairs is now holding a hearing on... prediction markets, of course, and what it means for tribes.
— Geoff Zochodne (@GeoffZochodne) August 4, 2026
Vice Chairman Brian Schatz (D-HI) says the consumer experience on sports betting apps and prediction markets apps "is exactly the same." pic.twitter.com/5PqlRwiAlD
While election betting was contested in the courts and ultimately allowed, it was sports that really caused all kinds of hell. Because, at first glance, sports prediction markets can look a lot like state-regulated sports betting.
So, to some, sports prediction markets are regulatory arbitrage and/or illegal. To others, they are an inventive way of de facto wagering/price discovery that is available across most of the U.S. under the federal oversight of the CFTC.
The thing is, they’re here now. And they’ve jolted the sports betting landscape, with newer names (Kalshi, Polymarket, Robinhood), familiar names (DraftKings, Fanatics, FanDuel, PrizePicks, Underdog), and up-and-comers (Novig, ProphetX) all participating.
There are also more than a dozen applications pending with the CFTC for prediction market approvals, including from entities that are geared toward sports, such as Sporttrade and Smarkets.
And for a lot of people, that’s a problem. For these folks, there are good reasons why sports betting shouldn’t be nationwide.
“Prediction market platforms are using CFTC registration to offer nationwide sports betting while bypassing the state and tribal gaming laws that Congress, states, tribes, regulators, and voters have spent decades building,” said Chris Cylke, senior vice president of government relations, during his testimony to a Congressional subcommittee last month.
So, as the above should suggest, the rise of sports prediction markets is also raising all kinds of concerns and questions about addiction, consumer protection, and, in the eyes of professional sports leagues and governing bodies, the integrity of their product.
The National Football League, for instance, wrote to the CFTC during its public comment period for proposed prediction market rules.
That letter reiterated that the NFL and other leagues want “a defined pathway to request emergency review and suspension of any sports event contract or class of contract upon submission of credible evidence of actual or potential integrity compromise.”
The kids may not be all right
Meanwhile, the fact that prediction markets have users as young as 18 is another major concern, and is in addition to the concerns about wagering done by younger people in general.
For example, a survey released this week by personal finance platform Betterment found around 26% of Gen Z investors “treat sports betting as a deliberate part of their long-term financial strategy.”
“When a prediction market or sportsbook starts to feel like a retirement strategy, we have a problem,” Betterment CEO Sarah Levy said in a press release.
So the evolution of prediction markets includes a lot of worrying. Some people are offering suggestions to ease those concerns.
Earlier this month, the Sports Traders Union announced itself to the world as an “independent, user-centered voice of sports prediction market traders in the United States.”
The union's advisory board is made up of sharps, CEOs, and writers and researchers. They've already published a “Responsible Trading Code,” which urges a minimum trading age of 21 and “honest” marketing, among other things. The union also plans to track and publish which platforms are actually meeting its standards.
“We almost want to create a ‘race to the top’ among operators, where it's like you can get credit for doing these good things and not putting yourself at a competitive disadvantage,” said Isaac Rose-Berman, a member of the union’s advisory board and a trader, writer, and fellow at the American Institute for Boys and Men.
So the union is trying to add some first-hand experience, knowledge, and common sense to the conversation. It wasn’t founded as a lobbying arm for the industry (even with members of that industry on the advisory board) but instead to offer its “reasoned takes,” Rose-Berman said.
If the industry listens, though, it could be better for traders. There’s consumer advocacy for those prediction market customers, even if there is also a lot of advocacy for those consumers to just not exist at all.
Washington's Kalshi-related court order has been issued: "requires Kalshi to stop offering, accepting, or facilitating wagers on sports, elections, politics, entertainment, culture, tech and science, or mentions."
— Geoff Zochodne (@GeoffZochodne) August 13, 2026
IP/residency geofencing by Aug. 19, multi-source GF by Sept. 2.
And there are many legal battles that continue to rage over the legality of sports event contracts offered by federally regulated prediction markets.
Washington, for example, recently won an order from a state court that will require Kalshi to implement certain restrictions, although the exchange says it is examining its legal options in the wake of that decision.
But the bottom line on accessibility is that some form of sports betting is accessible in every state right now.
Sports prediction markets are a growing part of that, such as H2 Gambling Capital’s estimate that prediction market activity was around 27% of all legal U.S. sports betting volume during the World Cup. That, however, would still leave 73% of volume in the hands of state-regulated sportsbooks.
Ricky Gold, founder and CEO of Juice Reel, a free bet-tracking app that securely connects to sportsbook and prediction market accounts, said 9.2% of all bets synced into the app in August were prediction market trades. That's well up from 0.2% last August and even a good deal more than the 3.1% tracked in February, around the Super Bowl.
PENN Entertainment CEO Jay Snowden said this morning that they are anticipating an “arms race” this football season, with online sportsbooks and prediction markets using a “a very aggressive, irrational” approach to marketing and customer acquisition. pic.twitter.com/yNWRNqUrYj
— Geoff Zochodne (@GeoffZochodne) August 6, 2026
What’s more, with the uber-popular football season about a month away, a massive spending spree by both sportsbooks and prediction market operators is beginning to ramp up. That money will be aimed at acquiring and re-engaging bettors.
“In fact, the encouraging underlying signs we're seeing give us the confidence to increase generosity to customers and improve our value proposition,” said Peter Jackson, the outgoing CEO of FanDuel-owner Flutter Entertainment, during last week’s earnings call.
So both the outs and incentives are there. And that combination may make now a good time to be a bettor.
Is it the best time to be a sportsbook? Or a market maker on an exchange? Or a state gambling regulator or tribal gaming operator? Maybe not so much. You’re on the hook for marketing and promo costs, fighting with other market makers to offer the best price to takers, and watching as a federally regulated industry spreads across the land, competing with what you already oversee or offer on your turf.
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But for people who want to bet, if you plug your ears and cover your eyes, it could still smell pretty sweet.
Because you’ve also got other, incumbent, state-regulated sportsbook operators that still want to compete, such as BetMGM, theScore Bet, and Caesars. They are picking their spots, refining their approaches, and focusing on product and certain geographies, such as ones where they can also offer online casino games.
There’s also plenty of fight left in these operators, and in newer ones still seeking to expand through the state-regulated system.
Namely, bet365. Citizens noted that bet365's share of gross online sports betting revenue surged to 6.2% in May compared to 1.6% a year earlier, and at the expense of some other operators.
“We believe recent market share losses are largely a function of bet365’s promotional intensity, particularly in Michigan,” Bender wrote.
📢 TODAY: ADG has allocated an event wagering operator license to Circa Sports Arizona LLC as the designee for the the San Juan Southern Paiute Tribe.
— Arizona Department of Gaming (@AzGaming) August 3, 2026
Full press release here: https://t.co/g9Ogzm59CZ pic.twitter.com/jYSjNJQE6q
And then there’s another online sportsbook that’s much different from what other state-regulated books are offering.
Circa Sports recently received a license in Arizona, which will be the seventh state for the low-hold, high-volume operator when it launches early next year.
Among other things, Circa will take big bets, and from the type of customer who may not be able to bet any longer at other state-regulated sportsbooks.
The Circa model could even compete for business with prediction markets, which are seeing a lot of volume from sharper clientele.
“We think we bring something different to that market,” CEO Derek Stevens told Covers.
The state-regulated approach to online sports betting might prove prudent, too, if sports prediction markets get nuked through the courts. And that remains a very real possibility.
A recent federal court decision highlighted that very distinct possibility, in resoundingly rejecting Kalshi's bid for a preliminary injunction against Connecticut.
“The Court declines to conclude either that these sports wagers are properly categorized as swaps and fall under the CFTC’s authority, or that Congress clearly displaced Connecticut’s traditional authority to regulate sports wagering and vested that authority in the CFTC, an agency that has not historically regulated sports wagering and has not exercised meaningful oversight over Kalshi’s sports event contracts,” U.S. District Court Judge Vernon Oliver wrote in his Aug. 7 decision.
Nevertheless, the same court ruling noted that Kalshi has approximately 24,000 users in Connecticut, “and millions of dollars in open investments.”
Again, that wasn’t enough to convince the judge to shield Kalshi from Connecticut's gambling laws. However, the figure highlighted the fact that people are using prediction markets, even in a state with legalized online sports betting like Connecticut.
For a limited time only?
In April, a survey released by the Siena Research Institute and St. Bonaventure University’s Jandoli School of Communication suggested that 27% of Americans had an active online sports betting account. It also found that 15% of respondents claimed to have bet on a sporting event via prediction markets.
This survey came before a lot of recent developments in prediction markets, including new launches and new products. That offering to consumers keeps getting upgraded ahead of football season.
DraftKings, for example, self-certified “combo” contracts for its in-house exchange this week, which, in prediction market parlance, means parlays.
That tees up DraftKings to push parlays even more prominently to prediction market customers heading into the NFL regular season, and they’re plenty popular already.
“More than half of our Predictions customers have engaged with combos, and combos are already approaching 20% of Predictions Consumer Volume,” DraftKings CEO Jason Robins wrote in his second-quarter business update.
So, it might be better to be a bettor right now, especially if you're more casual than professional. It just might be a limited-time offer. You know, while quantities of sports event contracts last.
