The list of states looking into sports prediction markets got longer on Friday.
The Michigan Gaming Control Board (MGCB) announced it has initiated investigations into unlicensed sports prediction markets operating within the state, citing significant concerns about consumer protections.
Key Takeaways
- Six other states (Maryland, Ohio, Illinois, New Jersey, Nevada, and Montana) have sent cease-and-desist letters to companies offering prediction markets.
- These markets pose a serious risk to consumers.
- Prediction markets are available in all 50 states.
The Wolverine State is the latest state to investigate the prediction market industry, joining Maryland, Ohio, Illinois, New Jersey, Nevada, and Montana. Those states have sent cease-and-desist letters in connection with federally regulated sports event contracts, which have been a growing form of competition for state-regulated sportsbooks.
The trading of sports event contracts allows people to make de facto wagers on sporting events in all 50 U.S. states, not just the ones that have legalized sports betting.
“We take consumer protection very seriously and are committed to ensuring that Michigan residents are engaging with safe and legal sports betting options,” said Henry Williams, executive director of the MGCB said in an official news release.
“Unlicensed entities not only pose a risk to consumers but also undercut the integrity and revenue-generating potential of the state’s regulated sports betting industry. We are actively investigating these practices and will pursue appropriate measures to protect Michigan bettors.”
The MGCB stated that these unlicensed platforms offer what they describe as innovative financial products that allow users to trade their predictions on the outcomes of sports events, sidestepping regulatory protections. These pose a serious risk to consumers, creating potential confusion among bettors and blur the line between sports betting as entertainment and sports betting as a financial trading vehicle.
The MGCB is also concerned that promoting sports betting in Michigan as an investment opportunity directly contradicts Michigan’s established responsible gaming principles.
“Sports betting is meant to be a form of entertainment, not a financial investment,” said Williams. "By framing sports contracts as investment vehicles, these platforms risk confusing consumers and undermining the state’s commitment to responsible gaming. Moreover, many of these unlicensed platforms are often accessible to individuals as young as 18, in stark contrast to Michigan’s 21+ age requirement for legal sports betting.”
